                        T.C. Memo. 2006-166



                      UNITED STATES TAX COURT



                  MICHAEL KELLER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7530-04L.              Filed August 14, 2006.



     Asher B. Bearman, Jaret R. Coles, Jennifer A. Gellner, Terri

A. Merriam, and Wendy S. Pearson, for petitioner.

     Gregory M. Hahn and Thomas N. Tomashek, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     HAINES, Judge:   Petitioner filed a petition with this Court

in response to a Notice of Determination Concerning Collection

Action(s) Under Section 6320 and/or 6330 for 1991, 1992, and
                               - 2 -

1993.1   Pursuant to section 6330(d), petitioner seeks review of

respondent’s determination.   The sole issue for decision is

whether respondent abused his discretion in sustaining the

proposed levy action.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The first and second stipulations of fact and the attached

exhibits are incorporated herein by this reference.2   Petitioner

resided in Escondido, California, when he filed his petition.




     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure. Amounts
are rounded to the nearest dollar.
     2
        Respondent reserved relevancy objections to 8 exhibits
attached to the first stipulation of facts and to 143 exhibits
attached to the second stipulation of facts. Fed. R. Evid. 402
provides the general rule that all relevant evidence is
admissible, while evidence which is not relevant is not
admissible. Fed. R. Evid. 401 defines relevant evidence as
“evidence having any tendency to make the existence of any fact
that is of consequence to the determination of the action more
probable or less probable than it would be without the evidence.”
While the relevancy of some exhibits and portions of petitioner’s
testimony is certainly limited, we find that the exhibits and
testimony meet the threshold definition of relevant evidence and
are admissible. The Court will give the exhibits and testimony
only such consideration as is warranted by their pertinence to
the Court’s analysis of petitioner’s case.

     Respondent also objected to many of the exhibits on the
basis of hearsay. Even if we were to receive those exhibits into
evidence, they would have no impact on our findings of fact or on
the outcome of this case.
                                 - 3 -

     Petitioner is married.     He has a bachelor of science degree

in marine transportation and management and has been employed by

Military Sealift Command since June 1982.

     Petitioner timely filed Federal income tax returns for 1991,

1992, and 1993 and reported the following:

     Year   Total Income    Total Tax    Tax Withheld   Refund Due

     1991    $81,574        $10,662        $16,746        $6,084
     1992     70,094          9,035         11,226         2,191
     1993    107,841         21,043         22,445         1,402

Respondent assessed the tax as reported and issued the refunds

petitioner claimed.

     In 1995, petitioner became a partner in Durham Genetic

Engineering 1990-2 J.V. (DGE), a partnership organized and

operated by Walter J. Hoyt III (Hoyt).

     From about 1971 through 1998, Hoyt organized, promoted, and

operated more than 100 cattle breeding partnerships (Hoyt

partnerships).   Hoyt also organized, promoted, and operated sheep

breeding partnerships.     From 1983 to his subsequent removal by

the Tax Court in 2000 through 2003, Hoyt was the tax matters

partner of each Hoyt partnership.       From approximately 1980

through 1997, Hoyt was a licensed enrolled agent, and as such, he

represented many of the Hoyt partners before the IRS.       In 1998,
                               - 4 -

Hoyt’s enrolled agent status was revoked.   Hoyt was convicted of

various criminal charges in 2001.3

     Although petitioner did not invest in DGE until 1995, he

began claiming Hoyt-related deductions on his 1994 return.

Despite receiving from DGE Schedules K-1, Partner’s Share of

Income, Credits, Deductions, Etc., for 1994 and 1995, petitioner

claimed the Hoyt-related deductions on Schedules F, Profit or

Loss From Farming.   On his 1994 and 1995 returns, petitioner




     3
        Petitioner asks the Court to take judicial notice of
certain “facts” in other Hoyt-related cases and apply judicial
estoppel to “facts respondent has asserted in previous [Hoyt-
related] litigation”. We will do neither.

