                              T.C. Memo. 2017-161



                         UNITED STATES TAX COURT



          KEVIN M. BULLOCK AND EDNA D. BULLOCK, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 25152-15L.                        Filed August 21, 2017.



      Kevin M. Bullock and Edna D. Bullock, pro sese.

      Deborah Aloof, for respondent.



                           MEMORANDUM OPINION


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

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



      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] nue Service (IRS or respondent) to uphold a notice of intent to levy.

Respondent has moved for summary judgment under Rule 121, contending that

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

the proposed collection action was proper as a matter of law. We agree and

accordingly will grant the motion.

                                     Background

      The following facts are based on the parties’ pleadings and respondent’s

motion, including the attached declaration and exhibits. Petitioners separated

sometime before August 2015. Mr. Bullock resided in Maryland and Mrs. Bullock

resided in the District of Columbia when they filed their petition.

      Petitioners filed joint Federal income tax returns for 2012 and 2013 but did

not pay the tax shown as due. The IRS subsequently assessed the tax for both

years plus additions to tax under sections 6651(a)(2) and 6654(a). Petitioners’

total outstanding tax liabilities for 2012 and 2013 exceed $44,000.

      On November 24, 2014, in an effort to collect these unpaid liabilities, the

IRS sent petitioners a Final Notice of Intent to Levy and Notice of your Right to a

Hearing. On December 22, 2014, respondent received from petitioners a Form

12153, Request for a Collection Due Process or Equivalent Hearing. In their re-

quest they checked the boxes marked “Installment Agreement,” “Offer in Compro-
                                        -3-

[*3] mise,” and “I Cannot Pay Balance.” They attached to their request a

statement indicating (among other things) that they intended to seek abatement of

the additions to tax.

      After receiving petitioners’ case, a settlement officer (SO) from the IRS

Appeals Office reviewed their administrative file and confirmed that the tax liabil-

ities in question had been properly assessed and that all other requirements of

applicable law and administrative procedure had been met.2 On February 10,

2015, the SO sent petitioners a letter scheduling a telephone CDP hearing for

March 18, 2015. The SO informed petitioners that, in order for him to consider

collection alternatives, they had to provide him before the hearing: (1) completed

Forms 433-A, Collection Information Statement for Wage Earners and Self-Em-

ployed Individuals; (2) proof of estimated tax payments for 2014; and (3) a state-

ment explaining any “reasonable cause” defense they might have against the addi-

tions to tax. The SO requested that petitioners send him these documents by Feb-

ruary 24, 2015.


      2
        Section 6751(b)(1) provides that “[n]o penalty under this title shall be
assessed unless the initial determination of such assessment” receives supervisory
approval. This provision does not apply to “any addition to tax under section
6651, 6654, or 6655.” Sec. 6751(b)(2)(A). Accordingly, the SO was not required
to verify that the additions to tax assessed against petitioners under sections
6651(a)(2) and 6654(a) had been approved by a supervisor.
                                       -4-

[*4] Petitioners supplied none of the requested documents by that date. On

March 18, 2015, the SO attempted to contact petitioners’ representative to conduct

the scheduled CDP hearing, but the representative was unavailable. On March 23,

2015, the SO sent petitioners a letter allowing them 14 days to submit the request-

ed documentation. After receiving this letter each petitioner submitted a separate

Form 433-A to the SO.

       On his Form 433-A Mr. Bullock reported monthly income of $9,603 and

monthly expenses of $11,863. The SO determined that Mr. Bullock had under-

reported his monthly income and that his monthly expenses exceeded the appli-

cable local standards by more than $3,000 per month. The SO determined that Mr.

Bullock’s actual monthly income was $10,418 and that his allowable monthly ex-

penses were $8,052. He accordingly calculated that Mr. Bullock could make

monthly payments of $2,366 toward his tax liabilities.

       On her Form 433-A Mrs. Bullock reported monthly income of $12,602 and

monthly expenses of $11,107. The SO determined that her allowable monthly ex-

penses, under the applicable local standards, were $9,708. He accordingly calcu-

lated that Mrs. Bullock could make monthly payments of $2,894 toward her tax

liabilities.
                                        -5-

[*5] On August 12, 2015, the SO contacted petitioner’s representative, who in-

quired about a six-year installment agreement. See Internal Revenue Manual

(IRM) pt. 5.14.1.4.1 (Sept. 19, 2014). The SO proposed a six-year installment

agreement with monthly payments of $4,315 to be divided between petitioners.

