Filed: Sep. 13, 2010
Latest Update: Nov. 14, 2018
Summary: ROBERT FITZGERALD POUGH, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 21954–07L. Filed September 13, 2010. R seeks to collect income taxes and sec. 6672, I.R.C., pen- alties by means of levy and lien. At the trial of this case P raised his inability to obtain a home equity loan unless the tax lien was released. P failed to timely raise this issue with the assigned Appeals officer although he was given a reason- able time to respond, to obtain a loan, and to have his coun
Summary: ROBERT FITZGERALD POUGH, PETITIONER v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT Docket No. 21954–07L. Filed September 13, 2010. R seeks to collect income taxes and sec. 6672, I.R.C., pen- alties by means of levy and lien. At the trial of this case P raised his inability to obtain a home equity loan unless the tax lien was released. P failed to timely raise this issue with the assigned Appeals officer although he was given a reason- able time to respond, to obtain a loan, and to have his couns..
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ROBERT FITZGERALD POUGH, PETITIONER v. COMMISSIONER
OF INTERNAL REVENUE, RESPONDENT
Docket No. 21954–07L. Filed September 13, 2010.
R seeks to collect income taxes and sec. 6672, I.R.C., pen-
alties by means of levy and lien. At the trial of this case P
raised his inability to obtain a home equity loan unless the
tax lien was released. P failed to timely raise this issue with
the assigned Appeals officer although he was given a reason-
able time to respond, to obtain a loan, and to have his counsel
contact the Appeals officer. Regarding the income tax liabil-
ities, P failed to submit amended income tax returns after
being provided adequate time to do so. P had previously
agreed to his liability under sec. 6672, I.R.C., after being
offered an administrative hearing. Held: P did not properly
raise the income tax liabilities with the Appeals officer and
may not raise that issue in this case. See Giamelli v. Commis-
sioner, 129 T.C. 107, 111 (2007). Held, further, P, having
declined an administrative hearing, may not raise in this pro-
ceeding the sec. 6672, I.R.C., liability. Held, further, because
the Appeals officer gave P adequate time to submit the
requested items, it was not an abuse of discretion to move
ahead when P failed to submit them. Held, further, R’s pro-
posed collection actions are sustained.
Robert Fitzgerald Pough, pro se.
Anne M. Craig, for respondent.
OPINION
GOEKE, Judge: This case was commenced in response to a
notice of determination concerning collection action sus-
taining a notice of Federal tax lien and a proposed levy with
respect to section 6672 1 civil penalties for three calendar
quarters during 2006 and income taxes for years 2002
through 2005. The issue for decision is whether the Internal
Revenue Service (IRS) Appeals officer abused her discretion
in determining to sustain the tax lien and the proposed levy.
For the reasons stated herein, we conclude that the Appeals
officer did not abuse her discretion.
1 Unless otherwise indicated, all section references are to the Internal Revenue Code in effect
for the relevant period.
344
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(344) POUGH v. COMMISSIONER 345
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the accompanying exhibits are
incorporated herein by this reference. At the time the peti-
tion was filed, petitioner resided in Florida.
Petitioner is president of 911 Direct, Inc. (911 Direct),
which sells, installs, and services equipment for police and
fire dispatchers. 911 Direct was delinquent in paying trust
fund taxes for quarters ending March 31, June 30, and Sep-
tember 30, 2006.
On December 6, 2006, petitioner and his representative
met with an IRS revenue officer. The IRS thereafter issued to
petitioner a Letter 1153(DO) proposing to assess section 6672
penalties against petitioner for the unpaid trust fund taxes
of 911 Direct. Petitioner did not appeal or contest the assess-
ments proposed in the Letter 1153(DO). Petitioner signed
Form 2751, Proposed Assessment of Trust Fund Recovery
Penalty, agreeing to assessments against him of section 6672
penalties for the unpaid trust fund taxes of 911 Direct.
On February 2, 2007, petitioner filed delinquent 2002,
2003, 2004, and 2005 income tax returns. Each return
showed a balance due.
