                               T.C. Memo. 2019-49



                         UNITED STATES TAX COURT



              GREGORY DWIGHT GOOSBY, SR., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 22731-17L.                        Filed May 9, 2019.



      Gregory Dwight Goosby, Sr., pro se.

      Martha Jane Weber and William W. Kiessling, 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

IRS issued the notice to facilitate collection of petitioner’s unpaid Federal income

tax liability for 2014. The question presented is whether the Appeals officer

abused her discretion in rejecting petitioner’s proposal of an installment agreement

offering payments of $100 per month. 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 respondent’s motion papers, including the

attached declaration and exhibits. See Rule 121(b). Petitioner resided in Tennes-

see when he filed his petition.

      For 2014 petitioner filed a delinquent Form 1040, U.S. Individual Income

Tax Return, on which he reported, but did not pay, a tax liability of $3,849 in ex-

cess of his withholdings. As of January 2017 his unpaid 2014 tax liability, includ-

ing additions to tax and interest, was $5,578. On January 18, 2017, in an effort to

collect this liability, the IRS sent him a notice of intent to levy and your right to a

hearing.
                                        -3-

[*3] Petitioner timely submitted a Form 12153, Request for a Collection Due

Process or Equivalent Hearing, in which he expressed interest in an installment

agreement (IA) calling for payments of $100 per month.2 His case was assigned to

a settlement officer (SO) from the IRS Appeals Office. On May 3, 2017, the SO

sent him a letter acknowledging receipt of his CDP request and scheduling a tele-

phone hearing for June 13, 2017. She attached a proposed IA under which peti-

tioner would discharge his Federal tax liabilities for all open years, then almost

$120,000, with monthly payments of $1,600. She based this proposal upon an

analysis of petitioner’s financial situation that an IRS compliance officer had per-

formed less than a year previously.

      Before the hearing the SO verified that all applicable legal and adminis-

trative procedures had been satisfied. She confirmed that: (1) the IRS had proper-

ly assessed the tax for 2014, (2) the IRS had mailed a notice and demand for pay-

ment to petitioner’s last known address, and (3) petitioner had an outstanding bal-

ance due when the levy notice was issued.




      2
        Petitioner also checked the box for “lien withdrawal,” but the IRS had not
filed a notice of Federal tax lien for 2014.
                                         -4-

[*4] The hearing was held as scheduled. During the hearing petitioner did not

challenge his underlying liability for 2014.3 Instead he asked that the SO recon-

sider his $100-per-month offer in light of his recent switch to a lower paying job.

The SO acknowledged that changed circumstances could alter petitioner’s ability

to pay and requested that he submit a new Form 433-A, Collection Information

Statement for Wage Earners and Self-Employed Individuals, with recent pay stubs

from his current employer.

      Petitioner submitted updated financial information shortly after the hearing,

and the SO used this information to recalculate his ability to pay. She determined

that he had gross monthly income of $5,008 and total allowable monthly expenses

of $3,638. In making the latter calculation the SO determined that petitioner had

claimed several expense items that exceeded the amounts allowable to him as a

resident (under age 65) of a one-person household in Shelby County, Tennessee.

Subtracting petitioner’s allowable expenses from his monthly income, the SO de-

termined that he had the ability to pay the IRS $1,370 per month.

      On July 10, 2017, the SO sent petitioner a proposed IA under which he

would discharge his Federal tax liabilities for all open years by paying $1,300 per

      3
       Petitioner attempted to challenge his tax liability for 2007. The SO ex-
plained that she could not address his underlying liability for that year because it
was not a subject of the levy notice.
                                         -5-

[*5] month until the liabilities were satisfied. The SO requested that he respond to

her proposal within two weeks. He received the SO’s proposal and was unwilling

to make payments that large. But instead of directing his response to the SO, he

filed a petition with this Court. Goosby v. Commissioner, T.C. Dkt. No. 17027-17

(filed August 10, 2017). The SO, having received no response from petitioner by

the deadline she had set, decided to close the case. On September 5, 2017, the IRS

issued petitioner a notice of determination stating: “Since you offered to pay

much less than your ability to pay, your installment agreement request has been

rejected and the levy sustained.”

      On September 12, 2017, respondent filed a motion to dismiss the case at

docket No. 17027-17 for lack of jurisdiction, urging that the petition was prema-

ture. On October 4, 2017, petitioner filed an objection to that motion and attached

a copy of the notice of determination he had recently received. We treated his ob-

jection as a petition seeking review of that notice, dismissed for lack of jurisdic-

tion the case at docket No. 17027-17, and filed his petition in docket No. 17027-

17 as an amendment to petition in the instant case. On February 7, 2019, respond-

ent moved for summary judgment in the instant case, and petitioner timely re-

sponded to that motion.
                                         -6-

[*6]                                  Discussion

A.     Summary Judgment

       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 judg-

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

most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520. How-

ever, 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. We conclude

that there are no material facts in dispute and that this case is appropriate for sum-

mary adjudication.

B.     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.

But our case law tells us what standard to adopt. Where (as here) the taxpayer’s
                                         -7-

[*7] underlying tax liability is not before us,4 we review the IRS’ decision for

abuse of discretion only. Goza v. Commissioner, 114 T.C. 176, 182 (2000).

Abuse of discretion exists when a determination is “arbitrary, capricious, or

without sound basis in fact or law.” Holloway v. Commissioner, T.C. Memo.

2007-175, 94 T.C.M. (CCH) 25, 28, aff’d, 322 F. App’x 421 (6th Cir. 2008).

