                         T.C. Summary Opinion 2014-69



                         UNITED STATES TAX COURT



               JAMES WILLIAM HARRISON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 9288-13S L.                       Filed July 14, 2014.



      James William Harrison, pro se.

      Jeremy D. Cameron, for respondent.



                              SUMMARY OPINION


      GUY, Special Trial Judge: This case was heard pursuant to the provisions

of section 7463 in effect when the petition was filed.1 Pursuant to section 7463(b),



      1
        Unless otherwise indicated, all section references are to the Internal
Revenue Code, as amended, in effect at all relevant times, and all Rule references
are to the Tax Court Rules of Practice and Procedure. All monetary amounts are
rounded to the nearest dollar.
                                         -2-

the decision to be entered is not reviewable by any other court, and this opinion

shall not be treated as precedent for any other case.

      This collection review case is before the Court on respondent’s motion for

summary judgment, filed pursuant to Rule 121. Respondent’s motion was called

for hearing in Atlanta, Georgia, on April 1, 2014. Petitioner appeared at the

hearing and represented himself.

      Summary judgment serves to “expedite litigation and avoid unnecessary and

expensive trials.” Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).

Either party may move for summary judgment upon all or any part of the legal

issues in controversy. Rule 121(a). The Court will grant summary judgment only

“if the pleadings, answers to interrogatories, depositions, admissions, and any

other acceptable materials, together with the affidavits or declarations, if any,

show that there is no genuine dispute as to any material fact and that a decision

may be rendered as a matter of law.” Rule 121(a) and (b). Respondent, as the

moving party, bears the burden of showing that summary adjudication is

warranted. See FPL Grp., Inc. v. Commissioner, 115 T.C. 554, 559 (2000).

      Respondent’s motion for summary judgment is well founded in the light of

the averments therein, the pleadings, a declaration executed by Appeals Account

Resolution Specialist Nancy C. Lee (AARS Lee), and the administrative record.
                                        -3-

We conclude that there is no genuine dispute as to a material fact and that

respondent is entitled to judgment as a matter of law sustaining the notice of

determination upon which this case is based.

                                     Background2

      Petitioner and his wife (Harrisons) filed a timely joint Federal income tax

return for 2009. In May 2011 the Harrisons submitted to the Internal Revenue

Service (IRS) a Form 1045, Application for Tentative Refund, claiming tax

refunds for 2008 and 2009 in connection with the carryback of net operating

losses from the taxable year 2010.

      About the same time, the IRS examined the Harrisons’ 2009 return and, on

July 18, 2011, mailed them a notice of deficiency determining an income tax

deficiency of $4,239. The deficiency was attributable in relevant part to

distributions that petitioner received from retirement accounts during 2009 but

omitted from income on the couple’s tax return.

      Petitioner concedes (and the record reflects) that he received the notice of

deficiency shortly after it was mailed. On July 28, 2011, petitioner’s accountant

wrote to the IRS Taxpayer Advocate Service and requested expedited processing


      2
       The following facts are not in dispute and are drawn from the pleadings and
other documents constituting the record in this case.
                                        -4-

of the Form 1045 described above. The Harrisons did not file a petition for

redetermination with the Court challenging the notice of deficiency.

      On November 14, 2011, after the time for filing a timely petition for

redetermination with the Court had expired, see sec. 6213(a), the IRS assessed the

income tax determined in the notice of deficiency, a late-payment addition to tax

under section 6651(a)(2), and related statutory interest and sent a notice and

demand for payment to the Harrisons. When the Harrisons failed to remit

payment, the IRS mailed to them a Final Notice of Intent to Levy and Notice of

Your Right to a Hearing, for 2009.

