T.C. Memo. 2012-257



                          UNITED STATES TAX COURT



                 HARRY E. CANTRELL, JR., Petitioner v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 7095-05L.                          Filed September 10, 2012.



      John S. Ponseti, for petitioner.

      Ardney J. Boland III, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


      FOLEY, Judge: The issue for decision is whether respondent abused his

discretion in determining to proceed with the collection of petitioner’s Federal

income tax liability relating to 2001.
                                         -2-

[*2]                           FINDINGS OF FACT

       During 2001 petitioner operated the Law Offices of Harry E. Cantrell and

taught criminal law at Southern University. On October 18, 2002, petitioner and

his former spouse filed their joint Federal income tax return relating to 2001 but

failed to pay the full amount of tax reported on the return. Respondent

subsequently assessed petitioner’s self-reported tax liability of $608,846.

       On October 21, 2003, respondent sent petitioner and his former spouse a

Letter 1058, Notice of Intent to Levy and Notice of Your Right to a Hearing,

relating to 2001. On October 30, 2003, respondent sent petitioner and his former

spouse a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a

Hearing Under IRC 6320,1 relating to 2001. Petitioner timely requested a

collection due process (CDP) hearing relating to both notices and filed a Form

1040X, Amended U.S. Individual Income Tax Return (amended return), relating to

2001. Petitioner on the amended return reported $12,190 of deductions on

Schedule A, Itemized Deductions; $879,234 of expenses on Schedule C, Profit or

Loss From Business; and a tax liability of $243,561. On June 28, 2004, Appeals




       1
       Unless otherwise indicated, all section references are to the Internal Revenue
Code in effect at all relevant times.
                                        -3-

[*3] Officer Catherine Smith (AO Smith) contacted petitioner to discuss the

amended return and to schedule a CDP hearing. By facsimile on June 29, 2004, AO

Smith scheduled a CDP hearing and provided petitioner with a payoff

amount corresponding to the tax liability reported on the amended return. On July

15, 2004, petitioner gave AO Smith a $312,6242 check equal to the payoff amount

provided in the June 29, 2004, facsimile. After meeting with petitioner, AO Smith

forwarded the amended return to be examined by Revenue Agent Earline Brown

(RA Brown).

      By letter dated December 1, 2004, RA Brown informed petitioner and

his former spouse that the amended return was under examination. RA Brown

requested a meeting with petitioner to discuss three preliminary items: repair

expenses, vehicle expenses, and charitable contribution deductions. On

December 7, 2004, petitioner’s former spouse informed RA Brown that petitioner

had moved. On December 8, 2004, RA Brown sent petitioner two letters: one

to an address provided by petitioner’s former spouse and another to the

address reported on petitioner’s CDP request. On the same day petitioner


      2
        This amount included the tax liability reported on the amended return of
$243,561, an estimated tax addition to tax of $1,005, a failure to timely pay addition
to tax of $34,099, and interest of $33,960. These amounts are rounded to the
nearest dollar.
                                          -4-

[*4] and his representative left messages requesting RA Brown to return their

calls.

         From December 13, 2004, through January 14, 2005, RA Brown, petitioner,

and his representative exchanged numerous voice mail messages in an unsuccessful

attempt to schedule a meeting. On January 19, 2005, RA Brown called petitioner to

inform him that she was going to recommend rejection of the amended return

because petitioner had failed to schedule a meeting. Shortly thereafter petitioner’s

secretary informed RA Brown that petitioner would call on January 24, 2005. RA

Brown advised petitioner’s secretary that if petitioner did not call on January 24,

2005, the case would be returned to AO Smith. Petitioner did not call, and on

January 25, 2005, RA Brown returned petitioner’s case to AO Smith and

recommended rejection of the amended return. Petitioner did not provide any

documentation supporting the deductions claimed on the amended return.

