B. 26 U.S.C. §6203

26 U.S.C. §6203 provides, inter alia, that the IRS, upon request, shall furnish the taxpayer a copy of the "record of the assessment." The "record of assessment" includes the pertinent parts of the assessment which set forth: 1) the name of the taxpayer; 2) the date of assessment; 3) the character of the liability assessed; 4) the taxable period, if applicable; and 5) the amounts assessed. 26 C.F.R. §301.6203-1.

C. 26 U.S.C. §6331

26 U.S.C. §6331 provides, inter alia, that if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand, the IRS is authorized to collect such tax by levy upon all property and rights to property belonging to the taxpayer. Before proceeding with any collection by way of levy, however, the IRS must provide the taxpayer notice of the right to an administrative appeal. 26 U.S.C. §6631(d).

D. 26 U.S.C. §6630

After notice under the provisions of 26 U.S.C. §6631(d), the taxpayer has a right, within 30 days, to request a hearing before the IRS Office of Appeals. 26 U.S.C. §6330(a)(3)(B). At the hearing, the taxpayer may raise any issue relevant to the unpaid tax and proposed levy, including challenges to the propriety of the levy and offers of collection alternatives. 26 U.S.C. §6330(c)(2). The impartial IRS appeals officer conducting the hearing must then formulate a determination based on: 1) the verification that the requirements of any applicable law or administrative procedures have been met; 2) the issues raised by the taxpayer; and 3) the proper balance between the need for efficient tax collection and the Legitimate concern that any collection action be no more intrusive than necessary. 26 U.S.C. §6330(c)(3).

Following the hearing, the appeals officer sends a Notice of Determination to the taxpayer summarizing the matters raised during the hearing and responding to any offers or objections made by the taxpayer. 26 C.F.R. §301.6330-1T(e)(3) Q&A-E7. If the taxpayer is dissatisfied with the administrative determination, he may seek judicial review within 30 days of the Notice of Determination being issued either in the Tax Court or, if the Tax Court does not have jurisdiction over the underlying tax liability, the appropriate United States District Court. 26 U.S.C. §6330(d)(1). Review must be limited to matters actually raised at the administrative hearing. 26 C.F.R. §301.6330-1T(f)(2) Q&A-F5.

IV. Motion for Partial Dismissal

A. Jurisdiction

Defendant moves for a partial dismissal, arguing: 1) that this Court lacks subject matter jurisdiction to hear the action because the complaint sets forth claims which are not within the United States' limited waiver of sovereign immunity as provided in 28 U.S.C. §2410; and 2) that the complaint sets forth claims that do not state a legally valid cause of action.

Bonfante cites the provisions of 26 U.S.C. §6203 as authority to bring this cause of action. Defendant argues that there is no statute which allows the United States to be sued for alleged violations of either 26 U.S.C. §§6203 or 6303, and that, therefore, this Court lacks subject matter jurisdiction because there has been no waiver of sovereign immunity for the Bonfante's claim. Fed. R. Civ. P. 12(b)(1).

Although 26 U.S.C. §6203 is silent on the issue of sovereign immunity waiver, courts have generally exercised jurisdiction to interpret the statute's provisions. E.g., Gentry v. United States [92-1 USTC ¶50,225], 962 F.2d 555, 557-58 (6th Cir. 1992); United States v. Forrester [2001-1 USTC ¶50,163], 87 A.F.T.R.2d 2001-1593, No. C-1-98-839, 2001 WL 429811 (S.D. Ohio Mar. 16, 2001 ). Defendant cites no contrary authority expressly holding that courts are without subject matter jurisdiction to hear challenges to records of assessment. Accordingly, this Court finds that it has subject matter jurisdiction to interpret the provisions of 26 U.S.C. §6203.

B. Count I

In Count I of the complaint, Bonfante alleges that defendant did not provide him with the "Form 4340 Certificate of Assessment and Payments" pertaining to the underlying tax assessments and, therefore, violated 26 U.S.C. §6203.

