                  T.C. Memo. 2004-20



                UNITED STATES TAX COURT



              SCOTT ROMAN, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 8931-03L.          Filed January 28, 2004.


     P filed a petition for judicial review pursuant to
sec. 6330, I.R.C., in response to a determination by R
that levy action is appropriate.

     Held: Because there was no abuse of discretion by
R in rejecting P’s offer in compromise, R’s
determination to proceed with collection action is
sustained.

Kirk T. Karaszkiewicz, for petitioner.

Jack T. Anagnostis, for respondent.
                                - 2 -

                         MEMORANDUM OPINION


     WHERRY, Judge:    This case is before the Court on

respondent’s motion for summary judgment pursuant to Rule 121.1

The instant proceeding arises from a petition for judicial review

filed in response to a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330.      The issue

for decision is whether respondent may proceed with collection of

tax liabilities for the years 1994 and 1996 as so determined.

                             Background

     Petitioner filed Federal income tax returns for 1994 and

1996 showing balances due and did not fully pay the reported

liabilities.   Respondent subsequently assessed the unpaid amounts

and on March 20, 2002, issued to petitioner a Final Notice -

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

with regard to the 1994 and 1996 taxable years.   The notice

reflected a total amount due of $50,725.97, including taxes,

penalties, and interest.   In response to the notice, petitioner’s

representative, Kirk T. Karaszkiewicz (Mr. Karaszkiewicz), timely

submitted to respondent a Form 12153, Request for a Collection

Due Process Hearing.   The Form 12153 contained the following

explanation of petitioner’s disagreement with the notice of levy:



     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code of 1986, as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
                               - 3 -

“I filed an Offer in Compromise for the tax liabilities in

question on March 15, 2002.”

     By a letter dated August 30, 2002, Settlement Officer

Ronald J. Kroll (Mr. Kroll) advised petitioner that he had

received petitioner’s case for Appeals consideration and would

write or call to schedule a conference.   Mr. Karaszkiewicz

responded by a letter dated September 24, 2002, requesting that

Mr. Kroll contact him to arrange a mutually convenient

conference.

     Mr. Kroll investigated concerning the reference to an offer

in compromise made in petitioner’s Form 12153.   He found that

while an earlier offer in compromise, apparently submitted in

about December of 2000, had been returned to petitioner in

December of 2001, Internal Revenue Service records did not

reflect a March 15, 2002, offer.   When Mr. Kroll advised

Mr. Karaszkiewicz by telephone on October 2, 2002, of what he had

learned, Mr. Karaszkiewicz said that the earlier offer had been

returned because additional documentation requested had not been

timely submitted.   Mr. Karaszkiewicz also indicated that he would

send a copy of the subsequent March 15, 2002, Form 656, Offer in

Compromise, and Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals.

     On November 22, 2002, having not received the promised

copies of Forms 656 and 433-A, Mr. Kroll sent to
                               - 4 -

Mr. Karaszkiewicz a letter referencing the copies and stating, in

pertinent part:

     I have not received these documents. The offer was the
     only collection alternative proposed in your appeal.

     Please be advised that I am offering one final
     opportunity for you to provide the information for
     consideration as an alternative means of collection.
     You have 15 days from the date of this letter to file
     an offer in compromise or send me a written proposal on
     how you plan to resolve these liabilities. Enclosed
     are Forms 656 and 433-A.

     If the documents are not received within 15 days, I
     will issue a determination letter based on current
     information. No further extensions or exceptions will
     be considered.

On November 26, 2002, Mr. Karaszkiewicz sent to Mr. Kroll copies

of the requested documents.

     The offer in compromise proposed to pay a total of $15,000

by remitting $5,000 within 90 days of acceptance and the balance

in 10 monthly installments of $1,000.   In conjunction with his

review of the offer, Mr. Kroll both contacted Mr. Karaszkiewicz

by telephone with questions regarding the materials provided and

subsequently sent a letter dated January 21, 2003,2 requesting

additional information necessary for consideration of the offer.