On March 26, 2007, petitioner was issued a Final Notice
of Intent to Levy and Notice of Your Right to a Hearing for
his 2004 and 2005 income tax liabilities. On April 16, 2007,
petitioner was issued a Final Notice of Intent to Levy and
Notice of Your Right to a Hearing for his 2002 and 2003
income tax liabilities. On April 18, 2007, petitioner was
issued a Notice of Federal Tax Lien Filing and Your Right
to a Hearing Under IRC 6320 for his 2004 and 2005 income
tax liabilities. On April 27, 2007, petitioner was issued a
Notice of Federal Tax Lien Filing and Your Right to a
Hearing Under IRC 6320 for his 2002 and 2003 income tax
liabilities. On May 22, 2007, petitioner was issued a Final
Notice of Intent to Levy and Notice of Your Right to a
Hearing for the trust fund recovery penalties (TFRPs). On
June 5, 2007, petitioner was issued a Notice of Federal Tax
Lien Filing and Your Right to a Hearing Under IRC 6320 for
the TFRPs. Petitioner timely submitted requests for hearings
in response to each Notice of Federal Tax Lien Filing and
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346 135 UNITED STATES TAX COURT REPORTS (344)
Your Right to a Hearing Under IRC 6320 and Final Notice of
Intent to Levy and Notice of Your Right to a Hearing.
An IRS Appeals officer was assigned to hear petitioner’s
requests. The Appeals officer determined that 911 Direct was
not current on its 2007 Federal tax deposits (FTDs) and that
petitioner was not in compliance with estimated payments of
his income taxes for 2006 and 2007. The Appeals officer and
petitioner held a telephone hearing on April 26, 2007. During
the hearing, petitioner said he would be able to pay the
TFRPs within 60 days, but he did not. Petitioner also said
that his accountant incorrectly prepared petitioner’s tax
returns for 2002 through 2005. Petitioner said he intended to
file Forms 1040X, Amended U.S. Individual Income Tax
Return, but he never did so. Additionally, petitioner orally
requested an installment agreement of $200 a month, but he
never submitted a Form 656, Offer in Compromise.
The Appeals officer requested that petitioner file Form
433–A, Collection Information Statement for Wage Earners
and Self-Employed Individuals, and Form 433–B, Collection
Information Statement for Businesses, and submit a 2006
Profit and Loss (P&L) statement for 911 Direct. The Form
433–A petitioner submitted showed equity of approximately
$61,000 in real estate he owned. The P&L statement peti-
tioner submitted showed 911 Direct had net income of
$144,870 in 2006.
On May 30, 2007, the Appeals officer determined that peti-
tioner’s unpaid individual tax liabilities from Forms 1040,
U.S. Individual Income Tax Return, for years 2002 through
2005 would total $56,111 by October 28, 2007. On May 31,
2007, the Appeals officer called petitioner and asked whether
he would be able to pay this liability within 120 days by bor-
rowing against his assets. Petitioner responded that he
would be meeting with a loan officer at his bank in the next
week to discuss refinancing his property in order to pay the
individual liabilities. The Appeals officer told petitioner to
notify her by June 14, 2007, if he was unable to secure suffi-
cient financing to pay the individual liabilities within 120
days. Petitioner called with questions on June 7, 2007, and
reaffirmed his commitment to get back to the Appeals officer
with further information on financing by the June 14, 2007,
deadline. Petitioner did not get back to the Appeals officer.
Petitioner represents that he inquired about a home equity
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(344) POUGH v. COMMISSIONER 347
loan but was told he could not get one because of the liens
which the IRS had filed on his home. Petitioner introduced no
evidence that he had actually made such an inquiry with a
bank. Petitioner further represents that he requested that
the Appeals officer lift the liens so that he could apply for a
loan. There is no evidence that such a request was made
until July 10, 2007. At that time the Appeals officer did not
release the liens.
On June 19, 2007, petitioner informed the Appeals officer
that he was preparing a request for abatement of penalties
for all taxable years at issue, but he did not specify which
penalties he was referring to. Petitioner said he would send
the abatement request to the Appeals officer by July 9, 2007.