26 U.S.C. §6203 provides, inter alia, that the IRS, upon request, shall furnish the taxpayer a copy of the "record of the assessment." The "record of assessment" includes the pertinent parts of the assessment which set forth: 1) the name of the taxpayer; 2) the date of assessment; 3) the character of the liability assessed; 4) the taxable period, if applicable; and 5) the amounts assessed. 26 C.F.R. §301.6203-1.

The governing statute and regulation do not require that a taxpayer specifically be provided the "Form 4340 Certificate of Assessment and Payments." In Gentry, the Court addressed the issue of adequacy of tax records provided by the government to the plaintiff taxpayer. Gentry [92-1 USTC ¶50,225], 962 F.2d at 555. The court held that a "summary record of assessment" generated by computer and signed by an assessments officer (as long as it contained the five required elements listed in 26 C.F.R. §301.6203-1) was adequate to establish a nexus between the taxpayer and the underlying assessments. Gentry [92-1 USTC ¶50,225], 962 F.2d at 558. The court further held that 26 C.F.R. §301.6203-1 did not require the record to be of exacting specificity, as long as it was backed by supporting documents providing adequate notice to the taxpayer. Gentry [92-1 USTC ¶50,225], 962 F.2d at 557.

In the instant case, Exhibit C of the complaint indicates that: 1) Bonfante was sent letters in 1998 and 1999 regarding the assessment information found on the IRS Form 23-C and Form 4340; 2) he was provided transcripts of his account that showed all assessments; and 3) there was no apparent problem with the assessment process and the related forms. The IRS provided Bonfante with the information required by 26 C.F.R. §301.6203-1 to be part of the record of assessment. Based on the record, this Court finds that the IRS complied with the governing statute and regulations in making the tax assessment against Bonfante.

Section 2410(a) of 28 U.S.C. provides that the United States may be named a party in any civil action or suit in any district court having jurisdiction of the subject matter: 1) to quiet title to; 2) to foreclose a mortgage or other lien upon; 3) to partition; 4) to condemn, or; 5) of interpleader or in the nature of interpleader with respect to, real or personal property on which the United States has or claims a mortgage or other lien. A lawsuit under the provisions of "28 U.S.C. §2410 is proper only to contest the procedural regularity of a lien; it may not be used to challenge the underlying tax liability." Pollack v. United States [87-2 USTC ¶9463], 819 F.2d 144, 145 (6th Cir. 1987) (citing Laino v. United States [80-2 USTC ¶9724], 633 F.2d 626, 633 n.8 (2d Cir. 1980)) and Girvin v. United States [99-2 USTC ¶50,865], 84 A.F.R.T.R.2d (RIA) 6251, 1999 U.S. Dist. LEXIS 15331, at *1, 11-12 (S.D. Ohio, Sept. 9, 1999 ) (citing Pollack [87-2 USTC ¶9463], 819 F.2d 144, 145 (6th Cir. 1987)). Bonfante does not set forth any procedural irregularities with the IRS's lien.

C. Count III

Bonfante alleges that defendant breached a 1999 agreement to provide him with a hearing as to his underlying tax and tax penalty liabilities. According to Bonfante, a collection officer requested him to present deposition testimony to support his position that he was not liable for the underlying tax obligation. Bonfante argues that this request for additional evidence constituted an agreement to provide Bonfante with a new hearing.

Assuming a collection officer made such a request, the Court cannot construe that request to constitute a promise to provide Bonfante with a new hearing. And even if the officer did make a promise, Bonfante fails to cite any applicable law to support the contention that the promise created a right to another hearing. Further, Bonfante cites no authority allowing him to sue the government for an alleged failure to give him with a hearing in addition to the one already provided him.

V. Motion for Affirmation

A. Standard of Review

While 26 U.S.C. §6330(d) clearly provides for judicial review of the IRS's administrative determinations, the statute is silent with respect to the standard of review that the reviewing court must apply. The issue is discussed, however, in the conference report accompanying the IRS Restructuring Act. In cases where the validity of the underlying tax liability itself is properly at issue in the hearing, the administrative determination will be reviewed de novo. Where the validity of the underlying tax liability is not properly part of the appeal, the taxpayer may challenge the determination for abuse of discretion. H.R. Conf. Rep. No. 105-599, at 266 (1998); Goza v. Comm'r of Internal Revenue [CCH Dec. 53,803], 114 T.C. 176, 181-182 (2000) (concluding that a court must review the IRS officer's determinations using an abuse of discretion standard when the validity of the tax liability itself is not at issue); MRCA Info. Services v. United States [2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 199 (D. Conn. 2000) (same); Geller v. United States [2001-2 USTC ¶50,703], 88 A.F.T.R.2d 6494, 2001 WL 1346669, at *2 (S.D. Ohio Sept. 25, 2001 ) (same).

