                  T.C. Memo. 2007-89



                UNITED STATES TAX COURT



ESTATE OF MELVINE B. ATKINSON, DECEASED, CHRISTOPHER J.
  MACQUARRIE, PERSONAL REPRESENTATIVE, Petitioner v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 2865-05L.            Filed April 17, 2007.



     A petition was filed on behalf of the estate for
judicial review pursuant to sec. 6330, I.R.C., in
response to a determination by R that levy action is
appropriate.

     Held: R’s determination to proceed with
collection is sustained.


Mitchell I. Horowitz, for petitioner.

Stephen R. Takeuchi, for respondent.
                               - 2 -

             MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:   This case is before the Court on a petition

for judicial review of a Notice of Determination Concerning

Collection Action(s) Under Section 6320 and/or 6330.1   The issue

for decision is whether respondent abused his discretion in

sustaining the proposed levy action for the Estate of Melvine B.

Atkinson’s (the estate) Federal estate tax liabilities.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.2


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code) of 1986, as amended.
     2
      In the stipulation of facts, the estate and respondent both
reserved relevancy objections to attached exhibits. 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 the 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 is certainly limited, the
Court finds that the exhibits meet the threshold definition of
relevant evidence and are admissible. The Court will give the
exhibits only such consideration as is warranted by their
pertinence to the Court’s analysis of the case.

     The estate also reserved objections based on Fed. R. Evid.
106, alleging that exhibits “[failed] to include communications
between the Respondent’s counsel and the Petitioner’s prior
counsel, who represented the Petitioner in protracted Tax Court
litigation (including two appeals thereof)”. The Court overrules
the estate’s objection as the evidence the estate seeks admitted
is not relevant to the instant case.

     The estate also reserved objections, based on Fed. R. Evid.
403, “to the introduction of the Petitioner’s personal affairs
                                                   (continued...)
                               - 3 -

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference.

     Melvine B. Atkinson (decedent) was a resident of Miami

Beach, Florida, when she died testate on June 7, 1993.

Christopher J. MacQuarrie (Mr. MacQuarrie) was appointed executor

of decedent’s estate.   Mr. MacQuarrie was already serving as the

trustee of decedent’s trusts, the Melvine B. Atkinson Irrevocable

Trust and the Melvine B. Atkinson Charitable Remainder Annuity

Trust (collectively, the trusts).3     At the time the petition was

filed on behalf of the estate, Mr. MacQuarrie resided in Ocala,

Florida.


     2
      (...continued)
* * * because its probative value is substantially outweighed by
the danger of unfair prejudice and confusion of the issues.” The
Court concludes that the documents in question do not create an
undue risk of prejudice or confusion of the issues and are
admissible.

     Respondent also reserved objections to certain exhibits
based “on the ground that these documents were not submitted to
the revenue officer or settlement officer and therefore are not
part of the administrative record.” The Court noted respondent’s
objection but reserved its ruling. “[E]vidence that * * * [a
taxpayer] might have presented at the section 6330 hearing (but
chose not to) is not admissible in a trial conducted pursuant to
section 6330(d)(1) because [where as here, the Appeals officer
was open to receive the evidence at or before the hearing and was
not ignoring proffered evidence] it is not relevant to the
question of whether the Appeals officer abused her discretion.”
Murphy v. Commissioner, 125 T.C. 301, 315 (2005), affd. 469 F.3d
27 (1st Cir. 2006). The estate had ample opportunities to
present evidence to respondent’s revenue and Appeals officers.
Accordingly, the Court sustains respondent’s objection.
     3
      On Aug. 9, 1991, decedent created the trusts and executed
her Last Will and Testament.
                                - 4 -

     An estate tax return was filed for decedent on September 13,

1994.    Thereafter, respondent audited the estate and determined a

deficiency.    In response, the estate timely petitioned this

Court.    The Court found that the estate was liable for a reduced

deficiency.    See Estate of Atkinson v. Commissioner, 115 T.C. 26

(2000), affd. 309 F.3d 1290 (11th Cir. 2002).    On January 24,

2002, a deficiency of $717,790 plus interest was assessed against

the estate.