(This was $945 less than the sum of the monthly payments, or $5,260, that he had

determined petitioners could make separately.) The $4,315 monthly payments

under the SO’s proposed agreement would have covered petitioners’ outstanding

tax liabilities for 2007-2013.

      On August 21, 2015, petitioners informed the SO that they would not accept

this offer. He allowed them another 12 days to submit a counteroffer, but they

chose not to do so. The SO accordingly closed the case and, on September 2,

2015, issued a notice of determination sustaining the proposed levy.

      Petitioners timely petitioned this Court. On January 19, 2017, respondent

filed a motion for summary judgment, to which we directed petitioners to respond.

Our order informed them that, if they disagreed with any facts stated in the IRS

motion, they should point out those specific factual issues. We also informed pe-

titioners that failure to respond to our order would be grounds for granting re-

spondent’s motion and entering judgment against them. Petitioners did not re-
                                        -6-

[*6] spond to this Court’s order and have not otherwise responded to the IRS

motion for summary judgment.

                                     Discussion

I.    Summary Judgment Standard

      The purpose of summary judgment is to expedite litigation and avoid costly,

time-consuming, and unnecessary 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). In deciding whether to grant summary

judgment, we construe factual materials and inferences drawn from them in the

light most favorable to the nonmoving party. Ibid. However, the nonmoving

party may not rest upon mere allegations or denials of his pleadings but instead

must set forth specific facts showing that there is a genuine dispute for trial. Rule

121(d); see Sundstrand Corp., 98 T.C. at 520.

      Because petitioners did not respond to the motion for summary judgment,

we could enter decision against them for that reason alone. See Rule 121(d). We

will nevertheless consider the motion on its merits. We conclude that no material

facts are in dispute and that this case is appropriate for summary adjudication.
                                        -7-

[*7] II.     Standard of Review

       Section 6330(d)(1) does not prescribe the standard of review that this Court

should apply in reviewing an IRS administrative determination in a CDP case.

Where (as here) there is no challenge to the amounts of the taxpayers’ underlying

liabilities for the years in question,3 we review the IRS determination for abuse of

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

cretion occurs 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).

III.   Analysis

       In deciding whether the SO abused his discretion in sustaining the proposed

levy, we consider whether he: (1) properly verified that the requirements of appli-

cable law or administrative procedure have been met; (2) considered any relevant


       3
        In their request for a CDP hearing petitioners indicated that they intended
to seek abatement of the additions to tax on the ground of “reasonable cause.”
However, they did not submit to the SO any evidence of reasonable cause despite
his request that they do so. Nor did they challenge the additions to tax in their pe-
tition to this Court. They are thus precluded from challenging the additions to tax
here. See Rule 331(b)(4) (“Any issue not raised in the assignments of error shall
be deemed to be conceded.”); 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.
                                          -8-

[*8] issues petitioners raised; and (3) considered “whether any proposed collection

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

concern of * * * [petitioners] that any collection action be no more than intrusive

that necessary.” See sec. 6330(c)(3). We find that the SO properly verified that

all requirements of applicable law and administrative procedure were followed.4

      Taxpayers may raise at a CDP hearing relevant issues relating to the collec-

tion action and are entitled to make offers of collection alternatives. See sec.

6330(c)(2) and (3). In their hearing request petitioners indicated their intention to

seek a collection alternative in the form of an installment agreement.5

      Section 6159 authorizes the Commissioner to enter into an installment

agreement if he determines that it will facilitate full or partial collection of a tax-

payer’s unpaid liability. See Thompson v. Commissioner, 140 T.C. 173, 179

(2013). Subject to exceptions not relevant here, the decision to accept or reject an


      4
        Petitioners assert that the assessments for 2012 and 2013 were incorrect.
But these assessments were based on the tax that petitioners had reported on their
2012 and 2013 returns. The SO states in his case activity record that he “verified
through transcript analysis that there is a valid assessment” for each year. Peti-
tioners have alleged no facts suggesting that either assessment was improper, and
we find no basis in the record for any such contention.
      5
       According to petitioners’ account transcripts for 2012 and 2013, they
entered into installment agreements with the IRS in early 2014. These agreements
were withdrawn later that year, apparently because of petitioners’ failure to make
the agreed-upon payments.
                                        -9-

[*9] installment agreement lies within the Commissioner’s discretion. See sec.