Although Bonfante alleges certain facts in his complaint challenging the validity of his underlying tax liability, that issue is not properly before this Court. Bonfante's underlying tax liability was not considered during the appeals officer's administrative determination that is the subject of this complaint. The underlying tax liability had been previously addressed at an appeals hearing conducted in 1993. The Court concludes that the complaint is based on a dispute regarding the IRS's proposed collection procedures and not on the underlying tax liability. The appropriate standard of review to resolve a collection dispute is abuse of discretion. Goza [CCH Dec. 53,803], 114 T.C. at 181-182. Under the abuse of discretion standard, a determination will be affirmed unless the Court determines with a "definite and firm conviction" that a clear error of judgment has been committed. Cincinnati Ins. Co. v. Byers, 151 F.3d 574, 578 (6th Cir. 1998).

B. Discussion

As discussed earlier, an IRS appeals officer must base his decision on three factors: 1) the verification that the requirements of any applicable law or administrative procedure have been met; 2) the issues raised by the taxpayer; and 3) the balance between the need for efficient tax collection and the legitimate concern of the person that any collection action be no more intrusive than necessary. 26 U.S.C. §6330(c)(3).

The Notice of Determination received by Bonfante indicates that the IRS complied with all applicable law and procedures. Specifically, the Notice of Determination reflects that the requirements regarding notice to the taxpayer, the taxpayer's opportunity to raise relevant objections at a hearing, and the absence of any prior involvement by the appeals officer were all considered and found in compliance with 26 U.S.C. §6330. The Notice of Determination further reflects that the issues raised by Bonfante at his administrative hearing conducted in December, 1993 were duly considered. Bonfante does not dispute that he was afforded an opportunity to raise issues at the administrative hearing or that his claims at were fairly considered. The Notice of Determination also reflects that there were no apparent problems with the subsequent tax assessment process and the related Form 23-C and Form 4340. See Geller [2001-2 USTC ¶50,703], 2001 WL 1346669 at *4.

Although a levy upon property may arguably be an intrusive collection tactic, the appeals officer considered the issues raised by Bonfante and balanced his interests and concerns against the need for efficient tax collection. The Notice of Determination states that the underlying tax liability was not reviewed because it was previously reviewed in the December 1993 administrative hearing. The Notice of Determination further states that Bonfante was afforded an opportunity to offer alternative collection methods on three separate occasions and failed to do so.

The Court finds that the appeals officer did not commit clear legal error. Because there is no evidence of error in judgment by the appeals officer, nor any specific allegation by Bonfante that would support a finding of abuse of discretion, the judgment of the appeals officer is AFFIRMED.

Bonfante can challenge the tax assessment made against him by complying with the procedures set forth in 26 U.S.C. §7422 for bringing a refund action in the District Court. See United States v. Dalm [90-1 USTC ¶50,154; 90-1 USTC ¶60,012], 494 U.S. 596 (1990).

VI. Conclusion

Accordingly, the defendant's partial motion for dismissal is GRANTED, and the administrative decision of the IRS appeals officer is AFFIRMED. This action is hereby DISMISSED

[2002-1 USTC ¶50,284] Compucel Service Corporation, Plaintiff v. Commissioner of Internal Revenue, Defendant

U.S. District Court, Dist. Md., CIV. MJG-00-1092, 2/15/2002

[Code Sec. 6330 ]

Collection Due Process: Employment taxes: Appeals officer: Abuse of discretion: Administrative record, adequacy of: Changed circumstances: Notice of determination.--An appeals officer did not abuse his discretion in issuing a notice of determination in connection with an IRS levy to collect a corporation's unpaid Form 941 employment tax liabilities. The administrative record indicated that the appeals officer balanced the need for efficient collection of taxes with the taxpayer's legitimate concern that the collection action be no more intrusive than necessary. In addition, the taxpayer made no reasonable proposal to justify deferral of collection. Finally, the district court was not required to reconsider the notice of determination in the event circumstances had changed.
MEMORANDUM OF DECISION

