                              T.C. Memo. 2018-113



                         UNITED STATES TAX COURT



                   DANIEL A. COLON, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 13933-16L.                         Filed July 19, 2018.



      Nancy Ortmeyer Kuhn, for petitioner.

      Trevor B. Maddison, for respondent.



                           MEMORANDUM OPINION


      RUWE, Judge: Pursuant to section 6330(d)(1),1 petitioner seeks review of

the Internal Revenue Service Office of Appeals determination to proceed with



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

[*2] collection action by levy of unpaid trust fund recovery penalties (TFRPs) for

the tax periods ending September 30 and December 31, 2011. The only issue for

decision is whether respondent abused his discretion by sustaining the proposed

levy.

                                     Background

        The parties submitted this case fully stipulated pursuant to Rule 122.2 Some

of the facts have been stipulated and are so found. The stipulation of facts and the

attached exhibits are incorporated herein by this reference.3

        Petitioner resided in the Commonwealth of Virginia when he filed his

petition.

        During the periods at issue, petitioner was the chief executive officer of two

related entities: (1) Saint Catherine Physician Services (SCPS) and (2) Saint

Catherine Hospital (SCH). The Commissioner investigated petitioner for TFRP

liabilities for both entities.




        2
       We issued an order on October 17, 2017, granting the parties’ joint motion
to submit the case without trial pursuant to Rule 122.
        3
        We will issue an order overruling respondent’s objection to the
introduction of Exhibits 20-P through 41-P, which are attached to the stipulation
of facts.
                                        -3-

[*3] SCPS-TFRP Investigation and Appeals Hearing

      On June 27, 2012, the Commissioner issued petitioner a Letter 1153(DO)

notifying petitioner of his intent to assess TFRPs against petitioner for SCPS’

unpaid employment taxes for the tax periods ending September 30 and December

31, 2011. In the letter the Commissioner also informed petitioner of his right to

appeal or protest the proposed assessment with the Office of Appeals. On or about

August 23, 2012, petitioner timely appealed the proposed assessment.

      Petitioner’s appeal was assigned to Appeals Officer (AO) Frederick

Anderson. Petitioner had a hearing to dispute the TFRPs. On or about March 25,

2015, AO Anderson notified petitioner that he intended to recommend that the

TFRPs be assessed. In response, petitioner’s counsel requested that the case be

forwarded to the area director so that petitioner could challenge the proposed

assessment. On May 14, 2015, the Office of Appeals notified petitioner that the

TFRPs would be assessed. On May 26, 2015, the Commissioner timely assessed

the TFRPs against petitioner for SCPS’ unpaid employment taxes for the tax

periods ending September 30 and December 31, 2011. AO Anderson secured

supervisory approval for the penalty assessment.
                                          -4-

[*4] SCH-TFRP Investigation and Appeals Hearing

      The record is unclear as to whether petitioner received a Letter 1153 from

the Commissioner for TFRPs for SCH, but petitioner disputed the proposed

TFRPs for SCH’s unpaid employment tax liabilities for the tax periods ending

June 30, September 30, and December 31, 2011, and March 31, 2012. Petitioner’s

case was assigned to AO Beverly F. Levine. On October 29, 2015, the Office of

Appeals issued petitioner a letter (October 29, 2015, letter) stating:

      We have considered your protest and the evidence and arguments in
      support of your position against the Trust Fund Recovery Penalty
      assessment.

      We are returning your case file to the Area Director with the
      determination that you be relieved of liability for the tax periods
      indicated above.

The October 29, 2015, letter referred to the tax periods ending “6/2011 09/2011

12/2011 03/2012”. It did not refer to a specific entity, list the entity it applied to,

or have an employment identification number. But that letter listed Beverly F.

Levine, who was handling the SCH liability, as the person to contact.

CDP Hearing for SCPS

      On November 10, 2015, the Commissioner issued petitioner a Letter 1058,

Final Notice of Intent to Levy and Notice of Your Right to a Hearing, for the

TFRPs related to SCPS. Petitioner timely filed a request for a collection due
                                         -5-

[*5] process (CDP) hearing, in which he claimed: “IRS Appeals relieved Mr.

Colon of liability for identical tax periods for the Trust Fund Recovery Penalty

Assessment in a related case and related taxpayer * * *. Therefore, he should be

relieved for [sic] liability for these Trust Fund Recovery Penalties as well.”

Petitioner checked the collection alternative box for “I Cannot Pay Balance”.

      Petitioner’s CDP hearing was initially assigned to Settlement Officer (SO)

Robert Carbaugh. On January 21, 2016, SO Carbaugh sent petitioner a letter

acknowledging his request for a CDP hearing. In that letter SO Carbaugh notified

petitioner that in order for him to consider a collection alternative, petitioner

needed to submit a completed Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals, and proof that estimated tax

payments were paid in full for the year to date.