     A judicially noticeable fact is one not subject to
reasonable dispute in that it is either (1) generally known
within the territorial jurisdiction of the trial court or (2)
capable of accurate and ready determination by resort to sources
whose accuracy cannot reasonably be questioned. Fed. R. Evid.
201(b). Petitioner is not asking the Court to take judicial
notice of facts that are not subject to reasonable dispute.
Instead, petitioner is asking the Court to take judicial notice
of the truth of assertions made by taxpayers and the Commissioner
in other Hoyt-related cases. Such assertions are not the proper
subject of judicial notice.

     The doctrine of judicial estoppel prevents a party from
asserting a claim in a legal proceeding that is inconsistent with
a position successfully taken by that party in a previous
proceeding. New Hampshire v. Maine, 532 U.S. 742, 749 (2001).
Among the requirements for judicial estoppel to be invoked, a
party’s current litigating position must be “clearly
inconsistent” with a prior litigating position. Id. at 750-751.
Petitioner has failed to identify any clear inconsistencies
between respondent’s current position and his position in any
previous litigation.
                               - 5 -

reported Schedule F losses of $302,818 and$107,951,respectively.4

     In December 1995, petitioner filed a Form 1045, Application

for Tentative Refund, seeking to carry back a Hoyt-related net

operating loss realized in 1994 to 1991, 1992, and 1993.     As a

result of the carryback, petitioner reported decreases in tax of

$10,662, $9,035, and $21,043, respectively.     Respondent issued

refunds in those amounts, plus interest, on February 5, 1996.

     On March 30, 1998, respondent reversed petitioner’s

tentative net operating loss carrybacks claimed on the Form 1045

and reassessed tax due of $10,662, $9,035, and $21,043 for 1991,

1992, and 1993, respectively, plus interest.5    To secure payment

of the assessed tax, a Federal tax lien was placed on

petitioner’s property on August 13, 1999.6

     On October 11, 2000, respondent sent petitioner a settlement

proposal.   Respondent offered to not impose any section 6662

penalties if petitioner:   (1) Conceded that he is not entitled to



     4
        Petitioner’s 1994 and 1995 tax years were before the
Court at docket No. 9662-01. See Keller v. Commissioner, T.C.
Memo. 2006-131.
     5
        The details of the reassessment are not in the record,
and the parties do not raise any procedural issues regarding it.
     6
        The Federal tax lien is not at issue in the present case.
Petitioner received a sec. 6330 hearing with regard to the filing
of the lien, and respondent sustained the collection action.
However, the details of the lien and the related hearing are not
in the record.
                               - 6 -

claim any of the Hoyt-related expenses claimed on his returns;

(2) agreed that the higher rate of interest applicable to tax-

motivated transactions will apply; and (3) waived any claim for

the abatement of interest.   Petitioner did not accept the

settlement offer.

     On March 10, 2003, respondent sent petitioner a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing relating

to 1991, 1992, and 1993.   On April 8, 2003, petitioner submitted

a Form 12153, Request for a Collection Due Process Hearing.

Petitioner indicated he would pursue offers-in-compromise based

on doubt as to collectibility and effective tax administration

and would provide financial information upon request.

     On January 21, 2004, a section 6330 hearing was held by

phone between Settlement Officer Kathleen Lee (Ms. Lee) and Terri

A. Merriam (Ms. Merriam), petitioner’s attorney.   Ms. Merriam

indicated that petitioner would most likely be able to pay the

tax in full, and thus he wished to pursue only an effective tax

administration offer-in-compromise.    However, Ms. Merriam did not

provide Ms. Lee with Form 656, Offer in Compromise, or with Form

433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals.

     On February 4, 2004, Ms. Merriam sent Ms. Lee a letter

indicating that petitioner had not yet completed a Form 433-A,

but one would be obtained “shortly”.   Because petitioner would
                                - 7 -

likely be able to pay his tax liability in full, Ms. Merriam

asked Ms. Lee to consider the effective tax administration offer-

in-compromise.   The letter set out in detail petitioner’s

position regarding an effective tax administration offer-in-

compromise, but a Form 656 was not enclosed.