      The Harrisons subsequently filed with respondent a timely Form 12153,

Request for a Collection Due Process or Equivalent Hearing, stating that they

could not pay the balance due and that they intended to offer a collection

alternative. The Form 12153 included a vague reference to Forms 1040X,

Amended U.S. Individual Income Tax Return, for the years 2008 through 2011

and a lawsuit pending in the U.S. District Court for the Northern District of

Georgia.3

      3
        A refund suit that petitioner filed for 2008 was dismissed for lack of
subject matter jurisdiction. See Harrison v. United States, No. 2:10-CV-0209
(RWS), 2011 WL 233648 (N.D. Ga. Jan. 4, 2011). A second refund suit that
petitioner filed for 2008, 2009, and 2010 was dismissed because of his failure to
                                                                        (continued...)
                                       -5-

      On November 6, 2012, AARS Lee mailed to the Harrisons a letter informing

them that she had scheduled a telephone conference for December 4, 2012, and

inviting them to submit to the Office of Appeals (Appeals Office) an offer-in-

compromise (OIC) and a Form 433-A, Collection Information Statement for Wage

Earners and Self-Employed Individuals. On November 19, 2012, petitioner wrote

to AARS Lee and stated that no hearing would be necessary because the Harrisons

owed no income tax for 2009 and, in fact, they were due a refund for that year as a

result of substantial losses that they incurred from 2007 through 2012.

      AARS Lee subsequently learned that the Harrisons had submitted to the IRS

the Form 1045 mentioned above. On March 26, 2013, AARS Lee held a

telephone conference with petitioner and informed him that he would not be

permitted to challenge his underlying tax liability for 2009 during the Appeals

Office administrative hearing because the IRS had issued a notice of deficiency to

him for that year and he did not contest it. Petitioner informed AARS Lee that he

was not able to make installment payments and provided information to her at that

time about his current income and expenses. Following this discussion, AARS




      3
       (...continued)
properly serve the complaint. Harrison v. United States, No. 2:11-CV-0231
(RWS) (N.D. Ga. Aug. 31, 2012).
                                           -6-

Lee concluded that the Harrisons’ account for 2009 should be placed in currently

not collectible status.

      On April 1, 2013, the Appeals Office mailed to the Harrisons a notice of

determination stating that the IRS would suspend the proposed levy and place

their account for 2009 in currently not collectible status. Petitioner filed a timely

petition with the Court asserting that the IRS failed to process an amended return

that he had submitted for 2009.4 At the time the petition was filed, petitioner

resided in Georgia.

      Petitioner testified at the hearing of this matter. He explained that he and

his wife were the owners of Asia Spices, LLC (doing business as A Little Asia

Restaurant), which had incurred losses that would offset all of the income that they

received during 2009. The administrative record includes copies of Forms 1040X

for Asia Spices, LLC, for the taxable years 2008 through 2012, and for the

Harrisons for the taxable years 2006 through 2008.

                                        Discussion

      Section 6331(a) authorizes the Secretary to levy upon property and property

rights of a taxpayer liable for taxes who fails to pay those taxes within 10 days

after a notice and demand for payment is made. Section 6331(d) provides that the

      4
          Mrs. Harrison did not sign the petition and is not a party to this action.
                                         -7-

levy authorized in section 6331(a) may be made with respect to unpaid tax only if

the Secretary has given written notice to the taxpayer 30 days before the levy.

Section 6330(a) requires that the written notice include the amount of the unpaid

tax and the taxpayer’s right to an administrative hearing.

      If the taxpayer requests an administrative hearing, the hearing is to be

conducted by the Appeals Office. Sec. 6330(b)(1). In rendering an administrative

determination in a collection review proceeding under section 6330, the Appeals

Office must verify that the requirements of any applicable law and administrative

procedure have been met in processing the taxpayer’s case. Sec. 6330(c)(1),

(3)(A). The Appeals Office also must consider any issues raised by the taxpayer

relating to the collection action, including offers of collection alternatives (such as

an OIC), appropriate spousal defenses, and challenges to the appropriateness of

the collection action. Sec. 6330(c)(2)(A), (3)(B). A taxpayer may challenge the

existence or amount of his or her underlying tax liability if the taxpayer did not

receive a notice of deficiency or did not otherwise have an earlier opportunity to

dispute such tax liability. Sec. 6330(c)(2)(B). Finally, the Appeals Office must

consider whether the collection action balances the need for efficient collection

against the taxpayer’s concern that collection be no more intrusive than necessary.

Sec. 6330(c)(3)(C).
                                         -8-

        Section 6330(d)(1) grants this Court jurisdiction to review the

administrative determination made by the Appeals Office. If the taxpayer’s

underlying tax liability is properly in dispute, the Court will review the

determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).

