T.C. Memo. 2009-269



                      UNITED STATES TAX COURT



              VINCENT & GINA DEAN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

                     VINCENT DEAN, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 20812-07L, 20943-07L.   Filed November 25, 2009.



     Ronald F. Hood, for petitioners.

     Daniel P. Ryan, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   This proceeding was commenced in response to

two Notices of Determination Concerning Collection Action(s)

Under Section 6320 and/or 6330.   The Internal Revenue Service

(IRS) sent a notice of determination to Vincent Dean (petitioner)
                                - 2 -

for his income tax liabilities for 2001, sustaining the proposed

levy with respect to his unpaid taxes for 2001.    The case at

docket No. 20943-07L arises from a petition filed in response to

the notice sent to petitioner for 2001.     The IRS sent a separate

notice of determination to Vincent and Gina Dean (petitioners)

with respect to their outstanding joint income tax liabilities

for 2002, 2003, and 2004, sustaining the proposed levy for the

unpaid taxes for these years.   The case at docket No. 20812-07L

arises from a petition filed in response to this notice sent to

petitioners.   The cases were consolidated for trial, briefing,

and opinion.

     The issue for decision is whether the IRS Appeals Office

abused its discretion by rejecting offers-in-compromise (OICs)

made by petitioners and in determining that proposed levies on

petitioners’ property were appropriate.

     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.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioners resided in St. Louis County, Minnesota, at the time

the petitions were filed.
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     On April 3, 2006, the IRS sent petitioner a Letter 1058,

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

Hearing, under section 6330 with respect to his Federal income

taxes for 2001.    Attached to the Letter 1058 was an account

summary showing that petitioner’s liability for 2001 consisted of

an assessed balance of $53,008.19 plus interest of $2,135.89 and

a late payment penalty of $1,254.44, for a total of $56,398.52.

     On April 3, 2006, the IRS sent petitioners a Letter 1058

with respect to their Federal income taxes for 2002, 2003, and

2004.    Attached to the Letter 1058 was an account summary showing

that petitioners’ liabilities were as follows:

  Year      Assessed Balance   Interest      Penalty      Total

  2002        $37,715.89       $1,572.43    $1,353.44   $40,641.76
  2003         27,318.16        1,138.92     1,045.22    29,502.30
  2004         21,032.22          642.83       391.72    22,066.77

     On May 3, 2006, the IRS received timely Forms 12153, Request

for a Collection Due Process Hearing, from petitioners’ attorney,

Ronald Hood (Hood), in response to the Letters 1058--one for

petitioner and one for petitioners.     On the Forms 12153,

petitioners did not challenge the underlying tax liabilities but

stated their desire for OICs or installment agreements.

     Petitioners’ collection due process (CDP) hearings were

assigned to the same settlement officer in the Appeals Office.

On November 4, 2006, petitioners, through Hood, sent to the

settlement officer one Form 656, Offer in Compromise, on the
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basis of doubt as to collectibility regarding the outstanding tax

liabilities for 2001-04. (The Form 656 also included tax years

2000 and 2005).   With their OIC petitioners submitted financial

information about themselves on Form 433-A, Collection

Information Statement for Wage Earners and Self-Employed

Individuals, and about petitioner’s business on Form 433-B,

Collection Information Statement for Businesses.   In response to

a phone conversation between the settlement officer and Hood,

additional information regarding petitioner’s business was

submitted on November 16, 2006.

     The settlement officer and Hood subsequently had several

telephone conversations.   In one of these telephone

conversations, the settlement officer conveyed to Hood that the

monthly housing and utilities expenses of $2,511 petitioners

claimed on the Form 433-A exceeded the IRS Local Standard for

Housing and Utilities which, for a family of five in St. Louis

County, Minnesota, was a maximum of $1,115.

     On December 23, 2006, Hood sent a letter to the settlement

officer that she perceived as possibly threatening.    She

discussed it with her manager, who referred the letter to the IRS

Office of Professional Responsibility.

     In her research to verify the information petitioners

provided on the submitted Form 433-A and determine the reasonable

collection potential (RCP), the settlement officer concluded that
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she needed clarification regarding the real property that

petitioners owned.   On their Form 433-A, petitioners listed two

parcels of real property that they owned with a total current

value of $250,500.   However, the settlement officer’s online

research of the St. Louis County public records revealed

additional parcels of real property listed in petitioners’ names.

