CHIECHI, Judge.
This case is before us on respondent's motion for partial summary judgment that we have recharacterized as respondent's motion for summary judgment (respondent's motion).
The record establishes and/or the parties do not dispute the following.
Petitioner resided in Missouri at the time he filed the petition.
Petitioner filed late a Federal income tax (tax) return for each of his taxable years 2000, 2004, 2005, 2006, 2007, 2008, 2009, and 2011. Petitioner did not pay the tax shown due in each of those returns.
Respondent assessed on various dates tax and certain additions to tax, as well as interest as provided by law, for each of petitioner's taxable years 2000, 2004, 2005, 2006, 2007, 2008, 2009 and 2011. (We shall refer to the respective amounts of unpaid tax, additions to tax, and interest that respondent assessed for each of petitioner's taxable years 2000, 2004, 2005, 2006, 2007, 2008, 2009, and 2011, as well as interest as provided by law accrued after the respective dates of assessment, as unpaid liabilities at issue.)
On April 2, 2013, respondent issued to petitioner the notice of tax lien.
On May 9, 2013, petitioner's representative submitted to respondent Form 12153, Request for a Collection Due Process or Equivalent Hearing (May 9, 2013 Form 12153).
In a letter dated June 4, 2013, a representative of respondent acknowledged receipt of the May 9, 2013 Form 12153 and requested petitioner to complete and submit to respondent by June 19, 2013, Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals (Form 433-A). Petitioner did not comply with that request.
In a letter dated August 7, 2013, a representative of the Appeals Office (first settlement officer) requested that petitioner complete and submit to the Appeals Office Form 433-A. Petitioner did not comply with that request.
On November 26, 2013, the first settlement officer held a telephonic hearing with petitioner's representative. During that hearing, petitioner's representative indicated that most of petitioner's income consisted of monthly payments that the U.S. Department of Veterans Affairs made to him.
On February 13, 2014, petitioner's representative sent by facsimile to the Appeals Office a statement (petitioner's financial statement) that contained the following information regarding the amounts that petitioner received each month:
Petitioner's financial statement contained the following information regarding the expenditures that petitioner made each month:
On February 18, 2014, the first settlement officer determined that petitioner's monthly income was $5,934 and that his monthly allowable expenses were $2,691. As a result, the first settlement officer determined that petitioner had the ability to pay each month to the Internal Revenue Service (IRS) the difference between his monthly income and his monthly allowable expenses, or $3,243, with respect to the unpaid liabilities at issue.
On February 28, 2014, the Appeals Office assigned a different settlement officer (second settlement officer) to consider petitioner's May 9, 2013 Form 2153. On March 14, 2014, the second settlement officer determined, as had the first settlement officer, that petitioner's monthly income was $5,934. However, unlike the first settlement officer, who had determined that petitioner's monthly allowable expenses were $2,691, the second settlement officer determined that petitioner's monthly allowable expenses were $4,540. As a result, the second settlement officer determined that petitioner had the ability to pay each month to the IRS the difference between his monthly income and his monthly allowable expenses, or $1,397,
On March 19, 2014, the second settlement officer mailed petitioner's representative a letter that stated in pertinent part:
On April 17, 2014, the second settlement officer telephoned petitioner's representative and conducted a hearing during which they discussed the second settlement officer's determination that petitioner had the ability to pay each month to the IRS $1,397 with respect to the unpaid liabilities at issue. During that telephonic hearing, petitioner's representative told the second settlement officer that he believed the second settlement officer had improperly included petitioner's monthly veteran disability benefits in his determination of the amount that petitioner had the ability to pay each month to the IRS with respect to the unpaid liabilities at issue.
On May 5, 2014, petitioner's representative sent by facsimile to the second settlement officer a letter that stated in pertinent part:
On May 9, 2014, the second settlement officer began to research the information provided by petitioner's representative. He made the following pertinent entries in his "Case Activity Records":
On May 21, 2014, the second settlement officer telephoned petitioner's representative, who was not available. In a voice mail message that the second settlement officer left for petitioner's representative, the second settlement officer indicated that he had correctly included petitioner's monthly veteran disability benefits in his determination of the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue. In that voice mail message, the second settlement officer also recommended that petitioner enter into an installment agreement.
By letter dated June 16, 2014, the second settlement officer informed petitioner of his conclusions and enclosed with that letter certain forms, including Form 433-D, Installment Agreement (Form 433-D).
Petitioner did not complete and submit Form 433-D to the Appeals Office, as the second settlement officer had requested in his letter to petitioner dated June 16, 2014.
On July 14, 2014, the Appeals Office issued to petitioner the notice of determination. The notice of determination stated in pertinent part: "The Notice of Federal Tax Lien is sustained. A proposed installment agreement was reached, and a signed Form 433-D Installment Agreement was requested. A signed agreement was required to confirm the taxpayer willing to accept the proposed terms. The installment agreement was never returned." An attachment to the notice of determination stated in pertinent part:
We may grant summary judgment where there is no genuine dispute of material fact and a decision may be rendered as a matter of law. Rule 121(b);
Petitioner does not dispute the existence or the amount of petitioner's unpaid liabilities at issue. Where, as is the case here, the validity of the underlying tax liability is not placed at issue, we review the determination of the Commissioner of Internal Revenue for abuse of discretion.