Where the underlying tax liability is not at issue, we review the determination for

abuse of discretion. Id. at 182; see also Sego v. Commissioner, 114 T.C. 604, 610

(2000). An abuse of discretion occurs if the Appeals Office exercises its

discretion “arbitrarily, capriciously, or without sound basis in fact or law.”

Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

        Although petitioner initially asserted in his response opposing respondent’s

motion for summary judgment that he did not receive the notice of deficiency

dated July 18, 2011, he subsequently conceded that he received the notice shortly

after it was mailed. The Harrisons did not take advantage of the opportunity to file

a petition for redetermination with the Court; instead their accountant requested

that the IRS expedite the processing of a claim for tentative refunds for 2008 and

2009.

        Petitioner asserts that the IRS should not be permitted to proceed with

collection without first processing the Form 1045 or the amended tax return that

he submitted for 2009. Petitioner’s argument amounts to a back door challenge to
                                        -9-

the existence or amount of his underlying tax liability for 2009 within the meaning

of section 6330(c)(2)(B). However, as discussed above, petitioner admits that he

received the notice of deficiency for 2009 but decided not to file a petition for

redetermination with the Court. Consistent with section 6330(c)(2)(B), the

Appeals Office correctly determined that petitioner is not permitted to challenge

the existence or amount of his underlying tax liability for 2009 in this action. See

Sego v. Commissioner, 114 T.C. at 611.

      Even assuming for the sake of argument that we could consider petitioner’s

complaint that the IRS failed to process his Form 1045 and related amended

returns, we would not overturn the Appeals Office determination in this case. In

short, petitioner’s submission of Form 1045 to the IRS claiming a tentative refund

for 2009 did not preclude respondent from issuing a notice of deficiency to him for

that year. See Zarnow v. Commissioner, 48 T.C. 213, 215 (1967) (failure to act on

a Form 1045 within the 90-day period prescribed in section 6411(b) does not

prevent the Commissioner from determining a deficiency for that year). Likewise,

the Commissioner is vested with the discretion whether to accept and process an

amended return. See, e.g., Cantrell v. Commissioner, T.C. Memo. 2012-257 (and

cases cited therein). Despite having submitted a Form 1045 to the IRS, the

Harrisons were obliged to file a petition for redetermination with the Court if they
                                        - 10 -

disagreed with the notice of deficiency in any respect. When they failed to do that,

the IRS properly assessed the tax deficiency determined in the notice of

deficiency, and the Appeals Office was under no obligation pursuant to the

provisions of section 6330 to process the amended return or otherwise review the

amount of petitioner’s underlying liability. On this record, we can find no abuse

of discretion in respect of the disposition of petitioner’s amended return.

      Consequently, we review the administrative determination in this case for

abuse of discretion. We do not substitute our judgment for that of the Appeals

Office. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469 F.3d

27 (1st Cir. 2006). Instead, we consider whether, in the course of making its

determination, the Appeals Office (1) verified that the requirements of applicable

law and administrative procedures have been met, (2) considered any relevant

issue raised by the taxpayer that relates to the unpaid tax or the proposed levy, and

(3) determined whether any proposed collection action balances the need for the

efficient collection of taxes with the legitimate concern of the person that any

collection action be no more intrusive than necessary. Sec. 6330(c)(1)-(3).

      Petitioner has failed to advance any argument or introduce any evidence that

would allow us to conclude that the determination to suspend the proposed levy

and place the Harrisons’ account for 2009 in currently not collectible status was
                                         - 11 -

arbitrary, capricious, or without sound basis in fact. Although petitioner did not

submit a written OIC or a Form 433-A and related financial information as

requested, AARS Lee accepted oral statements that he made about his income and

expenses during a telephone conference call and allowed a collection alternative

that is less intrusive than the proposed levy. We have no reason to quarrel with

the determination by the Appeals Office that the requirements of applicable law

and administrative procedure were met in this case or that placing the Harrisons’

account for 2009 in currently not collectible status appropriately balanced the need

for efficient collection of taxes with petitioner’s concerns regarding the

intrusiveness of the proposed levy action. In sum, we hold that the Appeals Office

did not abuse its discretion in this case.

      To reflect the foregoing,


                                                  An appropriate order and

                                        decision will be entered.
