                               T.C. Memo. 2018-128



                         UNITED STATES TAX COURT



                    KATHY BLETSAS, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 4485-17L.                          Filed August 14, 2018.



      Frank Agostino and Malinda A. Sederquist, for petitioner.

      James P.A. Caligure, for respondent.



                           MEMORANDUM OPINION


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

seeks review pursuant to sections 6320(c)1 and 6330(d)(1) of the determination by



      1
        All statutory references are to the Internal Revenue Code (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] the Internal Revenue Service (IRS or respondent) to uphold a notice of

Federal tax lien (NFTL) filing. The IRS initiated the collection action with respect

to trust fund recovery penalties (TFRPs) that it had assessed against petitioner for

unpaid employment taxes of Delta Mechanical Corp. (Delta). 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 motion papers,

including the attached affidavits and exhibits. Petitioner resided in New York

when she filed her petition.

      Petitioner was an officer and the sole shareholder of Delta, a New York cor-

poration that became delinquent in its employment tax obligations. After Delta

failed to file required tax returns, the IRS assessed employment taxes against it for

three calendar quarters in 2014 and 2015. The balance of these unpaid taxes

exceeded $600,000. On December 16, 2015, the IRS and Delta entered into a bus-

iness installment agreement (IA), under which Delta would make monthly pay-

ments of $7,500 until its liability was satisfied.
                                          -3-

[*3] On November 10, 2015, the IRS sent petitioner a Letter 1153, Trust Funds

Recovery Penalty Letter. This letter informed her of the IRS’ determination that

she was a person required to “collect, truthfully account for, and pay over” Delta’s

employment taxes. See sec. 6672(a). The letter proposed to assess TFRPs against

her for the calendar quarters in question, stating: “You * * * have the right to ap-

peal or protest this action. To preserve your appeal rights you need to mail us your

written appeal within 60 days from the date of this letter (75 days if this letter is

addressed to you outside the United States).” The letter included detailed instruc-

tions about how to file an appeal with the IRS Appeals Office.

      Petitioner did not file an appeal with the IRS Appeals Office or take any

other action in response to the Letter 1153. The IRS accordingly assessed TFRPs

against her for the three quarters in question. At the time of the assessment, the

aggregate amount of the TFRPs exceeded $400,000.

      The revenue officers (ROs) assigned to petitioner’s case concluded that levy

action should not be taken against her “because collection was going to be with-

held while the business is paying” though Delta’s IA. However, they concluded

that an NFTL should be filed to protect the Government’s interest. Accordingly,

on July 12, 2016, the IRS sent petitioner Letter 3172, Notice of Federal Tax Lien

Filing and Your Right to a Hearing Under IRC 6320.
                                         -4-

[*4] Petitioner timely requested a CDP hearing, advancing numerous conten-

tions. Her principal contention was that the NFTL should be withdrawn and the

TFRPs abated because Delta, pursuant to its IA, was making payments intended to

satisfy its employment tax liabilities in full. She urged that the ROs who had as-

serted the TFRPs and filed the NFTL failed to follow the procedures in the In-

ternal Revenue Manual (IRM) when taking these steps.

      The case was assigned to a settlement officer (SO) from the IRS Appeals

Office. In October 2016 the SO held a telephone CDP hearing with petitioner’s

representative. During that hearing her representative contended that collection

should not proceed against petitioner while Delta’s IA remained in effect.

      The SO replied that the IRS may properly assert a TFRP against a respon-

sible person even if the debtor company is making installment payments. The RO

assigned to Delta’s case had requested financial information from petitioner to

determine whether assertion of TFRPs against her was appropriate. Petitioner had

neglected to provide that information and had missed the RO’s deadline for sched-

uling an interview to discuss these matters. The SO concluded that the RO had

acted permissibly in asserting the TFRPs, notwithstanding Delta’s IA, because

“[i]n essence * * * [petitioner] was not fully cooperative.”
                                        -5-

[*5] The SO informed petitioner that, in order for him to consider collection al-

ternatives, petitioner had to provide a completed Form 433-A, Collection Informa-

tion Statement for Wage Earners and Self-Employed Individuals, and supporting

financial documentation. The SO instructed petitioner to submit these documents

within 14 days. After receiving no further communication from petitioner, the SO

closed the case and issued on January 30, 2017, a notice of determination sustain-

ing the NFTL filing.