The letter also advised:   “Please see that I receive the

requested information no later than February 18, 2003.   Failure

to submit the information may result in the recommendation that


     2
       We note that Mr. Kroll’s case activity record in one
instance, specifically the entry for March 10, 2003, apparently
refers to this letter erroneously as the “1/31/03 letter”.
                                - 5 -

your client’s offer be rejected without further consideration.”

On February 18, 2003, Mr. Karaszkiewicz hand-delivered documents

to Mr. Kroll in response to the January 21, 2003, letter.

     In his examination of the hand-delivered documents,

Mr. Kroll found that several of the requested items had not been

provided.    He further became privy to new facts indicating that

additional collection information statements would be required in

order to complete consideration of the offer.    Specifically, the

documents revealed that petitioner owned yet another corporation

and had recently married, necessitating collection information

with respect to the company and to petitioner’s spouse.

Mr. Kroll advised Mr. Karaszkiewicz of these developments by

telephone on March 10, 2003, and Mr. Karaszkiewicz said he would

try to provide the requested materials by March 25, 2003.

     On March 26, 2003, Mr. Karaszkiewicz sent to Mr. Kroll a

brief fax stating as follows:    “Mr. Kroll, please excuse the

delay in providing the additional documentation which we

discussed.   This delay has been caused exclusively by my trial

commitments.   I have not been able to review the documents with

Mr. Roman.   I assure you that we will quickly provide them.”

When, 6 weeks later, the requested information had not been

submitted, Mr. Kroll determined that the proposed collection

alternative could not be accepted and that collection by levy

should proceed.   The corresponding Notice of Determination
                                - 6 -

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

was issued to petitioner on May 14, 2003.

     The notice summarized respondent’s determination:    “You

proposed an offer in compromise in the amount of $15,000 as your

collection alternative.    We must reject your offer because you

failed to submit the additional information requested which was

needed to make a determination regarding the acceptance of your

offer.    Levy action is, therefore, appropriate.”   An attachment

to the notice provided further details and indicated that, beyond

the proposed collection alternative, “No other issues were

raised” by the taxpayer.

     Petitioner’s petition challenging this notice of

determination was filed with the Tax Court on June 11, 2003, and

reflected an address in Marlton, New Jersey.    Petitioner contends

in the petition that he did not receive a fair hearing as

required by section 6330, and that respondent erred in rejecting

petitioner’s offer in compromise, due to respondent’s decision

that “‘Six weeks of silence’ amounts to a ‘failure to submit the

requested documents’”.    Respondent prepared and filed an answer

to the petition and subsequently filed the subject motion for

summary judgment.    Petitioner filed a response to respondent’s

motion.
                                  - 7 -

                               Discussion

I.   General Rules

      A.   Summary Judgment

      Rule 121(a) allows a party to move “for a summary

adjudication in the moving party’s favor upon all or any part of

the legal issues in controversy.”     Rule 121(b) directs that a

decision on such a motion shall be rendered “if the pleadings,

answers to interrogatories, depositions, admissions, and any

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

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.”

      The moving party bears the burden of demonstrating that no

genuine issue of material fact exists and that he or she is

entitled to judgment as a matter of law.       Sundstrand Corp. v.

Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th

Cir. 1994).    Facts are viewed in the light most favorable to the

nonmoving party.     Id.   However, where a motion for summary

judgment has been properly made and supported by the moving

party, the opposing party may not rest upon mere allegations or

denials contained in that party’s pleadings but must by

affidavits or otherwise set forth specific facts showing that

there is a genuine issue for trial.       Rule 121(d).   The Court has

considered the pleadings and other materials in the record and
                                - 8 -

concludes that there is no genuine justiciable issue of material

fact in this case.

     B.    Collection Actions

     Section 6331(a) authorizes the Commissioner to levy upon all

property and rights to property (except property exempt under

section 6334) of a taxpayer where there exists a failure to pay

any tax liability within 10 days after notice and demand for

payment.    Sections 6331(d) and 6330 then set forth procedures

generally applicable to afford protections for taxpayers in such

levy situations.    Section 6331(d) establishes the requirement

that a person be provided with at least 30 days’ prior written

notice of the Commissioner’s intent to levy before collection may

proceed.    Section 6331(d) also indicates that this notification

should include a statement of available administrative appeals.

