T.C. Memo. 2009-180



                     UNITED STATES TAX COURT



             STEPHEN AND KAREN MEEH, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7370-08L.              Filed August 5, 2009.



     Stephen and Karen Meeh, pro se.

     Ann L. Darnold, for respondent.



                        MEMORANDUM OPINION


     THORNTON, Judge:   Pursuant to section 6330(d), petitioners

seek review of respondent’s determination sustaining a proposed

levy with respect to their 2003 and 2004 income taxes.1



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

                             Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.    When they filed their petition, petitioners resided in

Oklahoma.

     On June 26, 2007, respondent sent petitioners a Letter 1058,

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

Hearing, with regard to petitioners’ 2003 and 2004 income taxes.

On July 27, 2007, petitioners submitted a timely Form 12153,

Request for a Collection Due Process or Equivalent Hearing, on

which they indicated they wished to pursue an installment

agreement.

      By letter dated October 31, 2007, a settlement officer in

respondent’s Memphis, Tennessee, Appeals Office scheduled a

telephone conference for November 27, 2007, and requested that

petitioners submit signed tax returns for 2005 and 2006 as well

as Form 433-A, Collection Information Statement for Wage Earners

and Self-Employed Individuals.

     On November 16, 2007, petitioners telephoned the settlement

officer.    Failing to reach her, they left voice messages

requesting to reschedule the hearing because of a work-related

conflict.    The settlement officer returned the calls and left

voice messages.

     In a letter to petitioners dated November 29, 2007, the

settlement officer stated:    “You did not call at the scheduled
                               - 3 -

time and you had not called to indicate that this date and/or

time were not convenient”.   The settlement officer acknowledged

having received from petitioners the requested 2005 and 2006 tax

returns but indicated that she had not received the requested

Form 433-A.   The letter requested that petitioners submit within

2 weeks any additional information they wished to have

considered.

     On January 2, 2008, petitioners faxed a letter to the

settlement officer expressing their continued interest in a

telephone hearing.   They indicated that they had been delayed in

submitting the requested financial information because of changes

in their financial circumstances as of the new year.   They

requested that the record be clarified to show that, contrary to

the statements in the settlement officer’s November 29, 2007,

letter, they had in fact exchanged recorded messages with the

settlement officer seeking to reschedule the previously scheduled

conference.

     On January 8, 2008, petitioner husband (Mr. Meeh) telephoned

the settlement officer to reschedule the hearing.   The settlement

officer rescheduled the telephone hearing for 9 a.m., January 15,

2008, and informed petitioners that they had to provide all

financial documentation by then in order for her to consider an

installment agreement.   Mr. Meeh phoned for the hearing at the

appointed time on January 15, 2008.    The settlement officer was
                                - 4 -

on another call, however, and did not return Mr. Meeh’s call

until later that day, leaving a voice message.   On January 18,

2008, she left another voice message advising that if she did not

hear from petitioners by close of business January 21, 2008, she

would have to close the case.

     At 4:43 p.m. on January 21, 2008, petitioners faxed to the

settlement officer the requested Form 433-A and associated

financial information.   The settlement officer reviewed this

information and determined petitioners’ disposable income to be

$2,014 per month.   According to her case activity record, on

January 22, 2008, the settlement officer telephoned petitioners

to “discuss the outcome” and left a voice message for a return

call.   According to the case activity record, the settlement

officer called petitioners again on January 31 and February 26,

2008, and left voice messages requesting a return call.

Petitioners allege that Mr. Meeh attempted several times after

January 22 to call the settlement officer.

     On March 5, 2008, respondent issued to petitioners a Notice

of Determination Concerning Collection Action(s) Under Section

6320 and/or 6330 sustaining the proposed levy (the notice of

determination).   The notice of determination contains a “Summary

of Determination”, which states in its entirety:

     Your request for relief from the proposed levy action
     is being denied. You did not present sufficient
     documentation to assist us is making an adequate
     decision under the Collection Due Process [sic]. The
                               - 5 -

     collection alternative you proposed was denied based on
     lack of documentation. Therefore, Appeals has
     sustained Collections levy action. See attachment for
     detailed information.