     On March 30, 2004, respondent sent petitioner a notice of

determination sustaining the proposed collection action.

Respondent stated that “We are unable to determine whether or not

an Offer in Compromise is the appropriate resolution because you

failed to provide the financial information necessary to make a

collection determination.”

     In response to the notice of determination, petitioner filed

his petition with this Court on May 5, 2004.    Petitioner argued

that respondent erred by:    (1) Determining that petitioner did

not qualify for an effective tax administration offer-in-

compromise; and (2) failing to allow petitioner sufficient time

to provide additional information.7

     This case was initially calendared for trial beginning

January 24, 2005.   However, the parties’ joint motions for

continuance and remand were granted at calendar call.    The case

was remanded to respondent’s Appeals Office to give petitioner an


     7
        Petitioner also alleged that respondent erred by not
finding that there was doubt as to collectibility. However,
petitioner did not present information to substantiate this claim
and does not argue it on brief. We conclude that petitioner has
abandoned this argument.
                               - 8 -

opportunity to present information that he did not present in the

first section 6330 hearing.   On remand, the case was assigned to

Settlement Officer John Vander Linden (Mr. Vander Linden).

     In connection with the second section 6330 hearing,

petitioner provided respondent with Forms 433-A and 656 that

indicated that petitioner was requesting an offer-in-compromise

based only on effective tax administration.8   Petitioner offered

to compromise his outstanding tax liabilities not only for the

years subject to the proposed collection action, but also for

those arising from his 1994, 1995, and 1996 tax years.9

Petitioner offered to pay $85,344 to compromise an estimated

income tax liability of $228,000, inclusive of penalties and

interest.   The $85,344 represented petitioner’s total income tax

liability, exclusive of penalties or interest.   However,

petitioner’s offer-in-compromise did not set forth any grounds on

which an effective tax administration offer could be accepted.

     The second section 6330 hearing was held on March 14, 2005.

Because the offer-in-compromise did not include any grounds for

accepting the offer, Mr. Vander Linden considered Ms. Merriam’s


     8
        Petitioner actually completed two offers-in-compromise,
one for 1991-95 and the other for 1996. Petitioner’s arguments
are not particular to one offer or the other, and respondent
considered both together. To avoid confusion, we refer to the
offers-in-compromise as a single offer.
     9
       At the time of the second sec. 6330 hearing, the taxes,
penalties, and interest for petitioner’s 1994, 1995, and 1996 tax
years were unassessed.
                                - 9 -

February 4, 2004, letter outlining petitioner’s position.    In his

review of this case, Mr. Vander Linden considered all of the

information and arguments presented by petitioner at the hearing,

in the letter, and contained in the administrative record.

     On May 10, 2005, respondent sent petitioner a Supplemental

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 (supplemental notice of determination).

Respondent determined that:    (1) Petitioner did not qualify for

an effective tax administration offer-in-compromise; and (2) any

compromise relating to 1994, 1995, and 1996 could not be

considered because the taxes, penalties, and interest for those

years had not been assessed.   As a result, respondent sustained

the proposed collection action.

                               OPINION

     Section 7122(a) provides that “the Secretary may compromise

any civil * * * case arising under the internal revenue laws”.

Whether to accept an offer-in-compromise is left to the

Secretary’s discretion.   Fargo v. Commissioner, 447 F.3d 706, 712

(9th Cir. 2006), affg. T.C. Memo. 2004-13; sec. 301.7122-1(c)(1),

Proced. & Admin. Regs.

     The regulations set forth three grounds for the compromise

of a tax liability:   (1) Doubt as to liability; (2) doubt as to

collectibility; or (3) promotion of effective tax administration.