Thus, on January 8, 2007, the settlement officer sent a letter to

petitioners requesting that they provide information to her by

January 31, 2007, regarding their real property.

     On January 30, 2007, Hood sent a letter on petitioners’

behalf to the settlement officer providing information regarding

their real property ownership.     Hood noted that “Some of the

parcels * * * are in fact Contracts for Deed, in which either

Vincent and/or Gina Dean are only the buyers/purchasers and these

parcels are still owned by the seller.”    Petitioners submitted

documentation regarding the real property that they owned through

warranty deeds that had been included on Form 433-A.    Petitioners

also submitted the documents for two real property parcels

showing that contracts for deed had been executed.

     One contract for deed was executed August 9, 2001, for

property described as “Lot 8, Block 2, Dorem, St. Louis County,

Minnesota, except the Easterly 40 feet thereof” (parcel No. 317-

0075-00160).   The purchase price was $36,000, and there was an

initial $10,000 downpayment.     Another contract for deed was
                              - 6 -

executed May 17, 2002, for property described as “Lot 2, Block 1,

Plat of Dorem” (parcel No. 317-0075-00020).   The purchase price

was $75,000, and there was an initial $2,000 downpayment.    In the

documents petitioners submitted to the settlement officer, they

included information that identified the outstanding balances

that remained on both contracts for deed:   $424.02 for parcel No.

317-0075-00160 and $68,335.29 for parcel No. 317-0075-00020.    The

contracts for deed provided that the purchasers were to pay all

real estate taxes and maintain liability insurance.

     On April 4, 2007, the settlement officer sent petitioners a

letter summarizing her analysis of their financial information

for the purpose of calculating the RCP and stated that the

“figures listed were calculated using the information received as

of 4/3/2007 and the information is provided to allow you to

discuss collection alternatives in resolving your outstanding

personal income tax liabilities.”

     In her analysis, the settlement officer prepared an asset

equity table that included the two parcels with the contracts for

deed/dissipated assets and noted:

          The taxpayers entered into contracts for deed for
     Parcel # 317-0075-00020 and Parcel # 317-0075-00160 in
     Ely [sic] County, MN. Since they entered into these
     contracts, the taxpayers paid $42,340.69 towards the
     contracts that could have been paid towards their
     outstanding income tax liabilities for the years 2000
     through 2005 inclusive.
                               - 7 -

In calculating the RCP, the settlement officer used the amounts

petitioners had paid, not the assessed values of the land.

     Additionally, using information petitioners provided, the

settlement officer identified the actual monthly housing and

utilities expenses as $2,364 consisting of:   A monthly mortgage

payment of $1,753, which included taxes and insurance; average

monthly electricity expense of $384; telephone expense of $103;

trash collection of $69; and $55 for DirectTV.   The settlement

officer further explained the housing and utilities expenses she

allowed according to the IRS local standards:

     Maximum allowable amount for a family of 5 in St. Louis
     County, MN is $1,115. I allowed $300 more a month than
     the allowable amount due to the fact that there are 5
     living in the house and the electricity and water bills
     may be higher due to their being a family of 5.

          They have presented no special circumstances, such
     as the need for handicapped accessible housing, as to
     why the $2,511 in actual amount of housing expenses,
     which are $1,249 over the allowable amount, should be
     allowed, other than that the amounts listed are what
     they are actually paying to meet their basic living
     expenses.

     Based on the information received from petitioners, the

inclusion of the properties with executed contracts for deed, and

the use of the local standard for housing with her $300 addition,

the settlement officer calculated the RCP to be $137,308 (if the

offered amount were to be paid in 5 months or less, or $147,124

if the offered amount were to be paid in more than 5 months but

less than 60 months).   In her letter, the settlement officer gave
                               - 8 -

petitioners until May 3, 2007, to submit an acceptable collection

alternative and noted that failure to do so would result in the

issuance of the notices of determination.