Section 6330(a) expands in several respects upon the premise of

section 6331(d), forbidding collection by levy until the taxpayer

has received notice of the opportunity for administrative review

of the matter in the form of a hearing before the Internal

Revenue Service Office of Appeals.      Section 6330(b) grants a

taxpayer who so requests the right to a fair hearing before an

impartial Appeals officer.

     Section 6330(c) addresses the matters to be considered at

the hearing:

          SEC. 6330(c). Matters Considered at Hearing.--In
     the case of any hearing conducted under this section--
                                 - 9 -

               (1) Requirement of investigation.--The
          appeals officer shall at the hearing obtain
          verification from the Secretary that the
          requirements of any applicable law or
          administrative procedure have been met.

                  (2) Issues at hearing.--

                       (A) In general.--The person may raise at
                  the hearing any relevant issue relating to
                  the unpaid tax or the proposed levy,
                  including--

                            (i) appropriate spousal defenses;

                            (ii) challenges to the
                       appropriateness of collection actions;
                       and

                            (iii) offers of collection
                       alternatives, which may include the
                       posting of a bond, the substitution of
                       other assets, an installment agreement,
                       or an offer-in-compromise.

                       (B) Underlying liability.--The person
                  may also raise at the hearing challenges to
                  the existence or amount of the underlying tax
                  liability for any tax period if the person
                  did not receive any statutory notice of
                  deficiency for such tax liability or did not
                  otherwise have an opportunity to dispute such
                  tax liability.

     Once the Appeals officer has issued a determination

regarding the disputed collection action, section 6330(d) allows

the taxpayer to seek judicial review in the Tax Court or a

District Court.    In considering whether taxpayers are entitled to

any relief from the Commissioner’s determination, this Court has

established the following standard of review:

     where the validity of the underlying tax liability is
     properly at issue, the Court will review the matter on
                                 - 10 -

     a de novo basis. However, where the validity of the
     underlying tax liability is not properly at issue, the
     Court will review the Commissioner’s administrative
     determination for abuse of discretion. [Sego v.
     Commissioner, 114 T.C. 604, 610 (2000).]

     C.   Offers in Compromise

     Section 7122(a), as pertinent here, authorizes the Secretary

of the Treasury to compromise any civil case arising under the

internal revenue laws.     Regulations promulgated under section

7122 set forth three grounds for compromise of a 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.3    With respect to the third-listed ground,

a compromise may be entered to promote effective tax

administration where:     (1)(a) Collection of the full liability

would cause economic hardship; or (b) exceptional circumstances

exist such that collection of the full liability would undermine



     3
       Sec. 301.7122-1, Proced. & Admin. Regs., contains an
effective date provision stating that the section applies to
offers in compromise pending on or submitted on or after July 18,
2002. Sec. 301.7122-1(k), Proced. & Admin. Regs. Previous
temporary regulations by their terms apply to offers in
compromise submitted on or after July 21, 1999, through July 19,
2002. Sec. 301.7122-1T(j), Temporary Proced. & Admin. Regs., 64
Fed. Reg. 39027 (July 21, 1999). Because the final and temporary
regulations do not differ materially in substance in any way
relevant here, we need not resolve which section would apply in
petitioner’s circumstances. We further note that temporary
regulations are entitled to the same weight and binding effect as
final regulations. Peterson Marital Trust v. Commissioner, 102
T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d Cir. 1996). For
simplicity and convenience, citations will be to the final
regulations.
                              - 11 -

public confidence that the tax laws are being administered in a

fair and equitable manner; and (2) compromise will not undermine

compliance by taxpayers with the tax laws.   Sec. 301.7122-

1(b)(3), Proced. & Admin. Regs.

II.   Analysis

      Nothing in the record indicates that petitioner has at any

time throughout the administrative or judicial proceedings

attempted to challenge his underlying tax liability.

Accordingly, we review respondent’s determination to proceed with

collection for abuse of discretion.    Action constitutes an abuse

of discretion under this standard where arbitrary, capricious, or

without sound basis in fact or law.    Woodral v. Commissioner, 112

T.C. 19, 23 (1999).