     The Appeals case memorandum attached to the notice of

determination (the attachment) states in part:

                     Summary and Recommendation

                 *   *    *    *       *   *    *

     The taxpayer has not presented any information to
     dispute the appropriateness of the collection actions
     nor have they submitted any documentation to support a
     discussion of collection alternatives to Appeals.

                          Brief Background

                 *   *    *    *       *   *    *

     The Settlement Officer offered you a face to face
     meeting, correspondence hearing and/or a telephonic
     hearing. You did not indicate your preference.
     Therefore, you were offered a telephonic hearing in
     which you failed to phone on the day and at the time
     that was originally scheduled for you.

                      Discussion and Analysis

                 *   *    *    *       *   *    *

     II.   Relevant Issues Presented by the Taxpayer

     ISSUE:

           Per Form 12153, you made no comments concerning any
           issues to be raised in during [sic] the Collection Due
           Process hearing.

     RESPONSE:

                 *   *    *    *       *   *    *

     The Settlement Officer issued a Substantive Contact
     letter dated October 31, 2007, offering you a
     Collection Due Process Hearing on November 27, 2007.
                         - 6 -

The Settlement Officer also requested you to complete a
Form 433-A (Collection Information Statement) and to
send Form 656 with all required financial documentation
and file the 2005 and 2006 Federal Income Tax Return.
You phoned on November 16, 2007 leaving a voicemail
message to reschedule the hearing. The hearing was not
held on November 27, 2007. The Settlement Officer
returned the phone call but was unable to reach you.
On November 29, 2007, you filed the Federal Income Tax
Returns for 2005 and 2006. You did not provide the
financial information that was requested of you. The
Settlement Officer issued Letter 4000 on November 29,
2007, requesting a second response. The Settlement
Officer tried several other times to reach you. On
January 8, 2008 you phoned for the conference. You
wanted the Settlement Officer to set up an Installment
Agreement. You had not sent the financial information
requested of you. You were advised to provide the
financial information by 01/15/08; the Settlement
Officer also rescheduled the hearing on that day. You
were informed of the consequences for not responding.
You phoned for the hearing, leaving a voicemail
message. Your call was return [sic] on the same day;
however, we did not hold the hearing. Also, the
financial information was not sent. The financial
information was finally sent on January 22, 2008. The
information was reviewed and the Settlement Officer
phoned you on January 31, 2008 to discuss your account.
A voicemail message was left for you to return the
call. You did not respond. After several unsuccessful
attempts to reach you by telephone, the Settlement
Officer was unable to connect with you. The Settlement
Officer continued with normal processing procedures.
The Settlement Officer was unable to assist you or
provide a collection alternative to you because you did
not cooperate with us. You were informed that we would
continue to process your case based on the information
in your case file if you failed to respond. We are
closing your case with the Appeals Office. * * *

III. Balancing of the Need for the Efficient Collection
of the Taxes With the Concerns That the Collection
Action Be No More Intrusive Than Necessary.

Enforced collection is inevitably intrusive, but it
does not appear that any less intrusive action will
meet the liability. Since you did not present any
acceptable alternatives or provide a financial
                               - 7 -

     statement, Appeals believes that the levy action
     balances the need for efficient collection of taxes
     with the intrusiveness of the action.

                            Discussion

     Section 6330 provides for notice and opportunity for a

hearing before the IRS may levy upon the property of any person.

Under section 6330(c)(3), the determination to proceed with a

collection action “shall take into consideration * * * 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.”   Once the Appeals Office issues a notice of

determination, the taxpayer may seek judicial review in this

Court.   Sec. 6330(d)(1).

     Petitioners have not challenged their underlying liability.

Accordingly, we review the Appeals determination for abuse of

discretion.   See Sego v. Commissioner, 

, 610 (2000).

An action constitutes an abuse of discretion if it is arbitrary,

capricious, or without sound basis in fact or law.    Giamelli v.