      On February 4, 2016, petitioner’s counsel called SO Carbaugh to contest the

levy, and she submitted via facsimile a copy of the October 29, 2015, letter. On

February 4, 2015, SO Carbaugh sent an email to AO Levine requesting certain

documents related to AO Levine’s TFRP hearing with petitioner to ascertain

whether petitioner was relieved of liability for the TFRPs.4 At some point

      4
        Although not explicitly stated in the email, it is evident that SO Carbaugh
tried to determine whether petitioner was relieved of liability for the TFRPs
                                                                          (continued...)
                                        -6-

[*6] thereafter, a notice of determination was drafted stating that collection action

was not sustained because AO Levine relieved petitioner “of the Trust Fund

Recovery Penalty for the periods ending 06/30/2011, 09/30/2011, 12/31/2011, and

03/31/2012.” The notice was signed by Appeals Team Manager Rhonda Warren

but was never issued. In the case activity record for the CDP hearing, SO

Carbaugh stated that he informed petitioner’s counsel that “a determination will be

made to NOT sustain” the collection action.

      On February 26, 2016, SO Khalilah A. Pollock sent an email to Richard W.

Bliss stating: “There has been a mistake in the processing and handling of * * *

[petitioner’s] case. Please DO NOT issue the notice of determination.”5

      On or about April 7, 2016, petitioner’s CDP hearing was reassigned to SO

Maria Smith. SO Smith determined that the October 29, 2015, letter applied only

to petitioner’s TFRP liabilities for SCH and not the liabilities for SCPS; thus,

petitioner was not relieved of the TFRPs for SCPS. According to the case activity

record, petitioner’s counsel and SO Smith had a telephone conference call on May

4, 2016, during which SO Smith explained to petitioner’s counsel that the October

      4
        (...continued)
related to SCPS because that was the liability the Commissioner sought to collect.
      5
       SO Pollock’s and Mr. Bliss’ relationship to petitioner’s CDP hearing is
unclear.
                                          -7-

[*7] 29, 2015, letter did not relieve petitioner of his TFRP liabilities for SCPS.

SO Smith also explained that she could assist with collection alternatives.

Petitioner’s counsel seems to have told SO Smith that the October 29, 2015, letter

applied to SCH and SCPS, and that petitioner was not interested in a collection

alternative. SO Smith then told petitioner’s counsel that she would have no choice

but to issue a notice of determination.

      On May 19, 2016, the Office of Appeals issued petitioner a notice of

determination sustaining the proposed levy, which was signed by Appeals Team

Manager Rhonda Warren. Petitioner timely filed a petition with this Court.

                                      Discussion

A. Standard of Review

      Where the validity of a taxpayer’s underlying liability is properly at issue,

the Court reviews any determination regarding the underlying liability de novo.

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the taxpayer’s

underlying liability is not properly at issue, we review the Office of Appeals’

determination for abuse of discretion only. Hoyle v. Commissioner, 131 T.C. 197,

200 (2008); Goza v. Commissioner, 114 T.C. at 182. A determination is an abuse

of discretion if it is arbitrary, capricious, or without sound basis in fact or law.
                                         -8-

[*8] Murphy v. Commissioner, 125 T.C. 301, 308, 320 (2005), aff’d, 469 F.3d 27

(1st Cir. 2006).

      A taxpayer may raise a CDP challenge to the existence or amount of his

underlying tax liability only if he “did not receive any statutory notice of

deficiency for such tax liability or did not otherwise have an opportunity to dispute

such tax liability.” Sec. 6330(c)(2)(B). Receipt of a Letter 1153 constitutes a

prior opportunity to dispute the taxpayer’s liability. Solucorp, Ltd. v.

Commissioner, T.C. Memo. 2013-118, at *9; Morgan v. Commissioner, T.C.

Memo. 2011-290, 2011 WL 6762929, at *3; McClure v. Commissioner, T.C.

Memo. 2008-136, 2008 WL 2120973, at *3-*4; see Mason v. Commissioner, 132

T.C. 301, 317-318 (2009). Petitioner does not dispute that he received a Letter

1153, and the parties stipulated that petitioner had a hearing to dispute the TFRPs

for SCPS with the Office of Appeals.6 Therefore, petitioner is not entitled to

contest the underlying TFRPs in this Court, and we will review the determination

to sustain the proposed levy only for abuse of discretion.




      6
       The stipulation states: “Petitioner had an Appeals hearing to dispute his
underlying liability for Saint Catherine Physician Services.”
                                        -9-

[*9] B. Analysis

      In deciding whether SO Smith abused her discretion in sustaining the

proposed levy, we review the record to determine whether she: (1) properly

verified that the requirements of applicable law or administrative procedure have

been met; (2) considered any relevant issues petitioner raised; and (3) considered

“whether any proposed collection action balances the need for the efficient

collection of taxes with the legitimate concern of * * * [petitioner] that any

collection action be no more intrusive than necessary.” See sec. 6330(c)(3). Our

review of the record establishes that SO Smith properly considered all of these

factors when making her determination.