     Respondent issued to the estate a Notice of Federal Tax Lien

Filing and Your Right to a Hearing Under IRC 6320 on March 10,

2004, with respect to the estate’s unpaid estate tax.    The estate

did not respond.    Respondent then issued to Mr. MacQuarrie a

summons for appearance on April 6, 2004, at respondent’s Ocala,

Florida, office.    Additionally, the summons required Mr.

MacQuarrie to bring to his summons appearance the following

documents relating to the period of June 7, 1993, to March 1,

2004:    (1) A listing of all assets of the estate; (2) copies of

statements of all bank accounts, stock accounts, or other asset

accounts owned or controlled by the estate; (3) copies of all

canceled checks for any bank accounts owned or controlled by the

estate; and (4) a listing of all distributions made from the

assets of the estate by source, date, amount, and payee.

     Mr. MacQuarrie designated his attorney, Robert S. Williams

(Mr. Williams), as his attorney-in-fact, on March 30, 2004, by
                               - 5 -

executing and delivering to respondent an Internal Revenue

Service (IRS) Form 2848, Power of Attorney and Declaration of

Representative.   Mr. Williams began correspondence with Amelia

Clark (Ms. Clark), the revenue officer appointed to handle the

estate’s unpaid tax liabilities.   On April 5, 2004, the day

before Mr. MacQuarrie was to appear in response to the summons,

Mr. Williams spoke with Ms. Clark and requested that the summons

appearance date be rescheduled to April 13, 2004.

     On April 13, 2004, Mr. MacQuarrie and Mr. Williams met with

Ms. Clark and her manager, Richard Bartholomew, at the IRS office

in Ocala, Florida, to discuss the following:   (1) The filing

status of the estate’s tax returns; (2) the current assets and

liabilities of the estate; (3) the administrative expenses of the

estate; (4) charitable distributions of approximately $340,000 to

the Mayo Clinic from the estate; and (5) some personal affairs of

Mr. MacQuarrie.   During the meeting, Ms. Clark prepared a

financial statement for the estate based on the information

provided by Mr. MacQuarrie and Mr. Williams, but Mr. MacQuarrie,

acting on advice from Mr. Williams, declined to sign the

statement.   At the end of the meeting, Ms. Clark informed Mr.

MacQaurrie and Mr. Williams that the estate’s delinquent tax

returns were to be filed within 30 days and that Mr. MacQuarrie

needed to submit a signed financial statement for the estate.
                               - 6 -

     On June 1, 2004, Ms. Clark spoke with Mr. Williams and

requested the following:   (1) Charles Schwab account information

from January 1, 1999, through June 1, 2004, for the trusts;

(2) information about the class action lawsuits in which the

estate was a class member;4 (3) information about the estate’s

real estate; (4) an original signed copy of the estate’s

financial statements, including those of the trusts; (5) a copy

of the estate’s court pleadings regarding fees; and (6) Mr.

MacQuarrie’s presence at the next meeting.   Shortly after Ms.

Clark’s and Mr. Williams’ telephone conversation, the estate

received by mail A Notice of Intent to Levy and Your Right to a

Hearing, which had been issued by respondent on May 27, 2004.     In

response, the estate timely submitted a Form 12153, Request for a

Collection Due Process Hearing, on June 20, 2004.   In an

attachment to Form 12153, Mr. Williams described the estate’s

disagreement with the levy, in pertinent part, as follows:

     The collection action in this case is premature, and
     the Internal Revenue Service should grant an extension
     of time to pay the outstanding estate taxes. The
     assets remaining in the Estate consist of cash and
     security class action lawsuits of unknown value. The
     cash remaining in the Estate is needed for
     administrative expenses to deal with the outstanding
     tax liability and the class action lawsuits.