Commissioner, 

, 111 (2007).

     The principal reason given in the notice of determination

for sustaining the proposed levy was petitioners’ failure to

present “sufficient documentation”.    The attachment goes further,

stating that petitioners had failed to submit “any

documentation”.   Similarly, the attachment indicates that the
                               - 8 -

balancing test mandated by section 6330(c)(3) was satisfied

because petitioners “did not present any acceptable alternatives

or provide a financial statement”.     These stated grounds are

contradicted by other statements in the attachment indicating, as

the administrative record shows, that petitioners faxed the

requested financial information to the settlement officer on

January 21, 2008.   The administrative record also indicates that,

on the basis of the information petitioners provided, the

settlement officer was able almost immediately to calculate

petitioners’ monthly disposable income.2

     The attachment states:   “Per Form 12153, you made no

comments concerning any issues to be raised in during [sic] the

Collection Due Process hearing.”   The Form 12153 clearly

indicates, however, that petitioners wished to pursue an

installment agreement.   The settlement officer failed to make any

determination based upon the information petitioners provided as

to whether petitioners would qualify for an installment

agreement.   See Judge v. Commissioner, T.C. Memo. 2009-135.

     The attachment states:   “you were offered a telephonic

hearing in which you failed to phone on the day and at the time



     2
      Respondent alleges that the financial information
petitioners submitted was incomplete, but on this point, as on
others, the record is too muddled for us to draw any firm
conclusions, other than to note, as indicated above, that the
information was apparently sufficient for the settlement officer
to calculate petitioners’ disposable income.
                                - 9 -

that was originally scheduled for you.”   Elsewhere, however, the

attachment acknowledges that:   “You phoned on November 16, 2007

leaving a voicemail message to reschedule the hearing.”    In fact,

the administrative record shows that the hearing was eventually

rescheduled but did not take place because the settlement officer

was unavailable when Mr. Meeh phoned at the appointed hour.

     Respondent suggests we should look past these numerous

errors and inconsistencies and uphold the determination on the

ground that the settlement officer properly closed petitioners’

case because petitioners ultimately failed to return the

settlement officer’s calls after January 21, 2008, when

petitioners finally submitted the requested financial

information.   Petitioners allege, to the contrary, that “Mr. Meeh

returned all of the messages left for him, and made yet another

number of unsolicited calls to the Appeals Officer, several after

January 22, 2008.”   Petitioners’ allegations are, we believe,

consistent with their general pattern of conduct as evidenced in

the administrative record.   Moreover, their allegations are not

inconsistent with the attachment to the notice of determination,

which merely states that “the Settlement Officer was unable to

connect with you”.   We observe that the settlement officer had a

history not only of being unavailable when petitioners tried to

contact her, even at a time that she had previously scheduled,
                             - 10 -

but of misrepresenting or failing to record petitioners’ efforts

to contact her.3

     Neither party appears to be without fault.    In particular,

petitioners were not always as prompt as they should have been in

responding to the settlement officer’s communications and

requests; furthermore, their track record is not heartening.      See

Meeh v. Commissioner, T.C. Memo. 2008-282.    In the final

analysis, however, the administrative record is badly muddled,

and the notice of determination is so permeated with errors and

inconsistencies as to lack a sound basis in fact or law.     We

conclude that it is appropriate to remand this matter to

respondent’s Appeals Office for the sole purpose of permitting

petitioners, if they wish, to pursue their requested installment

agreement.

     To reflect the foregoing,


                                      An appropriate order will be

                                 issued.




     3
      In particular, we note that the settlement officer’s Nov.
29, 2007, letter alleged, with regard to the originally scheduled
Nov. 27, 2007, telephone conference, that petitioners had failed
to call at the scheduled time and had failed to “indicate that
this date and/or time were not convenient.” The administrative
record clearly shows, however, that petitioners had in fact
exchanged recorded messages with the settlement officer seeking
to reschedule the previously scheduled conference because of a
work-related conflict.