      In arguing that rejection of his offer was an abuse of

discretion and deprived him of a fair hearing, petitioner focuses

on the “deadline” allegedly set by Mr. Kroll.   In his response to

respondent’s motion, petitioner makes what he characterizes as an

“equitable argument” and contends as follows:

      Settlement Officer Kroll should not have unilaterally
      decided on a “deadline” for submission of documents,
      and then not communicated the “deadline” to
      Petitioner’s counsel. The administrative record
      reveals that the Settlement Officer made repeated
      requests for additional information, all of which
      except the last were responded to. Additionally,
      Petitioner, through his counsel, responded to each
      request, and also responded when there was a delay in
      providing the documents responsive to the last request.
      * * *
                              - 12 -

Petitioner further alleges that the effect of the “deadline” was

a failure by Mr. Kroll to take into consideration both the issues

raised by the taxpayer and the balancing of efficient collection

and taxpayer intrusion.

     The difficulty with this argument is that, while petitioner

may have preferred more time to provide the materials requested,

respondent’s conduct in these circumstances can hardly be

characterized as arbitrary, capricious, or without sound basis in

fact or law.   The record reflects that throughout the

administrative process petitioner was given multiple and repeated

opportunities to submit sufficient information to support his

offer in compromise.   Petitioner’s counsel should also have been

well aware of the consequences of failure to provide requested

materials.   An earlier offer had been returned for this reason,

and Mr. Kroll’s November 22, 2002, and January 21, 2003, letters

clearly advised Mr. Karaszkiewicz that a failure to supply the

additional information requested would lead to rejection of

petitioner’s subsequent offer and issuance of a determination

letter without further consideration.

     Concerning particularly the final “deadline” of which

petitioner complains, respondent issued the notice of

determination on May 14, 2003.   This date is more than 2 months

after Mr. Kroll’s final request for information on March 10,

2003.   It is also 6 weeks after the March 25, 2003, date by which
                              - 13 -

Mr. Karaszkiewicz initially stated he would try to supply the

materials and the March 26, 2003, date on which Mr. Karaszkiewicz

said the information would be “quickly” provided.   Moreover, we

note that it is more than 2 years after petitioner’s initial

submission of an offer in compromise.   In these circumstances,

and especially in light of the absence of any further

communication from petitioner to alter the implications of the

“quickly” language, waiting for 6 weeks falls within the bounds

of reasonableness.

     Section 6330 entitles taxpayers to “a hearing”.    No

statutory or regulatory provision requires that taxpayers be

afforded an unlimited opportunity to supplement the

administrative record.   Nor are petitioner’s contentions

regarding lack of warning well taken where the record in this

case is replete with explicit deadlines that respondent

generously extended for petitioner’s benefit.   The statute only

requires that a taxpayer be given a reasonable chance to be heard

prior to the issuance of a notice of determination.    The

consideration of petitioner’s case thus did not fail to comply

with the terms for a fair hearing set forth in section 6330.

     Consequently, we conclude that there was no abuse of

discretion in respondent’s decision to reject petitioner’s offer

in compromise.   In absence of the requested information,

respondent was unable reasonably to determine that petitioner’s
                              - 14 -

circumstances satisfied the conditions necessary for compromise

of a tax liability.   Evaluation of potentially pertinent grounds

for compromise, such as doubt as to collectibility or a showing

of economic hardship, would require complete financial data.      The

record is equally bereft of any indication of exceptional

circumstances suggesting that collection here could undermine

public confidence in tax administration.    Hence, the Court holds

that respondent’s determination to proceed with collection of

petitioner’s tax liabilities was not an abuse of discretion.      See

e.g., Van Vlaenderen v. Commissioner, T.C. Memo. 2003-346;

Neugebauer v. Commissioner, T.C. Memo. 2003-276.

We shall grant respondent’s motion.

     To reflect the foregoing,


                                           An appropriate order

                                      granting respondent’s motion

                                      for summary judgment and

                                      decision for respondent will

                                      be entered.