      Petitioner contends that AO Anderson abused his discretion by finding

petitioner liable for the TFRPs for SCPS. AO Anderson conducted petitioner’s

hearing with the Office of Appeals to determine whether petitioner was liable for

the underlying TFRPs. Thus, petitioner is not challenging the determination to

sustain the proposed levy but is challenging AO Anderson’s decision regarding

the underlying liability. We cannot consider AO Anderson’s decision in this case.

See sec. 6330(c)(2)(B).

      Petitioner contends that the October 29, 2015, letter precludes the

Commissioner from collecting the TFRPs for SCPS under principles of contract
                                       - 10 -

[*10] law. We need not decide how the principles of contract law interact with the

October 29, 2015, letter because the weight of the evidence proves that the letter

does not apply to the TFRPs for SCPS; it applies only to the TFRPs for SCH.

      Petitioner’s underlying liability hearing for the SCH TFRPs was assigned to

AO Levine. AO Levine appears to have signed an Appeals Transmittal and Case

Memo-TFRP (ATCM) relieving petitioner of TFRPs for the tax periods “201106”,

“201109”, “201112”, and “201203”. The ATCM lists the related corporate entity

as “SAINT CATHERINE HOSPITAL OF” and does not mention SCPS. There is

nothing in the record drafted by AO Levine regarding the TFRPs for SCPS. The

October 29, 2015, letter listed AO Levine, who was handling the SCH liability, as

the person to contact. Additionally, the October 29, 2015, letter was issued

months after the Commissioner assessed the TFRPs for SCPS.7 Accordingly, the

October 29, 2015, letter does not apply to the TFRPs for SCPS and does not

preclude the Commissioner from collecting these liabilities.

      Petitioner contends that section 6672 violates the Fifth Amendment to the

Constitution under the void for vagueness doctrine. The void for vagueness

doctrine “requires the invalidation of laws that are impermissibly vague.” FCC v.

Fox TV Stations, Inc., 567 U.S. 239, 253 (2015). A statute is impermissibly vague

      7
          The Commissioner assessed the TFRPs for SCPS on May 26, 2015.
                                         - 11 -

[*11] if it “fails to provide a person of ordinary intelligence fair notice of what is

prohibited, or is so standardless that it authorizes or encourages seriously

discriminatory enforcement.” United States v. Williams, 553 U.S. 285, 304

(2008). However, “perfect clarity and precise guidance” are not required. Ward v.

Rock Against Racism, 491 U.S. 781, 794 (1989).

      Section 6672(a) imposes a TFRP on “[a]ny person required to collect,

truthfully account for, and pay over any tax imposed by this title who willfully

fails to collect such tax, or truthfully account for and pay over such tax, or

willfully attempts in any manner to evade or defeat any such tax or the payment

thereof”. The statute allows a TFRP to be imposed on any person (1) who is

responsible for certain enumerated duties and (2) whose conduct is willful. A man

of ordinary intelligence can determine that the willful failure of a responsible

person to collect, account for, and pay over employment tax is prohibited, and this

fairly clear definition does not lay a foundation for arbitrary enforcement.

Accordingly, section 6672 is not void for vagueness.

      Petitioner contends that SO Smith was not an impartial Appeals officer

because her supervisor, Rhonda Warren, had prior involvement with the case.

Under section 6330(b)(3), a CDP hearing to contest a levy must be conducted by

an impartial officer or employee with no prior involvement. Prior involvement is
                                       - 12 -

[*12] defined as “participation or involvement in a matter (other than a CDP

hearing held under either section 6320 or section 6330) that the taxpayer may have

had with respect to the tax and tax period shown on the CDP Notice.” Sec.

301.6330-1(d)(2), A-D4, Proced. & Admin. Regs. There is no evidence that Ms.

Warren had any involvement in any matter relating to petitioner except for the

CDP hearing. Accordingly, Ms. Warren’s involvement did not violate section

6330(b)(3).

      Petitioner contends that SO Smith did not comply with the verification

requirements of section 6330(c)(1). He seems to argue that it was an abuse of

discretion for SO Smith not to look at the TFRP file for SCHS. An SO is not

required to look at any particular document, Roberts v. Commissioner, 118 T.C.

365, 371 n.10 (2002), aff’d, 329 F.3d 1224 (11th Cir. 2003), and petitioner has not

pointed to anything in the TFRP file that SO Smith needed to verify. Accordingly,

SO Smith did not run afoul of the verification requirements by not looking at the

TFRP file.

      Finding no abuse of discretion in any respect, we will sustain the proposed

collection action. In reaching our decision, we have considered all arguments

made by the parties, and to the extent not mentioned or addressed, they are

irrelevant or without merit.
                                  - 13 -

[*13] To reflect the foregoing,


                                                 An appropriate order and

                                           decision will be entered.