     On May 2, 2007, Hood sent a letter to the settlement officer

on petitioners’ behalf with a proposed OIC.   In this OIC

submitted for years 2000 through 2006, petitioners offered to pay

$102,350.   In the OIC, petitioners stated:

           We disagree with the IRS analysis regarding the
     allowances for housing and utilities, transportation
     and the issue of dissipated assets. As a consequence
     of our disagreement on these issues, our offer of
     $102,350.00 is less than the IRS’s reasonable
     collection potential (RCP) amount of which we disagree.
     * * *

     On May 7, 2007, the settlement officer sent a letter to

petitioners informing them that they needed to submit two OICs--

one in petitioner’s name for 2000 and 2001 and a second in

petitioners’ names for 2002, 2003, 2004, and 2005.    On May 29,

2007, petitioners submitted two OICs, both based on doubt as to

collectibility.   In the OIC submitted for his 2000 and 2001

income tax liabilities, petitioner offered to pay $33,775, to be

paid over 115 months in monthly payments of $294.    In the OIC

submitted for their 2002, 2003, 2004, and 2005 income tax

liabilities, petitioners offered to pay $68,575, to be paid over

115 months in monthly payments of $596.   The offered amounts were

less than the RCP as calculated by the settlement officer, and in

both OICs it was noted that there was disagreement with the
                               - 9 -

settlement officer’s analysis regarding the allowance for housing

and utilities, the allowance for transportation expenses, and the

issue of dissipated assets.

     On August 14, 2007, the IRS sent two separate Notices of

Determination Concerning Collection Action(s) Under Section 6320

and/or 6330.   The notices of determination were both signed by

the same Appeals team manager and each contained a “Summary of

Determination” stating:

          Based on the information in the case file, the
     Notice of Intent to Levy was appropriate at the time it
     was issued. No acceptable collection alternatives
     could be agreed to. Collection action would be
     appropriate to collect this debt. This analysis
     indicates that this action is now necessary to provide
     for the efficient collection of the taxes despite the
     potential intrusiveness of enforced collection.

Petitions were timely filed with the Court in response to the

notices.

     At trial respondent’s counsel objected to petitioner’s

testimony as outside the administrative record, arguing that

petitioner’s testimony would not add to or explain anything

regarding the administrative record or the CDP hearing because

petitioner had counsel--and did not participate himself--in the

CDP hearing.   The Court reserved ruling on this objection.

                              OPINION

     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
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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.”

     This Court has jurisdiction to review the collection

activities of the Commissioner only with respect to tax

liabilities for which a valid notice of determination has been

issued.   Sec. 6330(d)(1).   Valid notices of determination were

issued as to collection of petitioner’s income tax liability for

2001 and petitioners’ income tax liabilities for 2002, 2003, and

2004, and petitions were filed identifying those years.     However,

the OICs submitted to the IRS included proposed compromises for

years not subjects of the notices of determination.

     The Court lacks jurisdiction to review collection of the

liabilities for the years not included in the notices of

determination.   See Sullivan v. Commissioner, T.C. Memo. 2009-4.

In determining whether the rejection of the OICs and the

collection of the years included in the notices of determination

is appropriate, this Court is authorized (as the settlement

officer was required) to consider “any relevant issue relating to

* * * the proposed levy”.    Sec. 6330(c)(2)(A), (d).   Therefore,

we evaluate the settlement officer’s exercise of discretion in

rejecting the OICs, taking into account all the liabilities that
                                - 11 -

were proposed to be compromised, even though we do not have

jurisdiction to review the collection of all those liabilities.

See, e.g., Orum v. Commissioner, 

(2004) (reviewing an

OIC that covers income tax liabilities for tax years that are

both within and outside of this Court’s jurisdiction), affd. 

(7th Cir. 2005).

     Petitioners have not challenged their underlying

liabilities.   Accordingly, we review the Appeals Office’s

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 parties agree that these cases are appealable to the

Court of Appeals for the Eighth Circuit.   That court has held

that judicial review of nonliability issues under section 6330(d)

is limited to the administrative record, subject to exceptions

that are not applicable here.    Robinette v. Commissioner, 

, 461-462 (8th Cir. 2006), revg. 

(2004); see

also Fifty Below Sales & Mktg., Inc. v. United States, 

, 829-830 (8th Cir. 2007) (concluding that the review of a CDP

decision rendered by an Appeals officer under section 6330 is

limited to the administrative record before the Appeals officer).