Petitioner refused to enter into an installment agreement with respondent because he believed, and still maintains here, that the second settlement officer incorrectly determined the amount that he would be able to pay each month to the IRS with respect to the unpaid liabilities at issue.
Section 6159(a) authorizes respondent to enter into an installment agreement with a taxpayer if "such agreement will facilitate full or partial collection" of a liability. Installment agreements "must reflect taxpayers' ability to pay on a monthly basis throughout the duration of agreements." Internal Revenue Manual (IRM) pt. 5.14.1.4(4) (June 1, 2010).
IRM pt. 5.15.1.11 (Oct. 2, 2012) states in pertinent part:
It is petitioner's position that, in proposing an installment agreement under which petitioner would pay $1,750 each month to the IRS with respect to the unpaid liabilities at issue, the second settlement officer erred. That is because, according to petitioner, the second settlement officer included petitioner's monthly veteran disability benefits in determining the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue. In support of his position, petitioner advances two arguments. First, according to petitioner, petitioner's monthly veteran disability benefits "fall squarely within I.R.C. Section 104(a)(4) and as such are properly excluded from any income or ability to pay calculation". Second, according to petitioner, petitioner's monthly veteran disability benefits "qualify as service-connected disability payments under 26 U.S. Code Section 6334(a)(10) and should * * * not be included in any ability to pay calculation."
We reject petitioner's position that, in proposing an installment agreement under which petitioner would pay each month to the IRS $1,750 with respect to the unpaid liabilities at issue, the second settlement officer erred because he included petitioner's monthly veteran disability benefits in determining that petitioner would be able to pay that amount each month. Petitioner's position completely ignores that installment agreements "must reflect taxpayers' ability to
We turn now to petitioner's first argument in support of his position that the second settlement officer erred in including petitioner's monthly veteran disability benefits in determining the amount that he would be able to pay each month to the IRS with respect to the unpaid liabilities at issue. Petitioner's first argument is that petitioner's monthly veteran disability benefits "fall squarely within I.R.C. Section 104(a)(4) and as such are properly excluded from any income or ability to pay calculation." Respondent concedes solely for purposes of respondent's motion that petitioner's monthly veteran disability benefits are excludible from gross income and exempt from tax. Respondent maintains that petitioner's monthly veteran disability benefits are nonetheless properly included in determining the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue. Petitioner counters that the Internal Revenue Manual and Form 433-A use the label "income" to refer to various receipts that are required to be included in determining the amount that a taxpayer would be able to pay each month to the IRS with respect to an unpaid tax liability. We understand, and are sympathetic to, the confusion that has resulted from the use of the label "income" in the Internal Revenue Manual and Form 433-A. However unfortunate the use of that label may be, it does not require us to conclude that it was an abuse of discretion for the second settlement officer to have included petitioner's monthly veteran disability benefits in determining the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue. Indeed, the Internal Revenue Manual identifies certain payments that a taxpayer receives which are required to be included in determining the amount that a taxpayer would be able to pay each month to the IRS with respect to an unpaid tax liability, even though those payments are excludible from gross income. By way of illustration, IRM pt. 5.15.1.11(2)(f) requires certain child support payments that a taxpayer receives to be included in determining the amount that a taxpayer would be able to pay each month to the IRS with respect to an unpaid tax liability, even though the taxpayer may exclude from gross income under section 71(c) child support payments described in that section.
We point out that, consistent with the requirement in the Internal Revenue Manual that amounts which a taxpayer receives and which are not includible in gross income be nonetheless included in determining the amount that a taxpayer would be able to pay each month to the IRS with respect to an unpaid tax liability, the Internal Revenue Manual requires certain personal expenditures to be included in that determination, even though those personal expenditures are not deductible for tax purposes. Indeed, petitioner reflected in petitioner's financial statement, and the second settlement officer allowed, certain nondeductible monthly expenditures of petitioner (e.g., "Trash Service", "Phone", and "Cable") to be included in determining the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue.
We turn now to petitioner's second argument in support of his position that the second settlement officer erred in including petitioner's monthly veteran disability benefits in determining the amount that he was able to pay each month to the IRS with respect to the unpaid liabilities at issue. Petitioner's second argument is that petitioner's monthly veteran disability benefits "qualify as service-connected disability payments under 26 U.S. Code Section 6334(a)(10) and should * * * not be included in any ability to pay calculation." We recently held in
On the record before us, we find that the second settlement officer did not abuse his discretion in including petitioner's monthly veteran disability benefits in determining the amount that petitioner would be able to pay each month to the IRS with respect to the unpaid liabilities at issue.
We have considered all of the arguments and contentions of the parties that are not discussed herein, and we find them to be without merit, irrelevant, and/or moot.
On the record before us, we shall grant respondent's motion.
To reflect the foregoing,
In respondent's motion, respondent states that "respondent's notice of determination does not address the validity of petitioner's Notice of Intent to Levy. Upon disposition of this motion, respondent intends to file a motion to remand for a hearing on the levy." The notice of determination concerning collection action(s) under section 6320 and/or 6330 of the Internal Revenue Code (notice of determination) which respondent issued to petitioner and upon which this case is based addresses only the "notice of Federal tax lien filing and your right to a hearing under IRC 6320" that respondent issued to petitioner with respect to his taxable years 2000, 2004, 2005, 2006, 2007, 2008, 2009, and 2011 (notice of tax lien). As a result, the notice of tax lien is the only matter that we have the authority to, and that we shall, consider in this case.