301.6159-1(a), (c)(1)(i), Proced. & Admin. Regs.; see also Rebuck v. Commis-

sioner, T.C. Memo. 2016-3; Kuretski v. Commissioner, T.C. Memo. 2012-262,

aff’d, 755 F.3d 929 (D.C. Cir. 2014).

      Petitioners supplied Forms 433-A with attached financial documentation.

After determining their allowable expenses under applicable local standards, the

SO determined that Mr. and Mrs. Bullock could make monthly payments of

$2,366 and $2,894, respectively, toward their tax liabilities. Petitioners do not

contend that they are entitled to a deviation from the IRS local standards.

      At petitioners’ request the SO calculated what their required payments

would be under a six-year installment agreement. See IRM pt. 5.14.1.4.1 (“When

a taxpayer is unable to full pay immediately and does not qualify for a streamlined

installment agreement, the taxpayer may still qualify for the six-year rule.”). The

SO determined that the required monthly payment would be $4,315 split between

them; this was $945 less than the sum of the monthly payments that he determined

they could make separately. Petitioners rejected this offer, but they did not explain

the grounds for their rejection. Nor did they make a counteroffer, even though the

SO invited them to do so and gave them 12 days to submit one.
                                        - 10 -

[*10] In their petition, petitioners assert that payments as high as $4,315 per

month would cause them economic hardship. Economic hardship is defined as the

inability to “meet reasonable basic living expenses.” IRM pt. 5.8.11.2.1(2) (Aug.

5, 2015). Petitioners advanced no claim of “economic hardship” to the SO. Nor

did they allege in their petition any facts suggesting that they would be unable to

meet basic living expenses under the SO’s proposal. We decline to impose on

settlement officers an obligation to evaluate arguments that taxpayers have not

made. See, e.g., Allen v. Commissioner, T.C. Memo. 2017-64, at *12.6

      In reviewing the SO’s decision respecting an installment agreement, we will

not substitute our judgment for his, recalculate the taxpayer’s ability to pay, or in-

dependently determine what would be an acceptable offer. See Thompson, 140

T.C. at 179; Lipson v. Commissioner, T.C. Memo. 2012-252. And an SO is not

required to negotiate with a taxpayer indefinitely. See, e.g., Kreit Mechanical

Assocs., Inc. v. Commissioner, 137 T.C. 123, 134 (2011). Petitioners had ample

opportunity to submit a counteroffer for the SO’s consideration but declined to do


      6
       Petitioners allege that Mrs. Bullock filed for chapter 7 bankruptcy in Oc-
tober 2011, but they have submitted no documentation suggesting that any bank-
ruptcy case remains pending. Without an automatic stay in place under 11 U.S.C.
sec. 362(a) (2012), respondent may pursue collection action against Mrs. Bullock.
In any event, any automatic stay would not affect collection action with respect to
her 2012 and 2013 tax years, which postdate her alleged bankruptcy filing.
                                         - 11 -

[*11] so. The SO did not abuse his discretion by closing the case when petitioners

failed to submit a counteroffer by his deadline and ceased further communications

with him. See Gentile v. Commissioner, T.C. Memo. 2013-175, 106 T.C.M.

(CCH) 75 (finding no abuse of discretion where taxpayer failed to submit a Form

656).7

         In sum, we find that the SO in upholding the levy properly balanced the

need for efficient collection of taxes with petitioners’ legitimate concern that the

collection action be no more intrusive than necessary. Petitioners rejected the

SO’s proposed installment agreement without offering an alternative, and the SO

acted reasonably in closing the case. Finding no abuse of discretion in this or any

other respect we will grant summary judgment for respondent and sustain the

proposed levy.




         7
        An Appeals officer likewise does not abuse his discretion in declining to
enter into an installment agreement where the taxpayers are unwilling or unable to
comply with their ongoing estimated tax obligations. See Giamelli v. Commis-
sioner, 129 T.C. 107, 111-112 (2007); Boulware v. Commissioner, T.C. Memo.
2014-80, 107 T.C.M. (CCH) 1419, 1424, aff’d, 816 F.3d 133 (D.C. Cir. 2016).
Petitioners do not dispute that they were not in compliance with their estimated tax
obligations for 2014.
                                  - 12 -

[*12] To reflect the foregoing,


                                           An appropriate order and decision

                                  will be entered.