     The class action lawsuits have no value that can be
     determined at this time, but have significant
     potential. However, the expenses of levying them could

     4
      The estate was a class member in the Citigroup, Sun Micro
Systems, TYCO, and Worldcom class action lawsuits.
                              - 7 -

     exceed the actual value of such assets. As a result,
     the Estate’s assets cannot be rightfully levied by the
     Government.
               *    *    *    *    *    *    *
     As a result of the revenue officer’s failure to suggest
     a course for working this matter out, the taxpayer has
     not had the opportunity to seek possible collection
     alternatives. Such alternatives would include a
     partial payment immediately, with some cash being used
     to pursue the class action claims. Hopefully, the
     class action cases will then bring sufficient sums to
     cover the outstanding estate taxes. Or the Estate
     could pursue an Offer in Compromise based on doubt as
     to the Estate’s ability to pay the tax liability. Or
     the taxpayer could pursue some other alternative based
     upon the good faith suggestions of the government. In
     any event, a levy is not an appropriate action to take
     under the circumstances.

On April 27, 2004, the estate submitted a Form 433-B, Collection

Information Statement for Businesses, which indicated that the

estate had $338,720.19 in investments and $162,169 in cash.

     By letter dated November 2, 2004, to Mr. Williams, a face-

to-face Appeals conference was initially scheduled for November

22, 2004, at the Appeals Office in Tampa, Florida.   On November

19, 2004, Mr. Williams spoke with James Feist (Mr. Feist), the

Appeals officer assigned to the estate’s case, and they agreed to

postpone the scheduled hearing for 2 to 3 weeks to allow the

estate additional time to prepare the delinquent tax returns.

The face-to-face hearing was rescheduled for December 17, 2004.

Mr. Williams called Mr. Feist the morning of the rescheduled

hearing to request another postponement.   Mr. Williams explained

that he had changed law firms and was experiencing difficulty in
                               - 8 -

obtaining client files from his previous firm that were needed to

complete the estate’s tax returns.5    Mr. Feist declined Mr.

William’s request for another extension and told Mr. Williams

that the hearing would be held that day, either in-person or

telephonically.

     A telephonic collection hearing was held on December 17,

2004, between Mr. Feist and Mr. Williams.    During the hearing,

Mr. Feist declined to discuss collection alternatives, explaining

to Mr. Williams that the estate was precluded from collection

alternatives due to its delinquent tax returns, and informed Mr.

Williams that he would issue a notice of determination sustaining

the levy.   Mr. Feist provided Mr. Williams with the following

suggestions:   (1) Forward the delinquent returns and old

brokerage statements to Ms. Clark; (2) estimate the remaining

administrative costs needed to close the estate (including the

collection activity); and (3) pay to respondent the money the

estate receives from the Mayo Clinic.6




     5
      Mr. Williams changed law firms from Akerman Senterfitt to
Straley Robin & Williams, both of which were located in Tampa,
Florida. Mr. Williams was experiencing difficulty in obtaining
files because of an alleged dispute between the estate and
Akerman Senterfitt over allegedly unpaid fees related to the
estate’s litigation in the Tax Court and the Court of Appeals for
the Eleventh Circuit.
     6
      The estate was to request the return of approximately
$340,000 in charitable distributions to the Mayo Clinic.
                               - 9 -

     The notice of determination in this case was issued on

January 7, 2005.   The notice of determination reflected that the

unpaid estate tax liability was $1,650,674.72, as calculated

through March 10, 2004.   An attachment to the notice of

determination stated in relevant part:

     The four basic collection alternatives to avoid
     enforced collection action are full payment,
     installment agreement, Offer in Compromise, or closing
     the account as “Currently Not Collectible” based on
     financial hardship. Outside of full payment,
     procedures for the other collection alternatives
     require that the entity file any outstanding tax
     returns and that the entity submit a full financial
     statement and verification information for analysis.
     Neither of these two requirements has been fulfilled by
     the estate.

