T.C. Summary Opinion 2018-34



                           UNITED STATES TAX COURT



                      ERIC AMAEFUNA, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 23235-16S L.                         Filed July 9, 2018.



      Eric Amaefuna, pro se.

      Kirsten E. Brimer and Jenna Cantarella (student), for respondent.



                                SUMMARY OPINION


      PANUTHOS, Special Trial Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect when the

petition was filed.1 Pursuant to section 7463(b), the decision to be entered is not


      1
          Unless otherwise indicated, subsequent section references are to the
                                                                        (continued...)
                                        -2-

reviewable by any other court, and this opinion shall not be treated as precedent

for any other case.

      In this collection due process (CDP) case petitioner seeks review, pursuant

to section 6330(d)(1), of the determination by the Internal Revenue Service (IRS

or respondent)2 to uphold a notice of intent to levy to collect petitioner’s 2012 and

2014 Federal income tax liabilities. The issues for decision are (1) whether

petitioner’s underlying liabilities were properly assessed and (2) whether

respondent abused his discretion in determining that the collection by levy may

proceed.

                                    Background

      Some of the facts have been stipulated, and we incorporate the stipulation

and the accompanying exhibits by this reference. Petitioner resided in

Pennsylvania when the petition was timely filed.




      1
        (...continued)
Internal Revenue Code in effect for all relevant times, and all Rule references are
to the Tax Court Rules of Practice and Procedure. We round monetary amounts to
the nearest dollar.
      2
        The Court uses the term “IRS” to refer to administrative actions taken
outside of these proceedings. The Court uses the term “respondent” to refer to the
Commissioner of Internal Revenue, who is the head of the IRS and is respondent
in this case, and to refer to actions taken in connection with this case.
                                        -3-

      Petitioner married Azuka Amaefuna in 1995 and remained married to her

throughout all relevant periods. Sometime around 1997 Mrs. Amaefuna moved to

the United States to live with petitioner. Sometime in 2002 petitioner and Mrs.

Amaefuna moved to their current residence in Pennsylvania. Petitioner and Mrs.

Amaefuna have five biological children. Petitioner prepared the income tax

returns for himself and Mrs. Amaefuna for the years in issue.

      Petitioner operated an insurance sales business before May 2005. On May

23, 2005, petitioner incorporated the business as American Financial Stewardship

Corp. (AFSC), an S corporation in Pennsylvania.3 Petitioner and Mrs. Amaefuna

were the sole officers and employees of AFSC. Petitioner served as president of

AFSC and Mrs. Amaefuna served as vice president and treasurer. Mrs. Amaefuna

performed clerical work for AFSC.




      3
        If a business meets the requirements of sec. 1361, it may elect to be treated
as an “S corporation” and generally avoid corporate tax. Secs. 1362(a), 1363(a).
An S corporation, like a partnership, is a flowthrough entity; its income and losses
flow through to its shareholders, who then pay income tax. See sec. 1363(b). Sec.
1366(a)(1) provides that an S corporation shareholder determines his or her tax
liability by taking into account his or her pro rata share of the S corporation’s
income, losses, deductions, and credits for the S corporation’s taxable year ending
with or in the shareholder’s taxable year.
                                           -4-

        During the years in issue petitioner or AFSC4 had contracts with an

unspecified number of insurance vendors, including Foremost Insurance Co.,

Grand Rapids (FIC). Petitioner’s main role at AFSC was to seek out potential

clients and sell insurance policies, earning commissions on the basis of sales

made.

I.      2012 Income Tax Returns

        FIC issued a Form 1099-MISC, Miscellaneous Income, to petitioner for

2012 reflecting nonemployee compensation of $15,121. Petitioner acknowledged

receipt of this amount.

        Petitioner timely filed a 2012 Form 1040, U.S. Individual Income Tax

Return, electing head of household filing status and reporting adjusted gross

income of $57,525 and tax due of $10,597.5 Petitioner did not remit payment with

his return, although in August 2013 he entered into an installment agreement.

Petitioner made installment payments until the end of 2013.