Petitioner never sent such a request.
On July 10, 2007, the Appeals officer called petitioner and
informed him that records indicated that he had not made
any FTDs for 911 Direct for the quarters ending March 31,
and June 30, 2007. During the July 10, 2007, telephone call,
petitioner claimed he would provide verification of compli-
ance with the obligation to make FTDs for those quarters.
Petitioner also requested an additional week to see whether
he could get funds to fully pay his liabilities for income taxes
and for TFRPs within 60 days. Petitioner did not provide
verification of compliance by 911 Direct with its obligation to
make the FTDs or provide information regarding full payment
of his liabilities.
On July 16, 2007, petitioner left a message for the Appeals
officer that he had retained someone with a power of
attorney to represent him. Petitioner stated the representa-
tive would contact the Appeals officer the next day to discuss
the case. No one did.
On July 25, 2007, the Appeals officer again spoke with
petitioner. Petitioner asked whether the Appeals officer had
been contacted by his representative, and she responded that
she had not. The Appeals officer informed petitioner that she
planned to close the file. Petitioner said he would get in
touch with the representative and have the person contact
the Appeals officer the next day if the Appeals officer would
delay closure of the file. The Appeals officer agreed to delay;
however, again no one contacted her. On August 2, 2007, the
Appeals officer closed the file.
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348 135 UNITED STATES TAX COURT REPORTS (344)
On August 23, 2007, respondent sent petitioner a Notice of
Determination Concerning Collection Action(s) Under Section
6320 and 6330 (notice of determination). The notice of deter-
mination sustained the proposed levy and the notices of Fed-
eral tax lien (NFTLs) for all tax periods at issue. The notice
of determination set forth a conclusion that the requirements
of law and administrative procedure had been met and that
the need for efficient collection justified the intrusiveness of
the collection action. The notice of determination also stated
that petitioner had not submitted a written request for an
abatement of penalties, nor a Form 656; that neither an
offer-in-compromise nor an installment payment would be an
acceptable collection alternative given petitioner’s equity in
assets and his earning capacity; and that petitioner was not
in compliance with his income tax obligations for 2006 and
2007, nor was 911 Direct in compliance with its obligation to
make FTDs for 2007.
Petitioner timely filed a petition for lien or levy action
under sections 6320(c) and 6330(d) requesting a review of
respondent’s collection action. The petition alleged that peti-
tioner and 911 Direct were in compliance with all Federal
tax filings and that no loans could be obtained to satisfy the
liabilities.
A trial was held on March 8 and 9, 2010, in Jacksonville,
Florida. At trial petitioner testified extensively. Much of his
testimony pertained to a separate hearing involving 911
Direct which was not appealed to this Court and which is not
at issue. Petitioner also testified that he was confused about
all the actions taken against him and how to resolve them.
Finally, petitioner testified that the income of 911 Direct as
stated in the P&L statement was incorrect.
Discussion
I. Lien and Levy Hearings
Section 6321 imposes a lien in favor of the United States
on all property of a taxpayer liable for taxes after a demand
for payment of the taxes has been made and the taxpayer
fails to pay. The lien arises when the assessment is made.
Sec. 6322. The Secretary must send a written notice to the
taxpayer of the filing of a notice of lien and of the taxpayer’s
right to a hearing on the matter. Sec. 6320(a). Similarly,
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(344) POUGH v. COMMISSIONER 349
before proceeding with a levy, the IRS must issue a final
notice of intent to levy and notify the taxpayer of the right
to a hearing. Sec. 6330(a) and (b)(1). During the hearing, a
taxpayer may raise any relevant issue, including challenges
to the appropriateness of the collection action and possible
collection alternatives. Sec. 6330(c)(2)(A). Following the
hearing, the Appeals Office must make a determination
whether the lien filing was appropriate and is required to
consider: (1) Whether the Secretary has met the require-
ments of applicable law and administrative procedure; (2) the
relevant issues raised by the taxpayer; and (3) whether the
proposed collection action appropriately balances the need for
efficient collection of taxes with the taxpayer’s concerns that
the collection action be no more intrusive than necessary.