      Petitioner timely petitioned this Court for review. On March 2, 2018, re-

spondent filed a motion for summary judgment, and he later supplemented that

motion. Petitioner timely responded to the motion on April 9, 2018. On May 25,

2018, respondent filed a reply addressing the application of section 6751(b)(1) to

the TFRPs in question. Respondent attached to his reply a declaration from Edwin

Renard, an IRS supervisory agent, and a Form 4183, Recommendation re: Trust

Fund Recovery Penalty Assessment. This form shows that the initial determina-

tion of the TFRPs by RO Kacic was approved in writing by Group Manager Ren-

ard, whose typed signature appears on that form.
                                         -6-

[*6]                                 Discussion

I.     Summary Judgment Standard and Standard of Review

       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). Under Rule 121(b), the Court may grant summary judgment

when there is no genuine dispute as to any material fact and a decision may be ren-

dered as a matter of law. 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 par-

ty may not rest upon the 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 find that no material facts are in

dispute and that this case may appropriately be adjudicated summarily.

       Neither section 6320(c) nor section 6330(d)(1) prescribes the standard of

review that this Court should apply in reviewing an IRS administrative determina-

tion in a CDP case. Where the taxpayer has properly challenged her underlying

tax liability for the periods in question, we review the IRS determination de novo.

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the taxpayer’s un-
                                          -7-

[*7] derlying tax liability is not properly before us, we review the IRS

determination for abuse of discretion only. Ibid. 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); see also Keller v. Commissioner, 568 F.3d 710, 716 (9th Cir. 2009), aff’g

in part T.C. Memo. 2006-166.

      A taxpayer may raise a CDP challenge to the existence or amount of her un-

derlying tax liability only if she “did not receive any statutory notice of deficiency

for such tax liability or did not otherwise have an opportunity to dispute” it. Sec.

6330(c)(2)(B). In determining whether the taxpayer had a prior opportunity to dis-

pute her liability, the regulations distinguish between liabilities that are subject to

deficiency procedures and those that are not. Where a liability is not subject to de-

ficiency procedures, “[a]n opportunity to dispute the underlying liability includes a

prior opportunity for a conference with Appeals that was offered either before or

after the assessment of the liability.” See sec. 301.6330-1(e)(3), Q&A-E2, Proced.

& Admin. Regs.

      As assessable penalties, TFRPs are not subject to deficiency procedures.

Sec. 6671(a); Shaw v. United States, 331 F.2d 493, 494-496 (9th Cir. 1964);

Moore v. Commissioner, 114 T.C. 171, 175 (2000). Notwithstanding the absence
                                          -8-

[*8] of a notice of deficiency, a taxpayer may be able to dispute her liability for

TFRPs (without paying them first) by resisting IRS collection efforts through the

CDP procedure and then seeking review in this Court. Williams v. Commissioner,

131 T.C. 54, 58 n.4 (2008); Callahan v. Commissioner, 130 T.C. 44, 48 (2008).

But this route to prepayment judicial review is available only if the taxpayer “did

not otherwise have an opportunity to dispute such tax liability.” Sec.

6330(c)(2)(B).

      “A taxpayer has the opportunity to dispute his liability for a trust fund re-

covery penalty when he receives a Letter 1153.” Thompson v. Commissioner,

T.C. Memo. 2012-87, 103 T.C.M. (CCH) 1470, 1472; see also Pough v. Commis-

sioner, 135 T.C. 344, 349 (2010). Upon receiving a Letter 1153, the taxpayer may

appeal the IRS determination of TFRP liability by submitting a protest to the IRS

Appeals Office. If a taxpayer fails to avail herself of this opportunity, she is not

entitled to advance a later challenge to her liability before the Appeals Office or

this Court. Thompson, 103 T.C.M. (CCH) at 1472.

      The IRS sent petitioner a Letter 1153 on November 10, 2015. During the

CDP hearing she did not deny that she had received this letter, and the SO verified

that it had been properly issued. The Letter 1153 informed petitioner of her appeal

rights and provided clear instructions about how to appeal. She nevertheless took
                                         -9-

[*9] no action in response to that letter. Because petitioner had, but neglected to

avail herself of, a prior opportunity to challenge her TFRP liability before the IRS

Appeals Office, she was precluded from disputing that liability at the CDP

hearing. See sec. 6330(c)(2)(B); Thompson, 103 T.C.M. (CCH) at 1472; sec.

301.6330-1(e)(3), Q&A-E2, Proced. & Admin. Regs.