               *     *    *    *       *   *   *

     At the point the Notice of Intent to Levy was mailed,
     the value of the estate had dwindled from a reported $7
     million in January 2000 to $338,720.19 as reported on
     the Form 433-B financial statement signed by Mr.
     MacQuarrie on April 13, 2004. No payments of any
     amount have been remitted toward the assessments of
     January 24, 2002. Without full financial disclosure
     and full compliance with outstanding returns, no
     collection alternative is available outside of full
     payment.

               *     *    *    *       *   *   *

     The class action lawsuits have not been initiated by
     the estate. Therefore there should be no
     administrative expenses necessary to monitor them. The
     only known administrative expenses accruing at this
     time are for return preparation and Collection/Appeals
     representation.

               *     *    *    *       *   *   *

     * * * The enforcement action taken by the Collection
     Division in issuing the Notice was appropriate and
                              - 10 -

     reasonable under the circumstances, and all legal and
     procedural requirements were met.


     The estate has failed to file returns, failed to
     provide full financial disclosure, failed to make
     significant voluntary payments on the amount due, and
     failed to submit a viable collection alternative. As a
     result, it has failed to show that the issuance of the
     Notice is overly intrusive or that a better collection
     alternative is available. Therefore, the issuance of
     the Notice balances the efficient collection of the
     taxes with a concern that the collection action be no
     more intrusive than necessary.

A timely petition was filed with this Court on February 4, 2005.

     A hearing was held on November 14, 2005, where pending

motions were disposed of, and the trial was started with the

filing of the stipulation of facts.7   The parties indicated that

the only witness would be Mr. Williams unless there was a

rebuttal witness called.   The estate asked to delay Mr. Williams’

testimony for up to 30 days so that another attorney could be

employed to conduct Mr. Williams’ examination.   The request was

granted, and the trial was adjourned until December 14, 2005.

Subsequently, on December 14, 2005, the trial was continued so




     7
      In the stipulation of facts, the estate reserved
evidentiary objections to the contact sheets based on Fed. R.
Evid. 404, which provides in pertinent part “Evidence of a
person’s character or trait of character is not admissible for
the purpose of proving action in conformity therewith on a
particular occasion”. The estate’s reliance on Fed. R. Evid. 404
is misplaced as respondent is not attempting to prove any act on
the part of Mr. MacQuarrie, and Mr. MacQuarrie was not called as
a witness at trial. The Court concludes that the contact sheets
are admissible.
                                - 11 -

that Mr. Williams could provide testimony regarding his contact

with respondent’s revenue and Appeals officers.8

     At trial, Mr. Williams’ uncontested testimony established

that at the time the estate received the notice of intent to

levy, the estate and respondent were still communicating,

exchanging documents and information, and working to arrange for

the payment of the estate taxes.    Specifically, Mr. Williams

stated that during his conversation with Ms. Clark on June 1,

2004, she did not inform him that the notice of intent to levy

had been issued, and instead requested information and documents,

which caused him to believe that they were still cooperating.

                                OPINION

I.   Collection Action

     A. General Rules

     Pursuant to section 6331(a), if a taxpayer liable to pay

taxes fails to do so within 10 days after notice and demand for

payment, the Secretary is authorized to collect such tax by levy

upon the taxpayer’s property.    The Secretary is obliged to

provide the taxpayer with 30 days’ advance notice of levy and to

include in the notice information regarding the administrative

appeals available to the taxpayer.       Sec. 6331(d)(2), (4).

Section 6330 elaborates on section 6331 and provides that upon a


     8
      The Court granted Mr. Williams’ oral motion to withdraw as
counsel on Dec. 14, 2005. Mitchell I. Horowitz replaced Mr.
Williams as the estate’s counsel.
                              - 12 -

timely request a taxpayer is entitled to a collection hearing

before the IRS Office of Appeals.     Sec. 6330(a)(3)(B) and (b)(1).