        4
       It is unclear from the record whether petitioner or AFSC was a party to the
contracts with FIC and the other insurance vendors.
        5
            Petitioner’s 2012 Form 1040 was not made a part of the record.
                                        -5-

      A 2012 Form 1120S, U.S. Income Tax Return for an S Corporation, was

timely filed on behalf of AFSC.6 On its Form 1120S AFSC reported a loss of

$1,840.7 The $15,121 of income from FIC was not reported on AFSC’s 2012

Form 1120S.

      On March 3, 2014, petitioner filed a 2012 Form 1040X, Amended U.S.

Individual Income Tax Return. Petitioner made the following adjustments to his

2012 Form 1040: (1) a decrease of $24,243 to adjusted gross income; (2) a change

from the standard deduction of $8,700 to itemized deductions totaling $22,999;

(3) a claim for an earned income tax credit (EIC) of $1,827; and (4) a claim for an

additional child tax credit of $2,000. The attached Schedule A, Itemized

Deductions, claimed deductions for $488 of general sales taxes expense, $3,308

for real estate taxes expenses, and $19,203 for home mortgage interest expense.

Petitioner attached two Forms 1098, Mortgage Interest Statement, for taxable year

2011 reflecting home mortgage interest expenses totaling $19,203. Petitioner

wrote on the 2012 Form 1040X: “Explanation: Line 1 - Original return did not

include Forms 1098 Mortgage Interest herein attached, property & school tax, also


      6
        Although not entirely clear, it appears that petitioner prepared the income
tax returns for AFSC for the years in issue.
      7
       The record does not reflect the details of the 2012 Form 1102S, and thus it
is unclear how this loss was calculated.
                                        -6-

attached herein, Schedule ‘A’ was not on the original but herein attached.”

Petitioner did not explain the reduction to adjusted gross income.

      On the basis of the 2012 Form 1040X the IRS partially abated petitioner’s

tax liability by $3,972 on June 9, 2014.8 After these adjustments, the application

of petitioner’s payments, and the application of overpayment credits from 2013

and 2016, a balance due remained for the 2012 tax year.9

II.   2014 Income Tax Returns

      FIC issued to petitioner a Form 1099-MISC for 2014, reflecting

nonemployee compensation of $18,535. Petitioner acknowledged receipt of this

amount.

      Petitioner timely filed a 2014 Form 1040 reflecting head of household filing

status and reporting $57,675 of self-employment income under the business

description “Sales”. The attached Schedule C, Profit or Loss From Business,

reflected $60,000 of gross receipts and deductions totaling $2,325. Petitioner did

not report any other income. Petitioner’s 2014 Form 1040 return reflected a tax



      8
        On October 24, 2014, petitioner filed a second 2012 Form 1040X reflecting
adjustments that are identical to the adjustments on the 2012 Form 1040X that was
filed on March 3, 2014. The IRS did not further adjust petitioner’s tax liability.
      9
       The IRS applied petitioner’s 2013 overpayment credit of $2,497 on April
15, 2014, and petitioner’s 2016 overpayment credit of $3,057 on March 27, 2017.
                                        -7-

due of $11,678; he did not remit payment with his return and at the time of trial he

had not made payments toward the 2014 liability.

       Mrs. Amaefuna also separately filed a 2014 Form 1040 electing head of

household filing status and reporting $15,957 of self-employment income under

the business description “Compliance”. The attached Schedule C reported

$16,107 in total gross receipts, including $15,001 from AFSC, and a deduction of

$150 for legal and professional services expense. Mrs. Amaefuna’s reported total

tax of $2,255 and credits of $7,917 ($6,143 EIC % $1,774 additional child tax

credit), resulting in an overpayment of $5,662.

       A 2014 Form 1120S was filed on behalf of AFSC reporting gross receipts of

$77,255; this amount did not include the $18,535 of income from FIC. AFSC’s

2014 receipts were offset by expenses totaling $82,319, including $74,999 for

officers compensation expense,10 resulting in a loss of $5,064.

III.   Collection Due Process Hearing

       To collect petitioner’s unpaid 2012 and 2014 liabilities the IRS sent a

Notice LT11, Notice of Intent to Levy (notice of intent to levy), on May 24, 2016.