        Even if petitioner could have challenged her TFRP liability at the CDP hear-

ing, she submitted no evidence to the SO on this point, and she failed to advance

such a challenge in her petition to this Court. She is thus precluded from disputing

her underlying TFRP liabilities now. Rule 331(b)(4); see Thompson v. Com-

missioner, 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.”); Woodley v.

Commissioner, T.C. Memo. 2017-242, at *8-*9; sec. 301.6330-1(f)(2), Q&A-F3,

Proced. & Admin. Regs. We thus review the SO’s actions for abuse of discretion

only.

II.     Analysis

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

collection action we consider whether he: (1) properly verified that the require-

ments of applicable law and administrative procedure had been met; (2) consid-

ered any relevant issues petitioner raised; and (3) considered whether “any pro-
                                         -10-

[*10] posed 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.” See sec. 6330(c)(3).

      Petitioner’s primary contention is that the IRS cannot collect TFRPs from

her so long as it is receiving payments from Delta for the same employment tax

liabilities. In her view, the assertion of the TFRPs while Delta’s IA was in effect

contravened IRM guidelines, and the SO’s determination to sustain the NFTL with

respect to those TFRPs was therefore improper.

      The Code imposes liability on “[a]ny person required to collect, truthfully

account for, and pay over any tax imposed by this title” who willfully fails to do

so. Sec. 6672(a). In this setting, “the employer bears principal liability under sec-

tion 3403 for the trust fund taxes that should have been withheld, and the ‘respon-

sible persons’ bear derivative liability for those same taxes under section 6672.”

Dixon v. Commissioner, 141 T.C. 173, 192 (2013). Liability under section 6672

is thus “separate and distinct from the underlying trust fund tax liability of an em-

ployer.” Hellman v. Commissioner, T.C. Memo. 2013-190, 106 T.C.M. (CCH)

138, 147.

      Where TFRPs are assessed, “numerous individuals and/or entities may be

liable for redundant penalties deriving from the same unpaid tax.” Dixon, 141
                                          -11-

[*11] T.C. at 192. But under longstanding IRS policy, unpaid trust fund taxes

“will be collected only once, whether from the business, or from one or more of its

responsible persons.” IRM pt. 1.2.14.1.3(2) (June 9, 2003); pt. 8.25.2.3(5) (Oct.

19, 2007) (“Even though the Service may make assessments against more than one

responsible person for a specific quarterly liability, it only collects the total

amount once.”). “[T]he IRS cross-references payments against the trust fund tax

liability of an employer and payments against the section 6672 penalty liability of

a responsible person,” so that all payments ultimately reduce the TFRP liability of

each responsible person. Hellman, 106 T.C.M. (CCH) at 147.

      The IRS has assessed TFRPs against petitioner, and it is receiving payments

from Delta pursuant to the IA. Section 6672 allows the IRS to seek collection si-

multaneously from the employer and from its responsible persons. See USLIFE

Title Ins. Co. of Dallas v. Harbison, 784 F.2d 1238, 1243 (5th Cir. 1986) ( “[T]he

fact that more than one person is responsible for a particular delinquency does not

relieve another responsible person of her personal liability, nor can a responsible

person avoid collection against herself on the ground that the Government should

first collect the tax from someone else.”). The record establishes that the IRS has

not yet collected enough to satisfy Delta’s outstanding tax liabilities. Until those
                                           -12-

[*12] liabilities are satisfied in full, the IRS is free to preserve its collection rights

against petitioner. See Woodley, at *13.

       Petitioner emphasizes an IRM provision stating that an RO “[i]n general

* * * [should] not request assessment of Trust Fund Recovery Penalties (TFRPs) if

business taxpayers meet the terms of installment agreements.” IRM pt.

5.14.7.4.1(6) (Mar. 11, 2011). This is a general statement of IRS policy regarding

acceptance of business IAs that cover employment taxes, and this general

statement is subject to qualification. Indeed, the IRM explicitly states that “TFRPs

must be considered on the potentially responsible persons of the business entity”

after the RO gathers certain facts. Ibid.

       The IRM instructs an RO considering a business IA to gather information

necessary “to support a possible [TFRP] assessment in the event the agreement is

defaulted.” IRM pt. 1.2.14.1.3 (June 9, 2003). Specifically, the RO is instructed

to “[a]ssemble all documentation for completion of * * * [a TFRP] to the point of

proposing assessment;” to “[c]omplete interviews for all potentially responsible

persons * * * to determine responsibility and willfulness;” and to “[c]onduct

financial analysis to determine whether the penalty, if assessed would be

collectible.” IRM pt. 5.14.7.4.1(7) (Mar. 11, 2011).
                                        -13-

[*13] As the SO noted in his case activity record, the RO had requested informa-

tion from petitioner to address these matters. The RO had set a deadline of March

12, 2015, for scheduling an interview during which these matters would be dis-

cussed. But petitioner failed to supply the required information by that date, so no

interview was ever scheduled or held. In these circumstances, the SO concluded

that the TFRPs were assessed appropriately because petitioner had failed to supply

the necessary information and “[i]n essence * * * was not fully cooperative.”