Sec. 301.7122-1(b), Proced. & Admin. Regs.   As pertinent here,
                              - 10 -

the Secretary may compromise a tax liability on the ground of

effective tax administration when:     (1) Exceptional circumstances

exist such that collection of the full liability would undermine

public confidence that the tax laws are being administered in a

fair and equitable manner; and (2) compromise of the liability

would not undermine compliance by taxpayers with the tax laws.10

     Petitioner proposed an effective tax administration offer-

in-compromise, arguing that exceptional circumstances exist such

that collection of the full liability would undermine public

confidence that the tax laws are being administered in a fair and

equitable manner.   Respondent rejected petitioner’s argument and

determined that “the offers in compromise under ETA provisions

are [not] appropriate given the circumstances of this case.”

     Because the underlying tax liability is not at issue, our

review under section 6330 is for abuse of discretion.    See Sego

v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,

114 T.C. 176, 182 (2000).   This standard does not ask us to

decide whether in our own opinion petitioner’s offer-in-

compromise should have been accepted, but whether respondent’s

rejection of the offer was arbitrary, capricious, or without



     10
        The regulations also provide that the Secretary may
compromise a liability on the ground of effective tax
administration when collection of the full liability will create
economic hardship. See sec. 301.7122-1(b), Proced. & Admin.
Regs. Petitioner does not argue that collection of the full
liability will create economic hardship.
                               - 11 -

sound basis in fact or law.    Woodral v. Commissioner, 112 T.C.

19, 23 (1999); Fowler v. Commissioner, T.C. Memo. 2004-163.

A.   Exceptional Circumstances

     Petitioner asserts that “There are so many unique and

equitable facts in this case that this case is an exceptional

circumstance”, and respondent abused his discretion by not

accepting those facts as grounds for an offer-in-compromise.     In

support of his assertion, petitioner argues that:   (1) The

longstanding nature of this case justifies acceptance of the

offer-in-compromise; (2) respondent’s reliance on an example in

the Internal Revenue Manual was misplaced; and (3) respondent

failed to consider petitioner’s other “equitable facts”.

     1.    Longstanding Case

     Petitioner asserts that the legislative history requires

respondent to resolve “longstanding” cases by forgiving penalties

and interest which would otherwise apply.   Petitioner argues

that, because this is a longstanding case, respondent abused his

discretion by failing to accept his offer-in-compromise.

     Petitioner’s argument is essentially the same argument

considered and rejected by the Court of Appeals for the Ninth

Circuit in Fargo v. Commissioner, supra at 711-712.   See also

Barnes v. Commissioner, T.C. Memo. 2006-150.   We reject

petitioner’s argument for the same reasons stated by the Court of

Appeals.   We add that petitioner’s counsel participated in the
                              - 12 -

appeal in Fargo v. Commissioner, supra, as counsel for the amici.

On brief, petitioner suggests that the Court of Appeals knowingly

wrote its opinion in Fargo in such a way as to distinguish that

case from the cases of counsel’s similarly situated clients

(e.g., petitioner), and to otherwise allow those clients’

liabilities for penalties and interest to be forgiven.    We do

not read the opinion of the Court of Appeals in Fargo to support

that conclusion.   See Barnes v. Commissioner, supra.

     Respondent’s rejection of petitioner’s longstanding case

argument was not arbitrary or capricious.

     2.   The Internal Revenue Manual Example

     Petitioner argues that respondent erred when he determined

that petitioner was not entitled to relief based on Example 2 in

Internal Revenue Manual section 5.8.11.2.2.   Petitioner asserts

that many of the facts in this case were not present in the

example and, therefore, any reliance on the example was

misplaced.   Petitioner’s argument is not persuasive.