In response petitioner timely filed a Form 12153, Request for a Collection Due

       10
        This was reported as $60,000 (rounded up from $59,998) in gross receipts
on petitioner’s 2014 Form 1040 and $15,001 in gross receipts on Mrs. Amaefuna’s
2014 Form 1040.
                                         -8-

Process or Equivalent Hearing, which the IRS received on June 6, 2016. On his

Form 12153 petitioner asserted: “I am not liable for (I do not owe) all or part of

the taxes as stated by IRS”. He did not provide further detail or supporting

documentation. Petitioner did not assert an inability to pay the liabilities, nor did

he request a collection alternative.

      Settlement Officer (SO) Diedre Serra11 from the IRS Office of Appeals was

assigned to petitioner’s case. She reviewed the administrative file for taxable

years 2012 and 2014 and confirmed that the liabilities had been properly assessed

and that all other requirements of applicable law had been met. On August 12,

2016, SO Serra sent petitioner a letter scheduling a telephone CDP hearing for

September 20, 2016, and requesting that petitioner provide a Form 433-A,

Collection Information Statement for Wage Earners and Self-Employed

Individuals.

      Petitioner’s telephone CDP hearing was rescheduled and held on September

23, 2016. During the hearing petitioner asserted that his liabilities were incorrect

because they included amounts reported to him by FIC on Forms 1099-MISC, as

paid to petitioner. Petitioner asserted that these amounts should have been


      11
       At some point after trial Diedre Serra changed her name to Diedre
Bartholomew. We will continue to refer to her as SO Serra.
                                        -9-

reported to AFSC. SO Serra requested that petitioner provide corrected Forms

1099-MISC, Forms 1040X, or a Form 433-A within 14 days, and she informed

petitioner that if she did not receive these documents she would sustain the levy.

SO Serra wrote the following notes in her Case Activity Record Print about this

exchange:

      Told TP [petitioner] * * * he is being issued 1099s as a self-employed
      contractor, and if this is incorrect he needed to correct * * * our
      records show self-employment, and he received all bills to date so this
      should have been corrected when 1st bills were issued. Also advised
      until corrected 1099s are issued by the payers so new 1040Xs can be
      submitted, he is liable for the income as SE [self-employed]. TP
      states he is not self-employed but will contact payers. Told him has
      14 days to get this corrected or submit Form 433-A, if not received
      must sustain levy and issue NOD [Notice of Determination]. TP
      asked if he could then go to Tax Court, told him yes if he files the
      petition within 30 days after our closing letter. TP stated will work
      on getting this corrected asap.

      By October 17, 2016, petitioner had not provided SO Serra with any

requested forms, including corrected Forms 1099-MISC or Forms 1040X, and she

tentatively determined to sustain the levy and sent this determination to her

supervisor. On October 19, 2016, the IRS issued a Letter 3193, Notice of

Determination Concerning Collection Action(s) Under Section 6320 and/or 6330,

sustaining the proposed levy. In response petitioner timely filed his petition on

November 1, 2016, renewing his assertion that his income tax liabilities are
                                        - 10 -

incorrect because of an “error” in the Forms 1099-MISC issued by FIC and also

asserting that FIC “is correcting the error. The correction will result in correction

of double taxation * * * the 14 days given to me by the appeals office was not

sufficient for me to get the error * * * corrected.”

                                      Discussion

I.    Section 6330

      We have jurisdiction under section 6330(d)(1) to review respondent’s

determination that the notice of intent to levy was proper and that respondent may

proceed to collect by levy. In reviewing the Commissioner’s decision to sustain

collection actions, where the validity of the underlying tax liability is properly at

issue, the Court reviews the Commissioner’s determination of the underlying tax

liability de novo. Sego v. Commissioner, 

, 610 (2000); Goza v.