See generally Murphy v. Commissioner, 

, 31 (1st Cir.
                                - 12 -

2006) (listing exceptions to administrative record rule), affg.

(2005).   The administrative record consists of the

case file, including the taxpayer’s written request for a

hearing, written communications or information submitted in

connection with the CDP hearing, IRS notes of any oral

communications with the taxpayer, IRS memoranda in connection

with the hearing, and any other documents or materials used by

the IRS Appeals officer or employee in making a determination

under section 6330(c)(3).   See Robinette v. Commissioner, supra

at 461-462.

     Respondent asserts that petitioner’s testimony should be

disregarded because it is outside the administrative record.

Petitioner’s attorney--not petitioner--participated in the CDP

hearing.   Thus, petitioner’s testimony is not relevant in

determining whether the Appeals Office’s refusal to accept the

OICs was arbitrary, capricious, or without sound basis in law or

fact.   See Murphy v. Commissioner, supra at 31; Robinette v.

Commissioner, supra at 461.     Therefore, we sustain respondent’s

objection regarding the consideration of petitioner’s testimony.

     Section 7122(a) authorizes compromise of a taxpayer’s

Federal income tax liability.    The grounds for compromise of a

tax liability include doubt as to collectibility.    Sec. 301.7122-

1(b)(2), Proced. & Admin. Regs.    Petitioners based both of their

most recently submitted OICs on doubt as to collectibility, which
                               - 13 -

“exists in any case where the taxpayer’s assets and income are

less than the full amount of the liability.”

Commissioner’s administrative guidelines, an offer to

compromise based on doubt as to collectibility will be acceptable

only if it reflects the RCP.   See Internal Revenue Manual (IRM),

pt. 5.8.1.1.3(3) (Sept. 1, 2005); see also Rev. Proc. 2003-71,

sec. 4.02(2), 2003-2 C.B. 517, 517 (stating that an offer will be

considered acceptable if it reflects the taxpayer’s RCP).     Where

the Appeals officer has followed the IRS guidelines to ascertain

a taxpayer’s RCP and has rejected the taxpayer’s collection

alternative on that basis, we generally have found no abuse of

discretion.   See McClanahan v. Commissioner, T.C. Memo. 2008-161;

Lemann v. Commissioner, T.C. Memo. 2006-37.

      Petitioners contend that in determining the RCP, the

settlement officer reached an unrealistic result by:   (1) Using

the local standard allowance for monthly housing and utilities

expenses and (2) including the contracts for deed, because

petitioners claim these were not property that petitioners

“owned”.

     Although petitioners stated on their Forms 656 that they

also disagreed with the transportation expense allowance, they

did not raise this issue in their petition or at trial.   A

petition for review of a collection action must clearly specify

the errors alleged to have been committed in the notice of
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determination, and any issues not raised in the assignments of

error are deemed conceded by the taxpayer.   Rule 331(b)(4); see

Goza v. Commissioner, 

, 183 (2000).   The

transportation expense allowance issue is deemed conceded.

Local Standard Allowance for Housing and Utilities Expenses

     Respondent asserts that

          Petitioners erroneously argue that the issue in
     this case is whether the local standards for housing
     and utilities accurately reflect the costs for a family
     to reside in St. Louis County, Minnesota. Instead, the
     issue to be decided by the Court is whether * * * [the
     settlement officer] abused her discretion in applying
     the local standards for housing and utilities rather
     than petitioners’ claimed expenses in determining an
     acceptable OIC amount.

     Petitioners’ disagreement is, in essence, with the

settlement officer’s use of the local standards for housing and

utilities expenses as published by the IRS for St. Louis County,

Minnesota.   Petitioners do not contend that the settlement

officer misapplied these standard allowances.   They challenge the

legitimacy of the IRS prescribed county-by-county standard

allowances and argue that the IRS guidelines are “clearly”

arbitrary on their face and do not follow the congressional

mandate of section 7122 because counties in the United States

vary in size and population and it would be more equitable for

the local standards to be issued on a city and town level.