     Internal Revenue Manual section 5.8.11.2.2 discusses

effective tax administration offers-in-compromise based on equity

and public policy grounds and provides the Example 2:

     In 1983, the taxpayer invested in a nationally marketed
     partnership which promised the taxpayer tax benefits
     far exceeding the amount of the investment.
     Immediately upon investing, the taxpayer claimed
     investment tax credits that significantly reduced or
     eliminated the tax liabilities for the years 1981
     through 1983. In 1984, the IRS opened an audit of the
     partnership under the provisions of the Tax Equity and
                              - 13 -

     Fiscal Responsibility Act of 1982 (TEFRA). After
     issuance of the Final Partnership Administrative
     Adjustment (FPAA), but prior to any proceedings in Tax
     Court, the IRS made a global settlement offer in which
     it offered to concede a substantial portion of the
     interest and penalties that could be expected to be
     assessed if the IRS’s determinations were upheld by the
     court. The taxpayer rejected the settlement offer.
     After several years of litigation, the partnership
     level proceeding eventually ended in Tax Court
     decisions upholding the vast majority of the
     deficiencies asserted in the FPAA on the grounds that
     the partnership’s activities lacked economic substance.
     The taxpayer has now offered to compromise all the
     penalties and interest on terms more favorable than
     those contained in the prior settlement offer, arguing
     that TEFRA is unfair and that the liabilities accrued
     in large part due to the actions of the Tax Matters
     Partner (TMP) during the audit and litigation. Neither
     the operation of the TEFRA rules nor the TMP’s actions
     on behalf of the taxpayer provide grounds to compromise
     under the equity provision of paragraph (b)(4)(i)(B) of
     this section. Compromise on those grounds would
     undermine the purpose of both the penalty and interest
     provisions at issue and the consistent settlement
     principles of TEFRA. * * *

1 Administration, Internal Revenue Manual (CCH), sec.

5.8.11.2.2(3), at 16,378.

     In the supplemental notice of determination, respondent

states:

     We have also considered the provision of the Internal
     Revenue Manual (IRM) Section 5.8.11.2.2, Example 2.
     This example involves circumstances similar to the
     circumstances presented in the taxpayer’s case. From
     this example, it is clear the government does not
     consider on [sic] offers like this to acceptable [sic]
     under ETA considerations.

We agree with respondent that the example presents similar

circumstances to those in petitioner’s case.   The similarities

include:   Petitioner’s outstanding tax liability is related to
                              - 14 -

his investment in DGE, a TEFRA partnership; respondent proposed a

settlement offer in 2000 in which respondent offered to forgo

penalties; petitioner rejected the settlement offer; petitioner

now proposes a compromise on terms more beneficial than those in

the settlement offer; and petitioner argues that the penalties

and interest have accumulated as a result of the length of the

case.

     Petitioner is correct in asserting that all of the facts in

his case are not present in the example.   However, it is

unreasonable to expect that facts in an example be identical to

facts of a particular case before the example can be relied upon.

The Internal Revenue Manual example was only one of many factors

respondent considered.   Given the similarities to petitioner’s

case, respondent’s reliance on that example was not arbitrary or

capricious.

     3.   Petitioner’s Other “Equitable Facts”

     Petitioner argues that respondent abused his discretion by

failing to consider the other “equitable facts” of this case.

Petitioner’s “equitable facts” include reference to:   (1)

Petitioner’s reliance on Bales v. Commissioner, T.C. Memo. 1989-

568;11 (2) petitioner’s reliance on Hoyt’s enrolled agent status;


     11
        Bales v. Commissioner, T.C. Memo. 1989-568, involved
deficiencies determined against various investors in several Hoyt
partnerships. This Court found in favor of the investors on
several issues, stating that “the transaction in issue should be
                                                   (continued...)
                                - 15 -

(3) Hoyt’s criminal conviction; (4) Hoyt’s fraud on petitioner;

and (5) other letters and cases.     The basic thrust of

petitioner’s argument is that he was defrauded by Hoyt and that,

if he is held responsible for penalties and interest incurred as

a result of his investment in a tax shelter, it would be

inequitable and against public policy.     Petitioner’s argument is

not persuasive.

     While the regulations do not set forth a specific standard

for evaluating an offer-in-compromise based on claims of public

policy or equity, the regulations contain two examples.     See sec.

301.7122-1(c)(3)(iv), Examples (1) and (2), Proced. & Admin.

