                              T.C. Memo. 2017-232



                        UNITED STATES TAX COURT



             JOAQUIN V. LEON-GUERRERO, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 19937-16L.                       Filed November 22, 2017.



      Joaquin V. Leon-Guerrero, pro se.

      Brenn C. Bouwhuis, for respondent.



                          MEMORANDUM OPINION


      GERBER, Judge: Pursuant to Rule 1211 respondent, in a motion filed

September 20, 2017, moved for summary judgment, and petitioner, in a response



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

[*2] filed October 16, 2017, asked the Court to deny respondent’s motion and to

grant him a trial.

                                     Background

      This case began by respondent’s January 14, 2016, issuance of a notice of

intent to levy on petitioner’s assets with respect to his outstanding trust fund

recovery penalties for the taxable quarters ending December 2012, March 2013,

and June 2013. Petitioner timely requested a hearing, but did not seek any

collection alternatives in his request. Attached to petitioner’s request were

numerous documents in support of his contention that failure to make payment

was not his fault and that he should not be liable for the trust fund penalties. He

did not, however, question the amounts of the employment taxes and resulting

penalties or the fact that they had been assessed against his company and him,

respectively.

      In his dealings with respondent’s settlement officer, petitioner wished to

question the underlying liabilities and show that it was the U.S. Government’s

fault that they were not paid. The settlement officer would not permit petitioner to

question the underlying liabilities because petitioner had previously been given an

opportunity to do so with an Internal Revenue Service Appeals officer in an

administrative proceeding that preceded the collection action. The settlement
                                        -3-

[*3] officer also suggested possible collection alternatives and asked petitioner to

provide information. Petitioner did not provide anything further, and there was no

further communication. Thereafter respondent issued a notice of determination

sustaining the proposed levy.

      The argument petitioner sought to make to the settlement officer concerned

his association with a Government contractor named Able Industries of the Pacific

(AIP) which performed services for the U.S. Department of Defense (Defense

Department). Services had been performed for the Defense Department and AIP

was owed money; but for reasons not explained in petitioner’s materials, the U.S.

Department of Labor instructed the Defense Department to withhold payment

from petitioner. This resulted in AIP’s inability to pay $59,000 to respondent for

outstanding taxes.

      AIP was also under the supervision of United States bankruptcy trustees

after filing for a reorganization and then a liquidating bankruptcy in bankruptcy

court. Petitioner contends that there were sufficient assets and/or cash to pay the

taxes when the trustees took control but that the assets and/or cash were used to

satisfy unsecured creditors instead of the Internal Revenue Service. Petitioner also

suggested that there were numerous other actions or inactions by bankruptcy
                                         -4-

[*4] trustees or Government agencies (but not the Internal Revenue Service) that

caused the outstanding tax liabilities and resulting penalties to not be paid.

      The bottom line of petitioner’s argument is that respondent should not be

granted summary judgment so that petitioner can have his day in court to show

that it was the Government and not AIP’s or petitioner’s fault that the tax

liabilities and/or penalties were not paid and, accordingly, remain outstanding.

                                     Discussion

      Summary judgment may be granted when there is no genuine dispute of

material fact and a decision may be rendered as a matter of law. Rule 121(b);

Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965

(7th Cir. 1994). The opposing party cannot rest upon mere allegations or denials

in his pleadings but must “set forth specific facts showing that there is a genuine

dispute for trial.” Rule 121(d). The moving party bears the burden of proving that

there is no genuine dispute of material fact, and factual inferences will be read in a

manner most favorable to the party opposing summary judgment. Dahlstrom v.

Commissioner, 85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340,

344 (1982).

      There is no dispute in this case about what transpired, including that the tax

liabilities and penalties are currently outstanding against petitioner. Accordingly,
                                         -5-

[*5] this matter is ripe for summary judgment. A taxpayer may challenge the

existence or amount of the underlying tax liability in a collection proceeding if

there was no prior opportunity, such as the receipt of a statutory notice of

deficiency, section 6330(c)(2)(B), or as here, a prior conference with the Internal

Revenue Service Office of Appeals, even though the taxpayer does not have a

right of judicial review of the Appeals determination. Lewis v. Commissioner,

128 T.C. 48, 61 (2007). If a taxpayer is legally barred from raising the validity of

the liability in the administrative proceeding, he is likewise precluded from

seeking review in the subsequent judicial proceeding. Goza v. Commissioner, 114

T.C. 176, 180-182 (2000).

      Even if petitioner were afforded an opportunity to present his evidence and

arguments concerning the underlying liabilities and penalties in this judicial

proceeding, his arguments focus on the reasons they were not paid and not on

whether they should have been assessed. The question presented by respondent’s

notice of intent to levy on petitioner’s property is not whether he can afford to pay

or would have paid but for extraneous circumstances but whether petitioner has

valid outstanding liabilities that subject his assets to collection. In other words,

petitioner does not seek to show that the liabilities are not valid or that payments

to respondent were misapplied.
                                        -6-

[*6] We review the Internal Revenue Service Office of Appeals’ determination

to proceed with collection on an abuse of discretion standard. Goza v.

Commissioner, 114 T.C. at 182. Petitioner bears the burden of showing an abuse

of discretion. See Carter v. Commissioner, T.C. Memo. 2007-25, aff’d in part,

rev’d in part sub nom. Keller v. Commissioner, 568 F.3d 710 (9th Cir. 2009).

      Respondent has shown that all procedural steps were taken by the settlement

officer and, even though petitioner did not request collection alternatives, the

settlement officer discussed various collection alternatives with him. Under these

circumstances, we hold that the settlement officer was not arbitrary or capricious

and the determination to proceed with collection was not an abuse of discretion.

       Accordingly, respondent’s motion for summary judgment will be granted.

      To reflect the foregoing,


                                                    An appropriate order and

                                              decision will be entered for

                                              respondent.