     In 1998 Congress directed the Secretary to prescribe

guidelines for calculating allowable living expenses when
                               - 15 -

determining the taxpayer’s current financial condition and

ability to pay delinquent taxes.   See Internal Revenue Service

Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3462,

112 Stat. 764; sec. 7122(d) (enacted as sec. 7122(c)).    The

Secretary was also directed to “develop and publish schedules of

national and local allowances designed to provide that taxpayers

entering into a compromise have an adequate means to provide for

basic living expenses.”   Sec. 7122(d)(2)(A).   The IRS has thus

developed collection financial standards that include national

standards for general living expenses and local standards for

housing, utilities, and transportation.   Local standards for

housing are established for each county within a state.    See IRM

pt. 5.15.1.7 (May 1, 2004).

     Petitioners argue that the use of local standards is a

violation of their “fundamental rights of procedural due process”

and that respondent should have been required to present expert

testimony about the manner in which the standards were developed.

Petitioners’ rights to a precollection hearing and to compromise

their undisputed tax liability are privileges created by

Congress, subject to conditions established by Congress.    They

have no constitutional right to avoid payment of their admitted

tax liabilities and, absent the 1998 legislation, had no rights

to precollection procedures.   Their attempt to raise the dispute

to constitutional levels is unpersuasive.
                               - 16 -

     When section 7122 was amended in 2006 to add provisions

governing the submission and evaluation of OICs, Congress did not

question the promulgated local standards, thus lending support to

the IRS local standards as developed and in use at that time.

See Tax Increase Prevention and Reconciliation Act of 2005, Pub.

L. 109-222, sec. 509(a), (b), (d), 120 Stat. 362-364 (2006).

Congress also signaled its support for the IRS standards as

developed by referring to “amounts specified under the National

Standards and Local Standards” in the Bankruptcy Abuse Prevention

and Consumer Protection Act of 2005, Pub. L. 109-8, sec. 102, 119

Stat. 27, and used to determine allowable living expenses of

above-median income debtors.   See 11 U.S.C. secs. 707(b)(2)(A),

1325(b) (2006).   Petitioners’ argument that the local standards

should not be determined on a county level is not persuasive in

the light of the actions of Congress.

     This Court has sustained use of the IRS published national

and local allowances as guidelines for basic monthly living

expenses in evaluating the adequacy of proposed installment

agreements and OICs.   See, e.g., Speltz v. Commissioner, 

, 179 (2005), affd. 

(8th Cir. 2006); Fernandez v.

Commissioner, T.C. Memo. 2008-210 (no abuse of discretion found

when the taxpayer argued that the local standard allowance for

monthly housing and utilities expenses would make it “almost

impossible to own a family size house” in South Florida).
                                - 17 -

Generally, this Court has found no abuse of discretion where

Appeals officers used the housing and utilities standard

allowances rather than the taxpayer’s actual expenses.     See Marks

v. Commissioner, T.C. Memo. 2008-226; Diffee v. Commissioner,

T.C. Memo. 2007-304; cf. Fowler v. Commissioner, T.C. Memo. 2004-

163 (holding that an Appeals officer abused his discretion in

determining, on the basis of the standard allowance guidelines,

that the taxpayer could not live as cheaply as they had claimed

and so could not afford their proposed installment payments).

     Petitioners identified their actual monthly housing and

utilities expenses as $2,511.    The settlement officer applied the

published local standards for housing and utilities expenses of

$1,115 for St. Louis County, Minnesota and added $300 because of

the size of petitioners’ family, resulting in a total monthly

allowance of $1,415.

     Petitioners contend that the settlement officer should have

conducted research to show the availability of less expensive

housing in St. Louis County for petitioners, presented an

analysis showing the costs for petitioners to move, and performed

research on the tax consequences of such a move.     The taxpayer

has the burden to submit information to Appeals to justify a

departure from the local standards.      See Lindley v. Commissioner,

T.C. Memo. 2006-229 (no abuse of discretion to use local

standards when taxpayer does not make showing that he will be
                              - 18 -

unable to provide for basic living expenses), affd. sub nom.

Keller v. Commissioner, 

(9th Cir. 2009).     No

evidence concerning the alleged cost of moving to a new residence

was presented during the CDP hearing, and it was not the burden

of the settlement officer to secure evidence supporting

petitioners’ position.