Regs.     The first example describes a taxpayer who is seriously

ill and unable to file income tax returns for several years.       The

second example describes a taxpayer who received erroneous advice

from the Commissioner as to the tax effect of the taxpayer’s

actions.     Neither example bears any resemblance to this case.

Unlike the exceptional circumstances exemplified in the

regulations, petitioner’s situation is neither unique nor


     11
      (...continued)
respected for Federal income tax purposes.” Taxpayers in many
Hoyt-related cases have used Bales as the basis for a reasonable
cause defense to accuracy-related penalties. This argument has
been uniformly rejected by this Court and by the Courts of
Appeals for the Sixth and Tenth Circuits. See, e.g., Mortensen
v. Commissioner, 440 F.3d 375, 390-391 (6th Cir. 2006), affg.
T.C. Memo. 2004-279; Van Scoten v. Commissioner, 439 F.3d 1243,
1254-1256 (10th Cir. 2006), affg. T.C. Memo. 2004-275; Sanders v.
Commissioner, T.C. Memo. 2005-163; Hansen v. Commissioner, T.C.
Memo. 2004-269.
                              - 16 -

exceptional in that his situation mirrors those of numerous other

taxpayers who claimed tax shelter deductions in the 1980s and

1990s.   See Barnes v. Commissioner, T.C. Memo. 2006-150.

     Of course, the examples in the regulations are not meant to

be exhaustive, and petitioner has a more sympathetic case than

the taxpayers in Fargo v. Commissioner, 447 F.3d at 714, for whom

the Court of Appeals for the Ninth Circuit noted that “no

evidence was presented to suggest that Taxpayers were the subject

of fraud or deception”.   Such considerations, however, have not

kept this Court from finding investors in the Hoyt tax shelters

to be liable for penalties and interest, nor have they prevented

the Courts of Appeals for the Sixth and Tenth Circuits from

affirming our decisions to that effect.   See Mortensen v.

Commissioner, 440 F.3d 375 (6th Cir. 2006), affg. T.C. Memo.

2004-279; Van Scoten v. Commissioner, 439 F.3d 1243 (10th Cir.

2006), affg. T.C. Memo. 2004-275.

     Mr. Vander Linden testified that he considered all of Ms.

Merriam’s and petitioner’s assertions, but that the “equitable

facts” did not affect his final determination.   Mr. Vander Linden

also testified that he considered Ms. Merriam’s February 4, 2004

letter, in which Ms. Merriam addresses petitioner’s “equitable

facts” at length.   Additionally, Mr. Vander Linden read and

considered many of the cases cited in that letter.   Likewise, the
                              - 17 -

supplemental notice of determination reflects consideration of

the arguments raised in the letter.

     The mere fact that petitioner’s “equitable facts” did not

persuade respondent to accept petitioner’s offer-in-compromise

does not mean that those assertions were not considered.   The

supplemental notice of determination and Mr. Vander Linden’s

testimony demonstrate respondent’s clear understanding and

careful consideration of the facts and circumstances of

petitioner’s case.   We find that respondent’s determination that

the “equitable facts” did not justify acceptance of petitioner’s

offer-in-compromise was not arbitrary or capricious, and thus was

not an abuse of discretion.

B.   Compromise of Penalties and Interest in an Effective Tax
     Administration Offer-in-Compromise

     Petitioner advances a number of arguments focusing on his

assertion that respondent determined that penalties and interest

could not be compromised in an effective tax administration

offer-in-compromise.   Petitioner argues that such a determination

is contrary to legislative history and is therefore an abuse of

discretion.   These arguments are not persuasive.

     The regulations under section 7122 provide that “If the

Secretary determines that there are grounds for compromise under

this section, the Secretary may, at the Secretary’s discretion,

compromise any civil * * * liability arising under the internal

revenue laws”.   Sec. 301.7122-1(a)(1), Proced. & Admin. Regs.   In
                              - 18 -

other words, the Secretary may compromise a taxpayer’s tax

liability if he determines that grounds for a compromise exist.

If the Secretary determines that grounds do not exist, the amount

offered (or the way in which the offer is calculated) need not be

considered.

