                               T.C. Memo. 2012-253



                         UNITED STATES TAX COURT



                 SPECIALTY STAFF, INC., Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket Nos. 5216-11L, 5218-11L.              Filed September 4, 2012.



      Terrie A. Hellman (an officer), for petitioner.

      Diane L. Worland, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      RUWE, Judge: This proceeding was commenced in response to two Notices

of Determination Concerning Collection Action(s) Under Section 63201


      1
       All section references are to the Internal Revenue Code, and all Rule
references are to the Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
                                          -2-

[*2] and/or 6330. The case at docket No. 5216-11L arises from a petition filed in

response to a notice of determination sent to petitioner sustaining the proposed levy

with respect to its unpaid employment tax liability of $74,190.87 for the period

ending June 30, 2010. The case at docket No. 5218-11L arises from a petition filed

in response to a notice of determination sent to petitioner sustaining the filing of the

notice of Federal tax lien (NFTL) for its unpaid employment tax liabilities of

$148,827.56 and $64,502.11 for the periods ending March 31, 2009 and 2010,

respectively, and its unpaid unemployment tax liability of $7,925.37 for the period

ending December 31, 2009. The cases were consolidated for trial, briefing, and

opinion.

      The issue for decision is whether the settlement officer abused her discretion

in rejecting petitioner’s requests to withdraw the lien and the proposed levy.

                                FINDINGS OF FACT

      At the time the petitions were filed, petitioner had an Indiana mailing address.

Petitioner’s address was subsequently changed to a Nevada address.

      On August 26, 2010, respondent sent petitioner a Letter 3172, Notice of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320, advising

petitioner that an NFTL had been filed with respect to its unpaid employment and
                                          -3-

[*3] unemployment tax liabilities for the periods at issue and that petitioner could

request a hearing with respondent’s Office of Appeals. Petitioner timely submitted

a Form 12153, Request for a Collection Due Process or Equivalent Hearing, in

which it did not contest the underlying liabilities but instead requested that

respondent withdraw or discharge the NFTL.

      On October 12, 2010, respondent sent petitioner a Letter 1058, Final Notice

of Intent to Levy and Notice of Your Right to a Hearing, advising petitioner that

respondent intended to levy to collect its unpaid employment tax liability for the

period ending June 30, 2010, and that petitioner could request a hearing with

respondent’s Office of Appeals.2 Petitioner timely submitted a Form 12153 in

which it did not contest the underlying liability but instead requested that respondent

refrain from making the proposed levy.

      During the collection due process (CDP) hearings for the lien and the

proposed levy, the settlement officer advised petitioner’s president, Terrie Hellman,

that petitioner did not qualify for a discharge of the lien or withdrawal of the lien

and levy because it was not in compliance with deposit requirements and


      2
        Respondent also filed an NFTL and levied against petitioner for its unpaid
employment tax liability for the period ending September 30, 2010. Specialty Staff,
Inc. v. Commissioner, T.C. Memo. 2012-52, 2012 Tax Ct. Memo LEXIS 52, at *1-
*2.
                                         -4-

[*4] continued to accrue tax liabilities for each quarter. The settlement officer

reviewed respondent’s records and verified that for every quarter commencing with

the fourth quarter of 2007 through the fourth quarter of 2010, petitioner had not

made timely and adequate deposits of employment tax for the wages it reported as

paid on its Forms 941, Employer’s Quarterly Federal Tax Return. Additionally, the

settlement officer verified that petitioner had not made timely and adequate deposits

of unemployment tax it reported on its Forms 940, Employer’s Annual Federal

Unemployment (FUTA) Tax Return, for the periods ending December 31, 2008,

2009, and 2010.

      On February 1, 2011, respondent issued petitioner a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 6330, sustaining the

proposed levy action. On February 1, 2011, respondent also issued a Notice of

Determination Concerning Collection Action(s) Under Section 6320 and/or 6330

sustaining the filing of the NFTL. Petitioner timely filed petitions with this Court.

                                      OPINION

      Section 6331(a) provides that if any person liable to pay any tax neglects or

refuses to pay such tax within 10 days after notice and demand for payment, then

the Secretary is authorized to collect such tax by levy upon the person’s property.
                                          -5-

[*5] Section 6331(d) provides that, at least 30 days before enforcing collection by

way of a levy on the person’s property, the Secretary is obliged to provide the

person with a final notice of intent to levy, including notice of the administrative

appeals available to the person.