     At the collection hearing, the taxpayer may raise “any

relevant issue relating to the unpaid tax or the proposed levy,”

including appropriate spousal defenses, challenges to the

appropriateness of collection actions, and offers of collection

alternatives.   Sec. 6330(c)(2)(A).    The taxpayer may not contest

the validity of the underlying tax liability unless the taxpayer

did not receive a notice of deficiency for such tax liability or

did not otherwise have an opportunity to dispute the tax

liability.   Sec. 6330(c)(2)(B).   In rendering a determination,

the Appeals officer must verify that the requirements of any

applicable law and administrative procedure have been met.    Also,

the Appeals officer must consider and weigh relevant issues

relating to the unpaid tax or proposed levy, and “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)(3)(C).

     The taxpayer is entitled to appeal the determination of the

Appeals Office if made on or before October 16, 2006, to the Tax

Court or a U.S. District Court, depending on the type of tax at
                                - 13 -

issue.    Sec. 6330(d)(1).9   Where the validity of the underlying

tax liability is properly at issue, the Court will review the

matter de novo.     Sego v. Commissioner, 114 T.C. 604, 610 (2000);

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).     The Court

reviews any other administrative determination regarding the

proposed levy action for an abuse of discretion.     Sego v.

Commissioner, supra at 610; Goza v. Commissioner, supra at 182.

     B. Review for Abuse of Discretion

     The estate tax liability was previously litigated and

determined by this Court.     That decision was affirmed by the

Court of Appeals for the Eleventh Circuit.     See Estate of

Atkinson v. Commissioner, 115 T.C. 26 (2000), affd. 309 F.3d 1290

(11th Cir. 2002).    Accordingly, the estate’s underlying tax

liability is not properly at issue, and the administrative record

will be reviewed for an abuse of discretion.     An abuse of

discretion has occurred if the “Commissioner exercised * * *

[his] discretion arbitrarily, capriciously, or without sound

basis in fact or law.”     Woodral v. Commissioner, 112 T.C. 19, 23

(1999).

     The estate argues that respondent abused his discretion for

the following reasons:    (1) The estate’s administrative expenses

were not considered adequately by respondent; (2) Ms. Clark had


     9
      Determinations made after Oct. 16, 2006, are appealable
only to the Tax Court. See Pension Protection Act of 2006, Pub.
L. 109-280, sec. 855, 120 Stat. 1019.
                                - 14 -

insufficient information to make any collection determination;

(3) Mr. Feist issued the notice of determination after being

assigned the case for only 2 months, “which was a grossly

inadequate period of time given the complexities of the case”;

and (4) Mr. Feist insisted on proceeding with the final hearing

even though Mr. Williams had not yet recovered his files.

     The estate alleges that respondent failed to consider

adequately the administrative expenses of the estate.   However,

the notice of determination indicates that Mr. Feist considered

all of the administrative expenses that the estate raised.    The

Appeals officer determined that expenses relating to the class

action lawsuits were not appropriate expenses of the estate

because the estate did not initiate the litigation and did not

need to incur those expenses.    The notice of determination also

indicates that Mr. Feist considered the administrative expenses

of the estate related to preparing the estate’s tax returns and

pursuing the collection hearing.    Thus, the record reflects that

appropriate consideration was given to the administrative

expenses raised by the estate.    Accordingly, the Court concludes

that respondent did not abuse his discretion in this regard.

     The estate contends that respondent abused his discretion

because Ms. Clark lacked sufficient information to make a

collection determination, and Mr. Feist held the collection

hearing before Mr. Williams retrieved his files.   “An Appeals
                                - 15 -

officer does not abuse her discretion when she fails to take into

account information that she requested and that was not provided

in a reasonable time.”     Murphy v. Commissioner, 125 T.C. 301, 315

(2005), affd. 469 F.3d 27 (1st Cir. 2006).

     Ms. Clark initially requested at Mr. MacQuarrie’s April 13,

2004, summons appearance that the estate file the estate’s

delinquent tax returns within 30 days.    After the 30 days had

lapsed and the estate failed to comply, Ms. Clark issued the

above-mentioned Notice of Intent to Levy and Your Right to a

Hearing on May 27, 2004.    Almost 6 months later, on November 19,

2004, and only days before the estate’s previously scheduled

collection hearing, the estate requested a delay in the hearing

date to afford the estate additional time to prepare the returns.