GARBIS, District Judge:

The instant case has been submitted for decision on the record, including the parties' respective papers and attached exhibits. The Court hereby issues its findings of fact and conclusion of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

I. BACKGROUND

At all times relevant hereto, Petitioner Compucel Service Corporation ("Compucel") has been engaged in a data processing related business ¹ with its principal offices in Laurel, Maryland. By not later than the Fourth Quarter of 1994 ("4Q94"), Compucel fell behind in regard to its Form 941 federal employment tax and withholding obligations.

In 1Q95, Compucel fell further behind so that by the end of that Quarter, it was more than $300,000 in arrears on its Form 941 liabilities. Despite its Form 941 tax deficit, Compucel continued in operation, but did not comply with its then-current Form 941 obligations. By the end of 3Q98, Compucel's total Form 941 deficit was in excess of $650,000.

On March 4, 1999 , the IRS sent Compucel two notices of Intent to Levy to collect unpaid Form 941 liabilities as follows:

4Q94-1Q95 ............................................ $377,757.07

1Q98-3Q98 ............................................  321,460.84

                                                       -----------

TOTAL ................................................ $699,217.91

On April 5, 1999 , Compucel requested a "collection due process hearing" under §6330 of the Internal Revenue Code. ² On February 7, 2000 , a hearing was held by Appeals Officer Chris Neighbor ("the Appeals Officer"). On March 17, 2000 , the Appeals Officer issued to Compucel a Notice of Determination Concerning Collection Action determining that the Notice of Intent to Levy dated March 4, 1999 was appropriate and should not be withdrawn. Compucel was advised that it had 30 days from the date of the Notice to file a complaint in a United States District Court to dispute the IRS determination. On April 17, 2000 , Compucel timely ³ filed the instant lawsuit.

II. RELEVANT STATUTORY FRAMEWORK

The instant case arises under Internal Revenue Code Amendments enacted in the Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L.105-206, 112 Stat. 685 (1998).

With exceptions not here relevant, the IRS cannot levy on a persons' property unless the Service has adequately given notice of the right to a hearing before the levy is made §6330(a)(1). If the person given notice timely requests a hearing, the hearing, sometimes referred to as a "Due Process Hearing, " is to be conducted by the IRS Office of Appeals. §6330(b)(1).

At the Due Process Hearing, the person given notice may raise any relevant issue including offers of collection alternatives, an installment agreement or an offer in compromise. §6330(c)(2)(A)(iii).

The statute provides that:

[t]he determination by an appeals officer under this subsection shall take into consideration . . . whether any 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.

§6330(c)(3).

If a Due Process Hearing is requested, the subject levy actions ⁴ are suspended while the hearing and any appeals therein are pending. ⁵ §6330(e).

If not satisfied with the Appeals Office determination, the person given notice may appeal the determination to the Tax Court or, for taxes such as Form 941 taxes or over which there is no Tax Court jurisdiction, to a district court. §6330(d)(1)(A), (B).

III. DISCUSSION

In brief and stark terms, the statute permits a taxpayer who does not deny that he owes a tax liability to block IRS collection by levy for so long as it may take to provide a Due Process Hearing and for the judicial process to be completed. In the instant case, Compucel, with substantial and increasing withholding and employment tax obligations in default since 1994, has been able to block IRS levy actions into the year 2002. In practical terms, the Court must decide how much longer Compucel can continue to avoid paying its Form 941 tax liabilities, which are now approaching $1,000,000. In other words, this Court must decide how much longer Compucel can use its unpaid tax liabilities effectively as "working capital". In the opinion of this Court, seven years of tax deficit financing has been more than enough. The IRS should be free to proceed with vigorous collection action.