C.    Analysis

      In determining whether the SO abused her discretion we consider whether

she: (1) properly verified that the requirements of any applicable law or admin-

istrative procedure had 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 * * * [peti-

tioner] that any collection action be no more intrusive than necessary.” See sec.

6330(c)(3). Our review of the record establishes that the SO clearly satisfied all

three requirements.




      4
        Although petitioner does not challenge his underlying liability for 2014, he
seeks to contest his liability for 2007. But he did not (and could not) raise a prop-
er challenge to that liability during the CDP hearing because it was not for a tax
period “specified on the CDP Notice.” See sec. 301.6330-1(e)(3), Q&A-E2, Pro-
ced. & Admin. Regs. He is thus precluded from challenging his 2007 liability in
this case. See Thompson v. Commissioner, 140 T.C. 173, 178 (2013).
                                           -8-

[*8] Section 6159 authorizes the Commissioner to enter into an IA if he deter-

mines that it will facilitate full or partial collection of a taxpayer’s unpaid liability.

See Thompson v. Commissioner, 140 T.C. 173, 179 (2013). Subject to an excep-

tion not relevant here, the decision to accept or reject an installment agreement lies

within the Commissioner’s discretion. See Kuretski v. Commissioner, T.C.

Memo. 2012-262, 104 T.C.M. (CCH) 295, 297 n.2, aff’d, 755 F.3d 929 (D.C. Cir.

2014); sec. 301.6159-1(a), (c)(1)(i), Proced. & Admin. Regs. Petitioner contends

that the SO abused her discretion by rejecting his proposal of an IA requiring

monthly payments of $100. We disagree.

      Petitioner contends that the SO’s proposal of an IA requiring payments as

high as $1,300 per month would not allow him to pay his “basic living expenses.”

But he identifies no error in her calculation of his allowable expenses or his gross

monthly income. He asserts that the SO took insufficient account of his difficulty

reentering the workforce after being released from prison in 2011. But the SO

took full account of his reduced earning capacity when she recalculated his ability

to pay on the basis of the paychecks he was receiving from his current employer.
                                        -9-

[*9] That recalculation showed that petitioner could pay $1,370 per month, versus

the $100 he offered.5

      Petitioner contends that the SO erred by allowing him monthly transporta-

tion expenses that were lower than his out-of-pocket costs. But out-of-pocket ex-

penditures are not controlling: A settlement officer considering an IA is instructed

to allow only “necessary expenses” as determined using national and local stand-

ards. Internal Revenue Manual (IRM) pt. 5.19.13.2.2.2(1) (June 10, 2015); see

Melasky v. Commissioner, 151 T.C. __, __ (slip op. at 30-31) (Oct. 10, 2018)

(citing Thompson, 140 T.C. at 179-180); see also sec. 7122(d)(2)(A). Ordinarily,

settlement officers are directed to allow transportation expenses equal to the lesser

      5
       Section 6343(a)(1)(D) provides that the Secretary shall release a levy if he
“determine[s] that such levy is creating an economic hardship due to the financial
condition of the taxpayer.” See sec. 301.6343-1(b)(4), Proced. & Admin. Regs.
In Vinatieri v. Commissioner, 133 T.C. 392, 401 (2009), we held that it would be
an abuse of discretion for a settlement officer to sustain a levy in circumstances
where the statute would require its immediate release on “economic hardship”
grounds. Petitioner brought to the SO’s attention his temporary absence from the
workforce due to his incarceration and his efforts to care for his wife, who had
died from cancer two years previously. But he did not demonstrate “economic
hardship due to * * * [his] financial condition.” See sec. 6343(a)(1)(D). We have
previously rejected contentions of economic hardship where (as here) the SO made
no finding of economic hardship and the taxpayer’s financial information showed
that “he could pay some monthly amount toward his outstanding liability.” Link
v. Commissioner, T.C. Memo. 2013-53, 105 T.C.M. (CCH) 1362, 1364-1365; see
also Speltz v. Commissioner, 124 T.C. 165, 179 (2005) (rejecting a taxpayer’s
attempts to “redefine ‘hardship’ * * * in a manner different from that set forth in
the regulations and * * * [IRM]”), aff’d, 454 F.3d 782 (8th Cir. 2006).
                                       - 10 -

[*10] of the local standard or the amount the taxpayer actually paid. IRM pt.

5.19.13.2.2.5 (June 10, 2015); see Lloyd v. Commissioner, T.C. Memo. 2017-60,

113 T.C.M. (CCH) 1287, 1288. An SO does not abuse her discretion by employ-

ing the local standard where (as here) the taxpayer has failed to show that the

amount allowed is inadequate to meet his basic living expenses. See Lloyd, 113

T.C.M. at 1288-1289; Doonis v. Commissioner, T.C. Memo. 2014-168, 108

T.C.M. (CCH) 193, 195; Aldridge v. Commissioner, T.C. Memo. 2009-276, 98

T.C.M. (CCH) 523, 526.6

      Even if petitioner were allowed the additional expenses that he claims, his

monthly ability to pay would still far exceed the $100 that he offered. The SO re-

jected that offer and made a counterproposal, to which petitioner never responded.

Instead, he ceased all communication with the SO. Under such circumstances, we

cannot find that she abused her discretion in closing the case and sustaining the

collection action.




      6
       Petitioner asserts that his housing and utility expenses have recently in-
creased above the amounts allowed by the SO. The SO allowed him 100% of the
housing and utility expenses that he claimed at the CDP hearing, and she did not
abuse her discretion in doing so.
                                  - 11 -

[*11] To reflect the foregoing,


                                           An appropriate order and decision

                                  will be entered for respondent.