Mr. Feist obliged and rescheduled the collection hearing for

December 17, 2004.   On the morning of the rescheduled hearing,

the estate once again asked for additional time to prepare the

returns.   Mr. Feist declined the estate’s request.

     In total, from the time Ms. Clark initially requested the

estate’s delinquent tax returns, the estate had approximately 8

months to prepare and file the returns and failed to do so.    In

Roman v. Commissioner, T.C. Memo. 2004-20, this Court stated:

     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
                              - 16 -

      explicit deadlines that respondent generously extended
      for petitioner’s benefit.

The Court concludes that respondent did not abuse his discretion

by:   (1) Failing to take into account information respondent

requested of the estate and that the estate failed to produce;

and (2) proceeding with the collection hearing despite the

estate’s lack of files.   See Morlino v. Commissioner, T.C. Memo.

2005-203; Roman v. Commissioner, supra.

      The estate also alleges that Mr. Feist spent a “grossly

inadequate period of time” considering the case.    The regulations

promulgated under section 6330 provide that there is no period of

time within which the Appeals Office must conduct a collection

hearing or issue a notice of determination.    The regulations

provide, in pertinent part, that while there is no set time

deadline to conduct the Appeals hearing, “Appeals will, however,

attempt to conduct a CDP hearing and issue a Notice of

Determination as expeditiously as possible under the

circumstances.”   Sec. 301.6330-1(e)(3), Q&A-E9, Proced. & Admin.

Regs.   “[T]here is neither requirement nor reason that the

Appeals officer wait a certain amount of time before rendering

his determination as to a proposed levy.”     Clawson v.

Commissioner, T.C. Memo. 2004-106; see Murphy v. Commissioner,

supra at 322; Manjourides v. Commissioner, T.C. Memo. 2005-242;

Morlino v. Commissioner, supra.
                               - 17 -

     In Clawson v. Commissioner, supra, the notice of

determination was issued less than 3 months after the taxpayers

requested a collection hearing and only 9 days after the

telephonic collection hearing was conducted.   In Manjourides v.

Commissioner, supra, less than 3 weeks passed between the

telephonic collection hearing and the issuance of the notice of

determination.   In the instant case, the notice of determination

was issued more than 6 months after the estate requested a

collection hearing.    The record reflects that Mr. Feist had the

estate’s case under consideration starting sometime between

September 1 and October 22, 2004.   The telephonic collection

hearing was held on December 17, 2005, and the notice of

determination was issued approximately 3 weeks later on January

7, 2005.

     In total, Mr. Feist had the estate’s case under

consideration for at least 2 months and as many as 4 months.

While Mr. Feist may have been predisposed to an expeditious

conclusion of the estate’s case, the Court sees nothing wrong

with that, given the facts of the instant case.   See Morlino v.

Commissioner, supra.    Suffice it to note that the determined

deficiency to be collected was $717,790, plus interest, and that

as of March 10, 2004, the total amount due was $1,650,674.72.

Due to questionable investments and other factors, including

legal fees contesting this very tax deficiency, the estate had
                              - 18 -

already shrunk from over $7 million to $500,889.1910 by March 13,

2004, ignoring speculative class action assets.   Respondent did

not abuse his discretion by expeditiously deciding the estate’s

case if, in fact, 2 to 4 months is expeditious.

II.   Conclusion

      The Court concludes that respondent’s determination to

proceed with collection by levy of the estate taxes was not an

abuse of discretion, and respondent may proceed with collection.

      The Court has considered all of the estate’s contentions,

arguments, requests, and statements.   To the extent not discussed

herein, we conclude that they are meritless, moot, or irrelevant.

      To reflect the foregoing,


                                         Decision will be entered

                                    for respondent.




      10
      This amount consists of $338,720.19 in investments and
$162,169 in cash.