In its efforts to delay tax collection further, Compucel presents a number of arguments and proposals that it claims might support an exercise of discretion to forego collection action by levy and claims that the Appeals Officer did not consider, or did not adequately consider, them. In response, the Government contends that any arguments and proposals (whatever these may have been) made by Compucel were considered by the Appeals Officer. The IRS further takes issue with whether certain of the arguments or proposals Compucel says it presented were, in fact, presented to the Appeals Officer.

Although the matter has not yet been addressed by the Fourth Circuit, it appears that in a §6330(d) appeal, the district court should review the Appeals Officer's determination as to the appropriateness of the collection activity on an abuse of discretion standard. H.R.Rep.No. 105-599, at 266. See Goza v. Comm'r [CCH Dec. 53,803], 114 T.C. 176, 182 (2000).

In many administrative appeal contexts, review on an abuse of discretion standard can be accomplished through a review of a comprehensive formal record, complete with pleadings and transcripts of administrative hearings. In an Internal Revenue Service Appeals Office context, there is no such record. Hearings "at the Appeals level have historically been conducted in an informal setting." Katz v. Comm'r [CCH Dec. 54,081], 115 T.C. 329, 337 (2000). As stated in the leading treatise on federal tax procedures:

Appeals Office conferences are informal. No stenographer is present to record the discussions of the facts and the law relating to the issue involved. Testimony under oath is not taken.

Michael I. Saltzman, IRS Practice and Procedure ¶9.05[3] (1991).

The absence of a comprehensive administrative record of the IRS Appeals Office Due Process Hearings has led one district court to hold that the IRS had failed to make a record adequate to permit judicial review. Mesa Oil, Inc. v. United States [2001-1 USTC ¶50,130], No. 00-B-851 (D. Col. Nov. 21, 2000 ) (Order remanding case to IRS Comm'r). As stated in Mesa Oil by Judge Babcock:

While a full stenographic record is not required, there must be enough information contained in the documentation created by the IRS for a court to draw conclusions about statutory compliance and whether the AO abused his or her discretion.

Id. at *7.

In Mesa Oil, the court remanded the case to the IRS with directions to have a new Appeals Officer conduct a collection Due Process Hearing with "an adequate record", including: some form of a recording of the evidence or arguments presented; the making of finding of fact and conclusions of law; a review of the arguments raised; the factors taken into consideration in the final conclusion; and citations to supporting authority. Id.

It is no doubt true, as Judge Babcock found and ruled in Mesa Oil, that there can be cases in which the Appeals Officers' administrative record is inadequate to permit judicial review of the collection due process hearing. However, the instant case does not present such a situation.

The Court finds the record, including the Appeals Case Memorandum ⁶ and the evidence submitted by the parties, adequate to warrant the conclusion that the Appeals Officer took into consideration the requisite balancing of the need for efficient collection of taxes with the legitimate concern of Compucel that the collection action be no more intrusive than necessary. See §6330(c)(3). Even taking the facts as presented by the Compucel, Petitioner made no proposal to the Appeals Officer that would have required, or even justified, a deferral of collection by levy. Indeed, Compucel has not even suggested to this Court a reasonable basis for delaying collection by levy. By no means has Compucel established that the Appeals Officer abused his discretion by "failing" to accept Compucel's proposals to "write off" the majority of its tax debts through an offer in compromise or to enter into a payment plan that, even if complied with, would effectively defer the payment of Compucel's obligations for a long long time, if not forever.

Finally, Compucel seeks to gain further delay by alleging "changed circumstances" warranting yet another round of negotiations. The Court finds the so called "changed circumstances" presented by Compucel to be of insubstantial weight and to in no way to justify further collection delay. Moreover, as noted in AJP Mgmt. v. United States [2001-1 USTC ¶50,184], 2000 WL 33122693, *3 (C.D. Cal. 2000), there is no "indication in the Internal Revenue Code or its legislative history that a district court can or should order the IRS to reconsider a Notice of Determination in light of 'changed circumstances' . . ."

In sum, Compucel has not made a showing justifying any further delay in IRS collection efforts.

IV. CONCLUSION

For the foregoing reasons:

1. The Appeals Officer did not abuse his discretion in making the Notice of Determination at issue.

2. The IRS may proceed to collect, by levy and all other legally proper means, the tax liabilities at issue.

3. Judgment shall be entered by separate Order.

SO ORDERED.