Sec. 6330(c)(3).
II. Underlying Liabilities
In a hearing a taxpayer may challenge the existence or
amount of the underlying tax liability for any tax period if
he did not receive a notice of deficiency for such liability or
otherwise have an opportunity to dispute such tax liability.
Sec. 6330(c)(2)(B). We address the underlying TFRP and
income tax liabilities separately.
Petitioner previously had an opportunity to challenge the
TFRP liabilities when he received the Letter 1153(DO), but he
did not do so. Instead, petitioner signed Form 2751, agreeing
to assessment against him of the TFRPs. Therefore he was
unable to contest the underlying TFRP liabilities in the
hearing, and we may not consider them. Sec. 6330(c)(2)(B),
(d).
While petitioner told the Appeals officer that he intended
to file amended income tax returns, petitioner did not do so
over the period of nearly 7 months between the filing of his
original Forms 1040 and the issuance of the notice of deter-
mination. The underlying income tax liabilities were there-
fore not challenged in the hearing, and we may not consider
them. See sec. 6330(c)(2)(B), (d); Giamelli v. Commissioner,
129 T.C. 107, 111 (2007); Newstat v. Commissioner, T.C.
Memo. 2005–262.
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350 135 UNITED STATES TAX COURT REPORTS (344)
III. Standard of Review
Where a taxpayer’s underlying tax liability is not in dis-
pute, the Court reviews the Commissioner’s determination
for abuse of discretion. See Sego v. Commissioner, 114 T.C.
604, 610 (2000); Goza v. Commissioner,
114 T.C. 176, 182
(2000). To establish an abuse of discretion, the taxpayer
must prove that the decision of the Commissioner was
arbitrary, capricious, or without sound basis in fact or in law.
Giamelli v. Commissioner, supra at 111 (citing Woodral v.
Commissioner, 112 T.C. 19, 23 (1999)); Tinnerman v.
Commissioner, T.C. Memo. 2010–150. In reviewing for abuse
of discretion, we generally consider only the arguments,
issues, and other matters that were raised at the hearing or
otherwise brought to the attention of the Appeals Office.
Giamelli v. Commissioner, supra at 115; Tinnerman v.
Commissioner, supra. Considering the facts of this case, we
find that there was no abuse of discretion in the Appeals offi-
cer’s determination to uphold the tax lien and the proposed
levy against petitioner.
IV. Whether the Decision To Sustain the Liens and Notices of
Levy Was an Abuse of Discretion
A. Whether the Secretary Has Met the Requirements of
Applicable Law and Administrative Procedure
Before issuance of a notice of determination, an Appeals
officer must verify that all requirements of applicable law
and administrative procedure have been met. Sec. 6330(c)(1),
(3)(A). The Appeals officer determined that respondent fol-
lowed the requirements of applicable law and administrative
procedure in filing the liens and proposing to levy. The notice
of determination noted that the liabilities were duly assessed
and the requisite notices were mailed timely to petitioner.
There is no evidence that the requirements of applicable law
and administrative procedure were not satisfied.
B. Relevant Issues Raised by Petitioner
An Appeals officer is required to consider any relevant
issue raised by a taxpayer during the course of a hearing,
including challenges to the appropriateness of collection
action and collection alternatives offered by the taxpayer.
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(344) POUGH v. COMMISSIONER 351
Sec. 6330(c)(2)(A), (3)(B). We find that the Appeals officer
adequately took into consideration the relevant issues peti-
tioner raised and did not abuse her discretion.
Petitioner expressed interest in an installment agreement
of $200 per month. Petitioner also informed the Appeals
officer that he wished to submit a request for abatement of
penalties and that he was going to have his representative
contact the Appeals officer. Finally, petitioner attempted to
have the Appeals officer release the liens on his home so that
he could apply for an equity loan. We address each of these
matters in turn.