         On March 30, 2005, respondent issued a notice of determination sustaining

the proposed collection actions. On April 15, 2005, petitioner, while residing in

Louisiana, filed his petition with the Court.
                                          -5-

[*5]                                   OPINION

       During a CDP hearing the taxpayer may raise relevant issues such as spousal

defenses, the appropriateness of the proposed collection action, and possible

collection alternatives. Sec. 6330(c)(2)(A). The Appeals officer must verify that

the requirements of applicable law and administrative procedure have been met,

consider issues properly raised by the taxpayer, and consider whether the proposed

collection action balances the need for the efficient collection of taxes with the

taxpayer’s legitimate concern that any collection action be no more intrusive than

necessary. Sec. 6330(b), (c)(3).

       When a taxpayer’s underlying tax liability is properly at issue, the Court

reviews the underlying tax liability de novo and all other administrative

determinations for abuse of discretion. Christopher Cross, Inc. v. United States,

, 612 (5th Cir. 2006). Petitioner did not receive a notice of deficiency

and did not otherwise have an opportunity to dispute his underlying tax liability.

See sec. 6330(c)(2)(B); Montgomery v. Commissioner, 

, 8-9

(2004) (holding that taxpayers who self-reported their tax liability did not have a

prior opportunity to dispute their underlying tax liability). Furthermore, respondent

acknowledged in the notice of determination that “During the hearing, * * *

[petitioner] raised the existence or amount of the liability.” Petitioner’s
                                         -6-

[*6] underlying tax liability was properly at issue, and therefore we review his

underlying tax liability de novo. See Christopher Cross, 

.

      On the original return relating to 2001 petitioner reported adjusted gross

income of $1,535,679, a standard deduction of $7,600, and a total tax liability of

$608,846.3 Petitioner contends that the amended return properly reflects his

Federal income tax liability relating to 2001. On the amended return petitioner

reported $12,190 of deductions on Schedule A, Itemized Deductions; $879,234 of

expenses on Schedule C, Profit and Loss From Business; and a tax liability of

$243,561.4 Petitioner wrote “See Attached” on part II, Explanation of Changes to

Income, Deductions, and Credits, of the amended return but did not attach an

explanation.

      The Commissioner is not required to accept an amended return. See

Badaracco v. Commissioner, 

, 393 (1984) (holding that “an amended

return is a creature of administrative origin and grace”); Goldring v.

Commissioner, 

, 81 (1953) (holding that the acceptance or rejection of

an amended return is solely within the discretion of the Commissioner). Petitioner


      3
       On the original return petitioner reported withholding payments of $16,308
and an estimated tax addition to tax of $1,005.
      4
          On the amended return petitioner reported withholding payments of $16,308.
                                          -7-

[*7] contends that his $312,624 payment on July 15, 2004, settled his Federal

income tax liability relating to 2001. Only authorized agents or officials

representing the Commissioner, however, may enter into settlement agreements.

See Johnson v. Commissioner, 

, 496 (2011). Appeals officers simply

do not have authority to enter into administrative settlements. See 

Accordingly, AO Smith’s acceptance of petitioner’s $312,624 check did not settle

his 2001 Federal income tax liability. See Bowling v. United States, 

,

113 (5th Cir. 1975) (per curiam) (holding that a settlement agreement cannot be

imputed by the Government’s acceptance of a taxpayer’s check); Johnson v.

Commissioner, 

(holding that the Government is not bound by

an implicit agreement entered into by an individual who lacks actual authority). In

addition, there is insufficient evidence in the record to establish that petitioner paid

or incurred the expenses reported on the amended return.

      Petitioner further contends that respondent’s determination to proceed with

the collection action was an abuse of discretion because petitioner “WAS DENIED

A REASONABLE OPPORTUNITY TO DEFEND * * * [his] AMENDED

RETURN”. We review respondent’s determination for abuse of discretion, and

petitioner must establish “clear taxpayer abuse and unfairness”. See Christopher
                                         -8-

[*8] Cross, 

. After speaking with petitioner’s secretary on

January 19, 2005, RA Brown gave petitioner a final opportunity to schedule a

meeting, and petitioner failed to do so. Furthermore, petitioner failed to provide

documentation supporting the deductions claimed on the amended return.

Respondent did not abuse his discretion in determining to proceed with collection of

petitioner’s $608,846 self-reported Federal income tax liability relating to 2001.

See 

      Contentions we have not addressed are irrelevant, moot, or meritless.

      To reflect the foregoing,


                                                     Decision will be entered

                                               for respondent.