Commissioner, 

, 181-182 (2000). The Court reviews any other

administrative determination regarding proposed collection actions for abuse of

discretion. Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114

T.C. at 182. An abuse of discretion occurs when the exercise of discretion is

without sound basis in fact or law. Murphy v. Commissioner, 

, 308

(2005), aff’d, 

 (1st Cir. 2006).
                                         - 11 -

      A taxpayer may challenge the underlying tax liability during a CDP hearing

if the taxpayer did not receive a statutory notice of deficiency for the liability or

did not otherwise have the opportunity to dispute the liability. Sec. 6330(c)(2)(B);

see also Montgomery v. Commissioner, 

, 8-9 (2004) (holding that

taxpayers are allowed to challenge the underlying liability where taxpayers self-

assessed their underlying liability and did not receive a notice of deficiency). This

Court may consider such a challenge, however, only if the taxpayer properly raised

it before the settlement officer. Giamelli v. Commissioner, 

, 115

(2007). An issue is not properly raised at the CDP hearing if the taxpayer fails to

request Appeals consideration of the relevant issue or if he or she requests

Appeals consideration but fails to present any evidence after being given a

reasonable opportunity to do so. LG Kendrick, LLC v. Commissioner, 

, 34 (2016), aff’d, 684 F. App’x 744 (10th Cir. 2017); sec. 301.6330-1(f)(2),

Q&A-F3, Proced. & Admin. Regs.

      Respondent concedes that petitioner did not have a prior opportunity to

contest his underlying liabilities; thus petitioner was allowed to challenge the

underlying liabilities at his CDP hearing. Sec. 6330(c)(2)(B); see also

Montgomery v. Commissioner, 122 T.C. at 8-9. Respondent asserts that petitioner

did not properly raise the issue of his underlying liabilities at the CDP hearing, and
                                        - 12 -

thus the underlying liabilities are not properly at issue before the Court. We need

not decide whether petitioner properly raised the issue of his underlying liabilities

because petitioner has not presented evidence establishing that (1) the initial tax

reporting was incorrect and (2) the underlying assessed tax liabilities are incorrect.

See Krishnan v. Commissioner, T.C. Memo. 2016-83, at *9-*10 (holding that even

if the underlying liability was in issue the taxpayer did not demonstrate that the

assessments were incorrect).

      A.     Petitioner’s 2012 and 2014 Self-Assessed Taxes

      Respondent seeks to collect petitioner’s self-assessed liabilities for taxable

years 2012 and 2014.12 In general, the Commissioner’s assessment is presumed

correct, and the taxpayer bears the burden of proving otherwise. Rule 142(a);

Welch v. Helvering, 

, 115 (1933); Poindexter v. Commissioner, 

, 286 (2004), aff’d, 132 F. App’x 919 (2d Cir. 2005). In the absence of

corroborating evidence, the Court is not required to accept a taxpayer’s self-

serving testimony. Tokarski v. Commissioner, 

, 77 (1986).




      12
         Respondent did not seek adjustments to petitioner’s income tax returns or
assert increased deficiencies for the years in issue. Accordingly, we resolve only
the issue of the self-assessed liabilities challenged by petitioner.
                                        - 13 -

      At his CDP hearing and at trial petitioner asserted that he was not liable for

the full amounts shown on his income tax returns for the years in issue because the

returns reported the income from FIC as earned by petitioner. Petitioner asserts

that FIC should have instead issued the Forms 1099-MISC to AFSC. At the time

of trial petitioner had not provided corrected Forms 1099-MISC or other evidence

(other than his own testimony) to support this assertion, despite asserting in his

petition that FIC was “correcting the error”.

      Petitioner also has not shown that he reported the income from FIC on his

Forms 1040 for the years in issue. Petitioner testified that he reported this income

for taxable years 2012 and 2014, but it is unclear from the record whether he

reported the $15,121 from FIC on his 2012 Form 1040. Additionally, petitioner

did not report the $18,535 from FIC on his 2014 Form 1040. This income was not

reported on AFSC’s 2014 Form 1120S and the only income that petitioner

reported on his 2014 Form 1040 was the $60,000 distribution from AFSC.

      Even if petitioner had reported the income from FIC on his 2014 Form

1040, it is unclear that the tax consequences would have been different if the

income had been reported to AFSC; because petitioner and Mrs. Amaefuna

collectively own 100% of AFSC, all income and losses of the S corporation would

have flowed through to them. See sec. 1363(b).
                                       - 14 -

      Additionally, there are a number of errors and inconsistencies on the

individual returns petitioner prepared for himself and Mrs. Amaefuna for the years

in issue, including the following: (1) petitioner claimed an unexplained and

unsupported reduction to adjusted gross income of $24,243 on his 2012 Form

1040X; (2) petitioner claimed a deduction of $19,203 for mortgage interest

expense on his 2012 Form 1040X, but the attached Forms 1098 are for taxable

year 2011; (3) petitioner and Mrs. Amaefuna each incorrectly elected head of

household filing status on their income tax returns for 2014;13 (4) petitioner and