      Section 6321 provides that, if any person liable to pay any tax neglects or

refuses to do so after demand, the amount shall be a lien in favor of the United

States upon all property and rights to property, whether real or personal, belonging

to such person. Section 6323 authorizes the Commissioner to file an NFTL.

Pursuant to section 6320(a) the Commissioner must provide the taxpayer with notice

of and an opportunity for an administrative review of the propriety of the NFTL

filing. See Katz v. Commissioner, 115 T.C. 329, 333 (2000).

      If a taxpayer requests a CDP hearing in response to an NFTL or a notice of

intent to levy, it may raise at that hearing any relevant issue relating to the unpaid

tax, proposed levy, or lien. Secs. 6330(c)(2), 6320(c). Relevant issues include

challenges to the appropriateness of collection actions. Sec. 6330(c)(2)(A)(ii).

      If a taxpayer’s underlying liability is properly at issue, the Court reviews

any determination regarding the underlying liability de novo. Goza v.

Commissioner, 114 T.C. 176, 181-182 (2000). Petitioner has the burden of proof

regarding its underlying liabilities. See Rule 142(a). A taxpayer is precluded
                                          -6-

[*6] from disputing the underlying liability if it was not properly raised in the CDP

hearing. See Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). Petitioner did

not raise its underlying tax liabilities in its requests for a CDP hearing. Petitioner

made no specific allegations or arguments regarding the correctness of the

underlying tax liabilities. Consequently, petitioner’s underlying tax liabilities are not

properly before the Court.

      The Court reviews administrative determinations by the Commissioner’s

Office of Appeals regarding nonliability issues for abuse of discretion. Hoyle v.

Commissioner, 131 T.C. 197, 200 (2008); Goza v. Commissioner, 114 T.C. at 182.

The determination of the Office of Appeals must take into consideration: (1) the

verification that the requirements of applicable law and administrative procedure

have been met; (2) issues raised by the taxpayer; and (3) whether any proposed

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

legitimate concern of the person that any collection be no more intrusive than

necessary. Secs. 6330(c)(3), 6320(c); see Lunsford v. Commissioner, 117 T.C.

183, 184 (2001). The settlement officer properly based her determinations on the

factors required by section 6330(c)(3).

      Petitioner contends that respondent’s settlement officer abused her

discretion in denying its requests for withdrawal of the lien and the proposed levy
                                         -7-

[*7] because withdrawal would have facilitated collection of petitioner’s liabilities

by allowing petitioner access to a potential line of credit. The settlement officer

considered petitioner’s continuous failure to comply with its deposit requirements

and its continuing accrual of significant unpaid employment and unemployment tax

liabilities and determined that withdrawal of the lien or proposed levy would be

inappropriate. This Court has previously held that a taxpayer’s history of

noncompliance, as well as its failure to be in current compliance with its Federal

income tax obligations, is a valid basis for the Commissioner’s rejection of a

collection alternative.3 See Martino v. Commissioner, T.C. Memo. 2009-43, 2009

Tax Ct. Memo LEXIS 44, at *12-*13; Londono v. Commissioner, T.C. Memo.

2003-99, 2003 Tax Ct. Memo LEXIS 100, at *7. Therefore, we find that the

settlement officer did not abuse her discretion in denying petitioner’s requests for

withdrawal of the lien and the proposed levy.

      We hold that the determinations to proceed with collection were not an abuse

of the settlement officer’s discretion. We sustain respondent’s filing of the tax lien

and respondent’s intent to levy on petitioner’s property.

      3
       In Specialty Staff, Inc. v. Commissioner, T.C. Memo. 2012-52, we held that
there was not an abuse of discretion when the settlement officer declined to
withdraw a lien and a proposed levy because petitioner at that time was also not
current on its deposit requirements and continued to accrue significant unpaid
employment tax liabilities.
                                         -8-

[*8] In reaching our decision, we have considered all arguments made by the

parties, and to the extent not mentioned or addressed, they are irrelevant or without

merit.

         To reflect the foregoing,


                                                     Decisions will be entered for

                                               respondent.