      The IRM provisions on which petitioner relies supply “procedural guidance

for initiating a business taxpayer, trust fund-related installment agreement.”

Kirkpatrick v. Commissioner, T.C. Memo. 2014-234, 108 T.C.M. (CCH) 541, 543.

Petitioner contends that these provisions should be read to create an absolute pro-

hibition against assertion of TFRPs against responsible persons, so long as the re-

lated business entity has an IA in place and is current on its obligations. But the

IRM expresses no ironclad rule directing suspension of collection; it requires

taxpayers seeking to avoid TFRPs to provide information and to attend an inter-

view, which petitioner did not do. In any event, these IRM provisions are directed

to the initial acceptance of IAs. They “do[] not address suspension of collection

after assessment with respect to an already established installment agreement.”
                                         -14-

[*14] Ibid. (rejecting an argument substantially identical to that which petitioner

advances here).

      The IRM clearly indicates that NFTLs may be filed against responsible

persons in this setting, stating that, if TFRPs are assessed, “lien determinations

should be made and, if appropriate, liens should be filed.” IRM pt. 5.14.7.4.1(8);

see id. pt. 5.14.7.4.1(11) (“If the TFRP assessment has been made, make lien de-

terminations on these accounts.”). After examining the relevant IRM provisions,

the SO concluded that the TFRPs had been asserted appropriately and that “the

filing of the NFTL was in accordance with current procedures.”

      This Court does not conduct an independent review and substitute its judg-

ment for that of the SO. See Murphy, 125 T.C. at 320. “Rather, if the settlement

officer follows all statutory and administrative guidelines and provides a reasoned,

balanced decision, the Court will not reweigh the equities.” Estes v. Commission-

er, T.C. Memo. 2014-9, 107 T.C.M. (CCH) 1053, 1055, aff’d, 577 F. App’x 205

(4th Cir. 2014). We conclude that the SO properly sustained the NFTL filing

against petitioner.2

      2
        Petitioner asserts that RO Perez, who is shown as the IRS contact person on
the Letter 3172, told her representative that an NFTL would not be filed if she met
certain conditions. There is no reference to such a communication in RO Perez’s
case activity record, which consistently recites the need to file an NFTL to protect
                                                                        (continued...)
                                         -15-

[*15] Section 6330(c)(1) and (3)(A) required the SO to verify that all applicable

legal and administrative requirements had been met. One such requirement is that

imposed by section 6751(b)(1). It provides: “No penalty under this title shall be

assessed unless the initial determination of such assessment is personally approved

(in writing) by the immediate supervisor of the individual making such determina-

tion or such higher level official as the Secretary may designate.” Respondent

contends that section 6751(b)(1) does not apply to TFRPs at all. Alternatively, he

contends that the record establishes IRS compliance with section 6751(b)(1) with

respect to the TFRPs in question here.

      In Blackburn v. Commissioner, 150 T.C. __ (Apr. 5, 2018), the IRS argued

similarly that section 6751(b) does not apply to TFRPs. We found no need to

decide that question because the record included a Form 4183 reflecting super-

visory approval of the TFRPs in question. We determined that the Form 4183 was

sufficient to enable the SO to verify that the requirements of section 6751(b)(1)

had been met with respect to the TFRPs, assuming the IRS had to meet those

requirements.




      2
       (...continued)
the Government’s interest. The SO properly made his determination on the basis
of documents in the administrative file.
                                        -16-

[*16] As in Blackburn, we need not decide whether section 6751(b)(1) applies to

TFRPs. Here, respondent submitted a Form 4183 showing that the TFRPs as-

sessed against petitioner had been approved in writing by Group Manager Renard,

the immediate supervisor of RO Kacic. We thus find there to be a sufficient

record of supervisory approval of the TFRPs in question.