¹ The nature of Plaintiff's business has not been described precisely in the evidence submitted.

² All statutory references herein are to the Internal Revenue Code, Title 26, United States Code.

³ The 30th day after March 17, 2000 fell on April 16, 2000 , a Sunday, so that filing on Monday, April 17, 2000 was timely.

⁴ As well as the running of certain periods of limitations.

⁵ Subject to exceptions not here relevant.

⁶ The Appeals Case Memorandum was not a mere pro forma conclusory statement. Rather, it adequately demonstrated that the Appeals Officer had considered Compucel's proposals, which amounted to efforts to "compromise" the tax liability for a fraction of the amount due and less than the Government could reasonably expect to collect, and to get on an installment payment schedule that would not even satisfy the interest that was accruing. If, as alleged, Compucel offered a combination of a very substantial write off of the liability and an installment payment, the absence of an express reference to this patently inadequate proposal is not significant.

[2002-1 USTC ¶50,321] Domingo Montijo, Plaintiff v. United States of America , Defendant

U.S. District Court, Dist. Nev., CV-S-01-0423-RLH (RJJ), 2/22/2002

[Code Secs. 6330 and 6702 ]

Collection Due Process hearing: Erroneous notice of determination: Invalidation of notice: Penalties, civil: Frivolous return penalty: Award of costs.--The IRS's erroneous notice of determination that found an individual liable for the frivolous return penalty following a telephone hearing with a revenue agent, which served as his appeal of the assessment, was deemed invalid following a Collection Due Process (CDP) hearing and was vacated. While acknowledging the erroneous statement in the notice, the government sought a remand at which the administrative hearing would be continued, but admitted that further proceedings would result in the same decision; however, it cited no authority under which the court could remand the matter for a continued administrative hearing. Moreover, a remand would constitute a judicial sanctification of the procedure used. With the government's consent, the court denied the motion for remand based on the rationale that the matter would come before it again after further delay. Instead, it concluded that invalidating the notice was appropriate and conformed with the taxpayer's request. The taxpayer was granted an award of his costs.
ORDER

HUNT, District Judge:

On April 12, 2001 , Appellant filed an Appeal of Determination of Collection Due Process Hearing Pursuant to 26 USC 6320 and a Motion that this Court Declare Invalid the IRS "Determination" at Issue (#1).

On December 12, 2001 , the United States of America ¹ filed its Motion and Memorandum to Remand for Continued Administrative Hearing (#4). Appellant Montijo filed an Objection (#8, filed January 17, 2002 ) to Appellee's motion.

BACKGROUND

Apparently, Appellant was served with a notice in 2000 that he owed a penalty for filing a frivolous tax return. The notice advised that he make arrangements to pay or request an appeal of the determination. He requested the appeal and was notified that a telephonic hearing was scheduled for January 10, 2001 . He tried to telephone the person providing the notice, Gerald Bowcut of the IRS, to complain that a telephonic hearing was not proper as the IRS was required to produce certain documentation during the hearing, but was only able to leave a message. On January 4, 2001 , Officer Bowcut called Appellant Montijo and, (according to Montijo, and not contradicted by the government) told him that he was not entitled to an "in-person" hearing, and that this telephone call would constitute the hearing. Appellant's demands for confirmation from the Secretary were denied. Appellant called Bowcut on January 10, 2001 , with the same results.

The Internal Revenue Service Appeals Office mailed Appellant a NOTICE OF DETERMINATION dated March 14, 2001 . Pursuant to 26 U.S.C. §6330(d)(1), Appellant filed this appeal, seeking a declaration that the IRS "determination" is invalid, that the IRS be ordered to hold the "Collection Due Process Hearing" required by §6320, and to produce certain documentation. He also seeks reimbursement of costs.

The Appellee asks the Court to remand so the administrative hearing can be continued, acknowledging that the NOTICE OF DETERMINATION contains an erroneous statement. In doing so, it admits that the determination will be the same.

For the record, in its motion, at page 2, beginning on line 7, the government admits the following: "The Internal Revenue Service, in the Notice of Determination, stated that plaintiff was precluded from raising liability for the frivolous return penalty at the appeal because he had previously been provided an opportunity to dispute the assessment, and had done so. . . . However, that statement was erroneous."