We find the Appeals officer did not abuse her discretion in
regard to petitioner’s expression of interest in an installment
agreement. Petitioner did not submit a written proposal for
such an agreement nor a Form 656 as is requisite for an
offer-in-compromise. He was not current on his tax obliga-
tions, and neither was his corporation. See Giamelli v.
Commissioner, supra at 111–112 (‘‘Reliance on a failure to
pay current taxes in rejecting a collection alternative does
not constitute an abuse of discretion.’’); Nelson v. Commis-
sioner, T.C. Memo. 2009–108. Although petitioner stated he
would provide verification of his and 911 Direct’s compliance
with tax obligations, he did not do so. In addition, the
Appeals officer told petitioner that an installment agreement
would not be acceptable given petitioner’s equity in assets
and petitioner’s income from 911 Direct, as reported on Form
433–A and the P&L statement. It was proper for the Appeals
officer to consider these items when determining whether to
accept such an offer-in-compromise. See Orum v. Commis-
sioner, 123 T.C. 1, 14 (2004), affd.
412 F.3d 819 (7th Cir.
2005); Schropp v. Commissioner, T.C. Memo. 2010–71.
We also find the Appeals officer did not abuse her discre-
tion by not waiting for petitioner’s representative to get in
touch with her or by not waiting for petitioner to submit a
written request for abatement of penalties. Petitioner failed
to meet reasonable deadlines set by the Appeals officer
relating to the representative and to the abatement of pen-
alties request. This Court has found that when an Appeals
officer gives a taxpayer an adequate timeframe to submit
requested items, it is not an abuse of discretion to move
ahead if the taxpayer fails to submit the requested items.
Shanley v. Commissioner, T.C. Memo. 2009–17.
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352 135 UNITED STATES TAX COURT REPORTS (344)
Petitioner represents that he attempted to get a loan but
was denied outright because a tax lien had been placed on
his home. It appears that on July 10, 2007, petitioner
requested that the Appeals officer lift the lien so he could
apply for a loan. Petitioner did not provide any evidence that
he had in fact discussed obtaining a loan with a bank.
By July 10, 2007, petitioner had already violated several
deadlines, including the June 14, 2007, deadline to get back
to the Appeals officer about obtaining a loan against the
equity in his house. Given all the circumstances, including
petitioner’s dilatory behavior, we find that the Appeals officer
did not abuse her discretion in rejecting petitioner’s request
to lift the liens so that he could apply for a home equity loan.
See Shanley v. Commissioner, supra.
C. Balancing the Need for Efficient Collection of Taxes
With Concerns of Petitioner That Collection Be No More
Intrusive Than Necessary
The final item to be considered is ‘‘whether the 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.’’ Sec.
6330(c)(3)(C). The Appeals officer performed a balancing test,
finding that the liens and the potential levies did balance the
needs of collection with the concerns of petitioner. We find
the Appeals officer did not abuse her discretion in so finding.
See, e.g., Castillo v. Commissioner, T.C. Memo. 2004–238.
While petitioner orally suggested an installment plan, he
did not make a written proposal in that respect nor submit
a Form 656 as a predicate to an offer-in-compromise. There-
fore, the Appeals officer was presented with no concrete pro-
posal for a collection alternative.
The Appeals officer was met with petitioner’s missed dead-
lines and empty promises. The Appeals officer took into
consideration the equity petitioner had in assets and the
income his business was producing and the fact that peti-
tioner was not current on his tax obligations. She gave peti-
tioner an opportunity to file amended Forms 1040 and prove
he was current on his tax obligations, but petitioner did nei-
ther. When she told petitioner on July 25, 2007, that she
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(344) POUGH v. COMMISSIONER 353
intended to close the file, yet again she gave petitioner
another chance to have his representative contact her.
Petitioner failed to promptly notify the Appeals officer
when he was unable to obtain a home equity loan, failed to
file amended Forms 1040, and failed to meet numerous dead-
lines.
V. Conclusion
For the reasons discussed above, we find that the Appeals
officer did not abuse her discretion in determining to sustain
the tax lien and the proposed levy.
To reflect the foregoing,
Decision will be entered for respondent.
f
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