Mrs. Amaefuna would not have qualified for the EIC for 2014 on the basis of their

marriage status and combined adjusted gross income;14 and (5) petitioner testified

that he has professionally prepared income tax returns for clients since 2008,



      13
        Sec. 1(b) imposes an advantageous tax rate schedule for an individual who
is a “head of household” as defined in sec. 2(b). The first eligibility requirement
for head of household status is that the taxpayer not be married or a surviving
spouse. Sec. 2(b)(1). Exceptions to this requirement include situations where the
spouses are separated under a decree of divorce or separation, where one of the
spouses is a nonresident alien, or where the spouses live apart for at least the last
six months of the year. See secs. 2(b)(2), (c), 7703(b). Petitioner and Mrs.
Amaefuna were married in 1995 and have lived together since 1997. Petitioner
did not assert, nor does it appear, that any of the above-mentioned exceptions are
applicable.
      14
        For taxable year 2014 married filing jointly taxpayers with three or more
children do not qualify for the EIC if they have earned income exceeding $52,427.
See Rev. Proc. 2013-35, sec. 3.06, 2013-47 I.R.B. 537, 540.
                                          - 15 -

preparing as many as 300 income tax returns a year by 2010, but it does not appear

that he reported income from this activity for the years in issue.

      For these reasons, we hold that petitioner has not met his burden of proving

that he overreported his income for 2012 and 2014. Thus, petitioner is liable for

his self-assessed liabilities. See Rule 142(a); Welch v. Helvering, 290 U.S. at 115;

Tokarski v. Commissioner, 87 T.C. at 77.

      B.     Abuse of Discretion

      With respect to the issue of the administrative determination regarding the

proposed collection action, we conclude that it was not an abuse of discretion for

the Appeals Office to sustain the levy.

      Petitioner did not provide SO Serra with amended returns or corrected

Forms 1099-MISC within 14 days as requested or provide her with other

documentation to support his assertions that the Forms 1099-MISC should have

been issued to AFSC. Neither did he submit a Form 433-A or any of the other

requested information and documentation. It is well settled that it is not an abuse

of discretion for the Appeals Office to sustain a proposed collection action against

a taxpayer for failing to submit requested documentation and/or financial

information. Pough v. Commissioner, 

, 351 (2010).
                                        - 16 -

      Petitioner did not request additional time to provide evidence to support his

assertion before, during, or after the CDP hearing. Petitioner also asserts that 14

days was not enough time for him to obtain corrected Forms 1099-MISC or other

evidence. We have held that a 14-day deadline for a taxpayer to provide requested

information may be reasonable and that the Appeals Office does not have to

provide a taxpayer with an extension of time to provide this information. Shanley

v. Commissioner, T.C. Memo. 2009-17, 

, at *5-*7.

      Petitioner did not request a collection alternative such as an offer-in-

compromise or an installment agreement and did not submit to SO Serra a specific

offer or propose any specific terms. The Appeals Office does not abuse its

discretion in failing to consider an offer that petitioner did not make. Huntress v.

Commissioner, T.C. Memo. 2009-161, 

, at *5.

      In making the determination whether to sustain the proposed levy, section

6330(c)(3) requires the SO to consider: (1) whether the requirements of any

applicable law or administrative procedure have been met; (2) any issues

appropriately raised by the taxpayer; and (3) whether the collection actions

balance the need for the efficient collection of taxes and the legitimate concern of

the taxpayer that any collection action be no more intrusive than necessary. See

also Lunsford v. Commissioner, 

, 184 (2001). The record reflects
                                        - 17 -

that SO Serra considered each of these requirements. Therefore, we conclude that

it was not an abuse of discretion to sustain the proposed collection action.

II.   Conclusion

      For the reasons stated above, we sustain the determination of the Appeals

Office to proceed with the levy. We have considered all of the parties’ arguments,

and, to the extent not addressed herein, we conclude that they are moot, irrelevant,

or without merit.

      To reflect the foregoing,


                                                 Decision will be entered

                                       for respondent.