Judges: KERRIGAN
Attorneys: Joseph Chiarelli, Pro se. Luanne S. DiMauro , for respondent.
Filed: May 25, 2017
Latest Update: Dec. 05, 2020
Summary: T.C. Memo. 2017-91 UNITED STATES TAX COURT JOSEPH CHIARELLI, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 11951-12L. Filed May 25, 2017. Joseph Chiarelli, pro se. Luanne S. DiMauro, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION KERRIGAN, Judge: The petition in this case was filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) dated April 10, 2012. The notice of determination sust
Summary: T.C. Memo. 2017-91 UNITED STATES TAX COURT JOSEPH CHIARELLI, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 11951-12L. Filed May 25, 2017. Joseph Chiarelli, pro se. Luanne S. DiMauro, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION KERRIGAN, Judge: The petition in this case was filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) dated April 10, 2012. The notice of determination susta..
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T.C. Memo. 2017-91
UNITED STATES TAX COURT
JOSEPH CHIARELLI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11951-12L. Filed May 25, 2017.
Joseph Chiarelli, pro se.
Luanne S. DiMauro, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
KERRIGAN, Judge: The petition in this case was filed in response to a
Notice of Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 (notice of determination) dated April 10, 2012. The notice of
determination sustained a proposed levy regarding petitioner’s unpaid income tax
liability for tax year 2009.
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[*2] The issue for consideration is whether respondent’s determination to
proceed with the collection action regarding petitioner’s unpaid tax liability for
2009 was proper. All section references are to the Internal Revenue Code in effect
at all relevant times. We round all monetary amounts to the nearest dollar.
FINDINGS OF FACT
Petitioner resided in Connecticut when he timely filed his petition.
On March 14, 2011, respondent sent petitioner a Letter 1058, Final Notice
of Intent to Levy and Notice of Your Right to a Hearing, regarding tax year 2009.
Petitioner mailed a Form 12153, Request for a Collection Due Process or
Equivalent Hearing. On the Form 12153 he checked the boxes for installment
agreement and offer-in-compromise. Petitioner filed an incomplete Form 433-A,
Collection Information Statement for Wage Earners and Self-Employed
Individuals. The Form 433-A showed no ownership interest in real estate.
Petitioner wrote on this form that the only assets that he had transferred in the
prior 10 years were “charitable contributions”.
On April 10, 2012, respondent issued a notice of determination sustaining
the proposed levy. The settlement officer concluded that petitioner did not
provide enough financial information to enable her to determine whether his
income tax liability was not collectible or whether he qualified for an installment
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[*3] agreement or an offer-in-compromise. Petitioner’s petition contends that a
levy would result in a financial hardship.
A partial trial of this matter was held on May 19, 2014. On May 20, 2014,
the Court remanded this case to the Internal Revenue Service (IRS) Appeals
Office. The case was remanded to allow the Appeals Office to review information
about petitioner’s real estate holdings. A supplemental collection due process
(CDP) hearing was held.
During the supplemental CDP hearing petitioner provided information
regarding the ownership history of properties on Briarcliff Road and Whitney
Avenue in Hamden, Connecticut. On August 8, 2003, petitioner had transferred
by quitclaim deed an undivided one-sixteenth interest in the Whitney Avenue
property to his daughter. On June 16, 2010, petitioner had transferred by deed his
remaining interest in the Whitney Avenue property and the Briarcliff Road
property to his daughter. This deed, recorded on July 2, 2010, indicates that no
conveyance or State tax was paid. Petitioner had transferred the properties to his
daughter for $1.
Petitioner provided respondent with an appraisal of $480,000 for the
Whitney Avenue property dated June 8, 2010. It is unclear whether the appraisal
also includes the Briarcliff Road property, which abuts the Whitney Avenue
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[*4] property. The appraisal described the property as two adjacent parcels. The
IRS valuation engineer determined that the value of the Whitney Avenue property
was $545,000 on June 16, 2010, and $515,000 on April 10, 2012. The IRS
valuation engineer determined that the value of the Briarcliff Road property was
$120,000 on June 16, 2010, and $113,000 on April 10, 2012. As of December 11,
2011, the balance due on the mortgage for the Whitney Avenue property was
$549,335.
During the supplemental CDP hearing petitioner did not offer a collection
alternative. The settlement officer (second settlement officer) who conducted the
supplemental CDP hearing was not the one who had conducted the first CDP
hearing. The second settlement officer concluded that there was no equity in the
Whitney Avenue property but that petitioner had equity in the Briarcliff Road
property. On September 3, 2015, the second settlement officer issued a
supplemental notice of determination sustaining the proposed levy.