DISCUSSION

Section 6330(d)(1) provides that appeals for judicial review shall be to the Tax Court or, if the Tax Court does not have jurisdiction, to a district court of the United States . The government does not challenge this Court's jurisdiction, so it assumes this appeal is appropriately brought it.

In fact, the Appellee's motion provides no authorities whatsoever. Nowhere in the United States ' motion is any authority provided authorizing this Court to remand this matter for a continued administrative hearing. Local Rule LR 7-2(d) provides that "The failure of a moving party to file points and authorities in support of the motion shall constitute a consent to the denial of the motion. The failure of an opposing party to file points and authorities in response to any motion shall constitute a consent to the granting of the motion." Accordingly, the government has consented to the denial of its motion. Furthermore, the Court finds no merit to a request to permit the government to correct its admittedly erroneous statements when it admits it will make the same decision on remand, guaranteeing that the matter will be before the Court again, but after further delay.

Rather, the government's request that the "Notice of Determination should be vacated (emphasis added)" (see Motion page 2, line 5) seems more appropriate, and conforms with the request of the Appellant. Furthermore, the facts suggest that is what is required, considering the issue of whether a telephonic and unscheduled conversation constitutes a legal hearing under the statute. Remanding for a continuation of the hearing would constitute a judicial sanctification of the procedure used.

Inasmuch as the Appellee has acknowledged that the NOTICE OF DETERMINATION is erroneous, and should be vacated, no further evidence, documentation or hearing is necessary to resolve this matter. Therefore, the Court will proceed to rule not only on the motion to remand, but on the appeal itself.

Although the Appeal (#1) requests the Court to order the IRS to hold a hearing and to produce certain documentation, in addition to a determination that the NOTICE OF DETERMINATION was invalid, the Court finds it unnecessary and imprudent to attempt to describe the Appellee's administrative procedures or duties. The NOTICE OF DETERMINATION, dated March 14, 2001 , will be invalidated; Appellant will be awarded his costs; and Appellee may proceed as authorized by the law.

IT IS THEREFORE ORDERED AND ADJUDGED that the United States of America's Motion and Memorandum to Remand for Continued Administrative Hearing (#4) is DENIED.

IT IS FURTHER ORDERED AND ADJUDGED that the NOTICE OF DETERMINATION of March 14, 2001 is INVALID and VACATED.

IT IS FURTHER ORDERED that Appellant is awarded costs in the amount of $150.00.

¹ The original pleading characterized the parties as appellant and appellee. The government changed the characterization to plaintiff and defendant, which has been adopted by Plaintiff, who is appearing pro se. Since this is technically an appeal--see 26 U.S.C. §6330(d)(1)--the Court will continue to use the appellant and appellee designations.

[Dec. 54,713(M)] Karl Paul Vossbrinck v. Commissioner

Docket No. 612-01L., TC Memo. 2002-96, 83 TCM 1474, Filed April 9, 2002

[Appealable, barring stipulation to the contrary, to CA-2.

[Code Sec. 6330 ]

Collection: Notice of levy and right to hearing: Alternative resolution: Stay of collection: Abuse of discretion.--A pro se individual who was granted additional time prior to collection of his tax liabilities to seek a private letter ruling as to his employment status, but who, instead, requested the IRS examination division to review his status, was given a full and fair opportunity to seek an alternative resolution of his tax liabilities. Since collection was delayed at least six months while the taxpayer sought the administrative resolution of his liabilities and the IRS did not impede his efforts to seek an alternative to collection, the IRS did not abuse its discretion in refusing to allow him an additional stay to obtain a private letter ruling.