     Petitioner’s arguments regarding the compromise of penalties

and interest do not relate to whether there are grounds for a

compromise.   Instead, these arguments go to whether the amount

petitioner offered to compromise his tax liability was

acceptable.   As addressed above, respondent’s determination that

the facts and circumstances of petitioner’s case did not warrant

acceptance of his offer-in-compromise was not arbitrary or

capricious and was thus not an abuse of discretion.   Because no

grounds for compromise exist, we need not address whether

respondent can or should compromise penalties and interest in an

effective tax administration offer-in-compromise.

C.   Petitioner’s Other Arguments

     1.   Information Sufficient for the Court To Review
          Respondent’s Determination

     Petitioner argues that respondent failed to provide the

Court with sufficient information “so that this Court can conduct

a thorough, probing, and in-depth review of respondent’s

determinations.”   Petitioner’s argument is without merit.

     Generally, a taxpayer bears the burden of proving the

Commissioner’s determinations incorrect.   Rule 142(a)(1); Welch
                               - 19 -

v. Helvering, 290 U.S. 111, 115 (1933).12    The burden was on

petitioner to show that respondent abused his discretion.     The

burden was not on respondent to provide enough information to

show that he did not abuse his discretion.    Nevertheless, we find

that we had more than sufficient information to review

respondent’s determination.

     2.     Unassessed Years

     Petitioner argues that respondent abused his discretion by

failing to consider his offer-in-compromise as it relates to

petitioner’s unassessed tax years, 1994, 1995, and 1996.

Respondent has proposed collection action for only 1991, 1992,

and 1993.    The ultimate issue in this case is whether respondent

may proceed with the proposed collection action.    Whether

respondent can or should compromise petitioner’s tax liability

for years outside of those for which collection action has been

proposed is not relevant to our determination.    Petitioner’s

argument is without merit.




     12
        While sec. 7491 shifts the burden of proof and/or the
burden of production to the Commissioner in certain
circumstances, this section is not applicable in this case
because respondent’s examination of petitioner’s returns did not
commence after July 22, 1998. See Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3001(c), 112 Stat. 727.
                              - 20 -

     3.   Efficient Collection Versus Intrusiveness

     Petitioner argues that respondent failed to balance the need

for efficient collection of taxes with the legitimate concern

that the collection action be no more intrusive than necessary.

See sec. 6330(c)(3)(C).   Petitioner’s argument is not supported

by the record.

     Petitioner has an outstanding tax liability.     In his second

section 6330 hearing, petitioner proposed only an effective tax

administration offer-in-compromise.     In the notice, respondent

states:   “the only other alternative is to pay his accounts by

means of an installment agreement.     Through his authorized

representative he has indicated he does not want to consider this

alternative at this time.”   Respondent concludes:

     Since we are unable to resolve his accounts by mutually
     agreeable collection alternatives, the only alternative
     is to sustain the levy action proposed to collect his
     accounts. This action balances the need for efficient
     collection of taxes with the legitimate concern of the
     taxpayer that the collection action be no more
     intrusive than necessary.

     The supplemental notice of determination indicates that

respondent sought to collect petitioner’s outstanding tax

liability through less intrusive means (an installment

agreement), but petitioner rejected it.     Because no other

collection alternatives were proposed, there were not less

intrusive means for respondent to consider.     We find that
                             - 21 -

respondent balanced the need for efficient collection of taxes

with petitioner’s legitimate concern that collection be no more

intrusive than necessary.

D.   Conclusion

     Petitioner has not shown that respondent’s determination was

arbitrary or capricious, or without sound basis in fact or law.

For all of the above reasons, we hold that respondent’s

determination was not an abuse of discretion, and respondent may

proceed with the proposed collection action.

     In reaching our holdings herein, we have considered all

arguments made, and, to the extent not mentioned above, we find

them to be moot, irrelevant, or without merit.

     To reflect the foregoing,


                                               Decision will be

                                        entered for respondent.