     Petitioners have not shown that the settlement officer did

not properly apply the provisions of the Code, the regulations,

or the IRM with respect to the local standard allowance for

monthly housing and utilities expenses.   There was, therefore, no

abuse of discretion in regard to that element of the

determination.

Dissipated Assets

     Where a taxpayer has dissipated assets in disregard of the

taxpayer’s outstanding Federal income taxes, the dissipated

assets may be included in the calculation of the minimum amount

that is to be paid under an acceptable OIC.   See IRM pt.

5.8.5.4(5) (Sept. 1, 2005).   A dissipated asset is defined as any

asset (liquid or not liquid) that has been sold, transferred, or

spent on nonpriority items and/or debts and is no longer

available to pay the tax liability.    See Samuel v. Commissioner,

T.C. Memo. 2007-312; IRM pt. 5.8.5.4(1) (Sept. 1, 2005).

     Petitioners assert that they have no equity in two parcels

of real property in Minnesota for which they entered contracts
                              - 19 -

for deed.   In a letter dated January 30, 2007, sent to the

settlement officer on petitioners’ behalf, Hood stated that the

parcels were not listed on their Form 433-A because petitioners

were required to list all real estate that they “own”.    Thus,

petitioners contend that the settlement officer erred by

including those two properties to calculate the RCP.

     The settlement officer included the amounts petitioners had

already paid on the contracts for deed when calculating the RCP,

not the assessed value of the real properties.   The purchase

price of parcel No. 317-0075-00160 was $36,000, and an

outstanding balance of $424.02 remained; thus, the settlement

officer determined petitioners had paid $35,575.98.    The purchase

price of parcel No. 317-0075-00020 was $75,000, and an

outstanding balance of $68,335.29 remained; thus, the settlement

officer determined petitioners had paid $6,664.71.    When these

amounts were paid, petitioner had outstanding tax liabilities

going back to 2000.   Petitioners have offered no evidence

contradicting the reasonable assumptions of the settlement

officer.

     We conclude that it was not an abuse of discretion for the

settlement officer to include the amounts petitioners had paid on

the parcels of real property with executed contracts for deed

when calculating the RCP.   We need not address the arguments of

the parties about whether petitioners had an equity interest in
                              - 20 -

the parcels because the settlement officer included only the

amounts paid and not the assessed values of the parcels.

Appeals Office Impartiality Requirement

     Finally, petitioners argue that the CDP hearing failed to

satisfy the impartiality requirements under section 6330(b)(3).

Petitioners base their argument on the referral to the IRS Office

of Professional Responsibility of a letter written by Hood to the

settlement officer.   The letter was intemperate and was

reasonably perceived as possibly threatening.    We are unpersuaded

that the referral was an inappropriate or excessive response or

that the ultimate determination to reject petitioners’ OICs was

affected by counsel’s letter or the referral based on it.

     For purposes of section 6330(b)(3), an “impartial” officer

is one “who has had no prior involvement with respect to the

unpaid tax specified in subsection (a)(3)(A) before the first

hearing under this section or section 6320.”    See Perez v.

Commissioner, T.C. Memo. 2002-274.     Petitioners have presented no

evidence that either the settlement officer or the Appeals team

manager was involved in their cases before the first hearing

under section 6330.   We conclude that the section 6330(b)(3)

impartiality requirement was satisfied.

     Ultimately, the issue in this proceeding is whether there

was an abuse of discretion when the Appeals Office refused

petitioners’ requested collection alternatives and subsequently
                              - 21 -

determined that the proposed levy should proceed.     The settlement

officer followed applicable procedures in considering

petitioners’ request for a collection alternative, and rejection

of the OICs was not arbitrary, capricious, or without sound

basis.   Further, the Appeals team manager did not act in an

arbitrary or capricious way, or in an unlawful or unreasonable

manner, in sustaining respondent’s proposed collection action

and, accordingly, did not abuse his discretion.   In sum, we

conclude that there was no abuse of discretion by the Appeals

Office in rejecting the OICs and in sustaining the levy.

     In reaching our decisions, we have considered all arguments

made by the parties.   To the extent not mentioned or addressed,

they are irrelevant or without merit.

     To reflect the foregoing,


                                         Decisions will be entered

                                    for respondent.