OPINION
Section 6331(a) authorizes the Secretary to levy upon the property and
property rights of a taxpayer who fails to pay a tax within 10 days after a notice
and demand. Before the Secretary may levy upon the taxpayer’s property, the
Secretary must notify him or her of the Secretary’s intention to make the levy.
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[*5] Sec. 6331(d)(1). The Secretary must also notify the taxpayer of his or her
right to a CDP hearing. Sec. 6330(a)(1).
If the taxpayer requests a CDP hearing, the hearing is conducted by a
settlement officer from the Appeals Office. Sec. 6330(b)(1). At the hearing the
taxpayer may raise any relevant issue relating to the unpaid tax or the proposed
levy. Sec. 6330(c)(2)(A). Once the settlement officer makes a determination, the
taxpayer may appeal the determination to this Court. Sec. 6330(d)(1). The Court
has jurisdiction to review the Commissioner’s administrative determinations.
Id.
Where the validity of the underlying tax liability is properly at issue, this
Court reviews the liability determination de novo. Sego v. Commissioner,
114
T.C. 604, 610 (2000); Goza v. Commissioner,
114 T.C. 176, 181-182 (2000). The
Court reviews administrative determinations made by the Appeals Office
regarding nonliability issues for abuse of discretion. Sego v. Commissioner,
114
T.C. 610; Goza v. Commissioner,
114 T.C. 182. Petitioner does not
challenge his underlying liability for 2009, and therefore we review respondent’s
determination for abuse of discretion.
In determining whether there has been an abuse of discretion, we consider
whether the determination by the Appeals Office was arbitrary, capricious, or
without sound basis in fact or law. See, e.g., Murphy v. Commissioner,
125 T.C.
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[*6] 301, 320 (2005), aff’d,
469 F.3d 27 (1st Cir. 2006); Woodral v.
Commissioner,
112 T.C. 19, 23 (1999). The Court does not conduct an
independent review and substitute its judgment for that of the settlement officer.
Murphy v. Commissioner,
125 T.C. 320. If the settlement officer follows all
statutory and administrative guidelines and provides a reasoned, balanced
decision, the Court will not reweigh the equities. Link v. Commissioner, T.C.
Memo. 2013-53, at *12.
Following a CDP hearing the settlement officer must determine whether to
sustain the collection action, in this case the imposition of a levy. In making that
determination, section 6330(c)(3) provides that the settlement officer must
consider: (1) verification presented by the Secretary during the hearing process
that the requirements of any applicable law or administrative procedure have been
met; (2) any issues appropriately raised by the taxpayer; and (3) whether the
proposed levy action balances 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. Lunsford v. Commissioner,
117 T.C. 183, 184 (2001); Diamond
v. Commissioner, T.C. Memo. 2012-90, slip op. at 6-7.
We note that the second settlement officer properly based her determination
on the required factors. The settlement officer (1) verified that all legal and
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[*7] procedural requirements had been met, (2) considered the issues petitioner
raised, and (3) determined that the proposed levy action appropriately balanced the
need for the efficient collection of tax with the legitimate concern of petitioner that
the collection action be no more intrusive than necessary.
Petitioner contends that he made an offer regarding payments. Petitioner
testified that the Briarcliff Road property was the backyard of the Whitney Avenue
property and that he originally thought that there was a mortgage on the Briarcliff
Road property. He further testified that he now agrees that there is no mortgage
on the Briarcliff Road property. Respondent contends that it was not an abuse of
discretion for the second settlement officer to include equity in the Briarcliff Road
property in a collection alternative consideration and to sustain the proposed levy.
The second settlement officer sustained the proposed levy because of her
conclusion that petitioner had equity in the Briarcliff Road property. Petitioner
had transferred the Briarcliff Road property to his daughter on June 16, 2010.
Petitioner still had an ownership interest in the properties in 2009 and divested his
interest in the properties after his tax liability for 2009 accrued. Although
petitioner contended that he made an offer regarding payments, he provided no
collection alternatives to the second settlement officer. A settlement officer does
not abuse his discretion when he or she declines to consider a collection
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[*8] alternative under these circumstances. See Kendricks v. Commissioner,
124
T.C. 69, 79 (2005).
We find that the second settlement officer did not abuse her discretion in
upholding the proposed collection action.
To reflect the foregoing,
Decision will be entered
for respondent.