      Finally, petitioner contends that the SO failed to confirm that copies of the

Letter 3172 and the notice of determination were mailed to the proper person. The

IRS mailed both notices to petitioner personally. Section 6304, captioned “Fair

Tax Collection Practices,” provides that the Secretary generally “may not com-

municate with a taxpayer in connection with the collection of any unpaid tax” if

the Secretary “knows the taxpayer is represented by any person authorized to

practice” before the IRS and “has knowledge of, or can readily ascertain, such

person’s name and address.” Sec. 6304(a)(2). In this case, petitioner’s original

representative had filed Form 2848, Power of Attorney and Declaration of Repre-

sentative, on June 22, 2016, several weeks before the IRS issued the Letter 3172

notifying petitioner of the NFTL and informing her of her right to a CDP hearing.

      This argument is unpersuasive for several reasons. Congress enacted sec-

tion 6304(a) to prevent abusive tax collection practices, e.g., communicating with

a taxpayer “at any unusual time or place” or engaging in conduct “the natural con-
                                        -17-

[*17] sequence of which is to harass, oppress, or abuse any person.” Sec.

6304(a)(1), (b). There is no authority for the proposition that section 6304(a)(2)

bars the IRS from mailing, to a taxpayer personally, notices that the Code explicit-

ly requires to be mailed to the taxpayer. See sec. 6672(b) (providing that “no

penalty shall be imposed * * * unless the Secretary notifies the taxpayer” of pro-

posed TFRP assessment); secs. 6320(a)(1), 6321 (providing that IRS must provide

notice of NFTL filing to the “person liable to pay * * * [the] tax”). The IRS

properly sent the Letter 1153 and the Letter 3172 to petitioner personally.

      Second, there is no authority for the proposition that checking compliance

with section 6304 is part of an SO’s verification responsibilities under section

6330(c)(1). Congress created a civil action by which taxpayers can recover dam-

ages from IRS officers who knowingly violate section 6304. See sec. 7433 (cross-

referenced by section 6304(c)); Hunter v. Commissioner, No 09 Civ 4268 (JSR)

GWG), 2010 WL 2605715, at *6 (S.D.N.Y. June 29, 2010). There is no

suggestion in the Code or regulations that behavior that might give rise to a cause

of action under section 7433 can serve as a basis for setting aside otherwise

permissible collection action. See Currier v. Commissioner, T.C. Memo.

2011-113, 101 T.C.M. (CCH) 1548, 1549 n.2 (rejecting for lack of jurisdiction in

a CDP case a section 7433 claim that the IRS violated section 6304 “when
                                         -18-

[*18] respondent knew that petitioner was represented by counsel but called

petitioner directly”).

      In reality, petitioner’s complaint is not that the IRS mailed the Letter 3172

and the notice of determination to her, but that it failed to send copies of these no-

tices to her representatives. But section 6304(a) does not address that topic. And

any error in failing to copy petitioner’s representatives was clearly harmless. See

Perkins v. Commissioner, 129 T.C. 58, 71 (2007) (declining to remand for supple-

mental CDP hearing where any error that occurred during original hearing was

harmless). Petitioner immediately supplied copies of these notices to her represen-

tatives; they timely requested a CDP hearing; they fully participated in that hear-

ing; and they timely petitioned this Court for review of the IRS’ notice of determi-

nation.3

      In sum, our review of the record establishes that the SO properly discharged

all of his responsibilities under section 6330(c). Petitioner did not propose any


      3
       Petitioner asserts that her “right to be informed” and her “right to privacy,”
which are among the taxpayer rights that section 7803(a)(3) generally directs the
Commissioner to protect, were violated during the CDP hearing. She did not raise
these arguments during the CDP hearing or in her petition, and we accordingly
deem them waived. See Rule 331(b)(4) (“Any issue not raised in the assignments
of error shall be deemed to be conceded.”); Triola v. Commissioner, T.C. Memo.
2014-166, 108 T.C.M. (CCH) 185, 187; Dinino v. Commissioner, T.C. Memo.
2009-284, 98 T.C.M. (CCH) 559, 565-566.
                                         -19-

[*19] collection alternative or submit any supporting financial information. We

have consistently held that it is not an abuse of discretion for an Appeals officer to

reject collection alternatives and sustain collection action where the taxpayer has

failed, after being given sufficient opportunities, to supply the required forms and

supporting financial information. See Huntress v. Commissioner, T.C. Memo.

2009-161, 98 T.C.M. (CCH) 8, 10-11; Prater v. Commissioner, T.C. Memo. 2007-

241, 94 T.C.M. (CCH) 209, 210. We will thus sustain the collection action.

      To reflect the foregoing,


                                                An appropriate order and decision

                                       will be entered for respondent.