Karl Paul Vossbrinck, pro se. John Aletta, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

GERBER, Judge:

On December 14, 2000 , respondent issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 advising petitioner of respondent's intention to proceed with a proposed levy to collect petitioner's outstanding income tax liabilities for 1991, 1992, 1993, and 1994. A petition was filed on January 12, 2001 , in which petitioner alleged that he was not afforded a fair hearing and/or that he was denied due process. Petitioner had requested time within which to seek a private letter ruling as to whether he was an employee or self-employed. Respondent's Appeals Officer Richard Geltzer (the Appeals officer) agreed to permit additional time and after approximately 6 months the Appeals officer was advised that an examination had resulted in a decision that petitioner was an employee. Petitioner claims that respondent's Appeals officer refused to allow him additional time within which to seek a private letter ruling on the question of his employment status. Instead of obtaining a private letter ruling during the 6-month period, petitioner sought an audit examination of his employment status. We consider whether respondent's determination to proceed with collection, under those circumstances, was an abuse of respondent's discretion.

FINDINGS OF FACT

At the time of the filing of his petition, petitioner resided in Southbury , Connecticut . During the taxable years 1991 through 1994, petitioner provided computer consulting services to various entities. For the 1991, 1992, and 1993 tax years, petitioner filed returns reporting income from wages with Forms W-2 (Wage and Tax Statement) attached which reflected the withholding of tax from petitioner's wages. Petitioner's 1991, 1992, and 1993 returns reflected tax due of $1,562, $2,677 and $8,751, respectively. For 1994, petitioner filed a return reflecting income from wages resulting in a $17,364 income tax liability, $10,159 of which was paid by means of income tax withholding.

Respondent assessed on the unpaid income tax liability reported by petitioner for 1991 through 1994. Subsequently, respondent determined, by means of a statutory notice of deficiency, that petitioner had an income tax deficiency for 1993. In connection with that notice, petitioner did not file a petition with this Court, and respondent assessed the deficiency. In March 1999, respondent notified petitioner of the intent to levy with respect to all 4 taxable years. That notification also advised petitioner of his right to a hearing.

During April 1999, petitioner submitted a written request for a Collection Due Process Hearing. The Appeals officer contacted petitioner by telephone to arrange for a hearing. Petitioner did not request a face-to-face hearing. Instead, petitioner advised that he needed additional time to seek an administrative alternative to collection. The alternative was to have his employment status changed from employee to self-employed (independent contractor) for each of the tax years. If petitioner was successful in that pursuit, he believed that his tax liability would have either been reduced or eliminated. In particular, petitioner advised that he wanted time to obtain a private letter ruling to the effect that petitioner was self-employed during the years in question. The Appeals officer agreed to "stay" the collection process while petitioner sought a ruling. Approximately 1 week later, the Appeals officer received a copy of petitioner's request for a private letter ruling. The Appeals officer assumed that petitioner had submitted the original of the request for a private letter ruling to the appropriate Internal Revenue Service (IRS) ruling branch.

The Appeals officer heard nothing further from or about petitioner until November 2000, when he received notification from within the IRS that an examination of petitioner's employment status had been conducted and resulted in the conclusion that petitioner was an employee during the years in question. That determination had been made by respondent's specialized examination group in Vermont that considers whether taxpayers are employees or independent contractors. It was at that time (more than 6 months after his telephone conversation with petitioner) that the Appeals officer discovered that petitioner had not sought a private letter ruling, but had instead submitted a request for examination of his status. After receiving the notification during December 2000, the Appeals officer caused the issuance of the notice of determination to proceed with the levy, from which petitioner appealed to this Court.

For more than 1 year after the December 2000 issuance of the determination and the filing of the petition, petitioner did nothing about seeking a private letter ruling. Moreover, petitioner has alleged that he submitted his request for a ruling about 8 days prior to the time of the scheduled trial of this case (March 4, 2002).

OPINION

The question we consider is whether, under the circumstances of this case, respondent abused his discretion by not allowing petitioner additional time to seek a private letter ruling. The obverse of that question is whether the amount of time respondent afforded petitioner to seek collection alternatives was reasonable.

Section 6330 provides that, upon request and in the circumstances described therein, a taxpayer has a right to a "fair hearing". Sec. 6330(b). A "fair hearing" consists of the following elements: (1) An impartial officer will conduct the hearing; (2) the conducting officer will receive verification from the Secretary that the requirements of applicable law and administrative procedure have been met; (3) certain issues may be heard such as spousal defenses and offers-in-compromise; and (4) a challenge to the underlying liability may only be raised if the taxpayer did not receive a statutory notice of deficiency or receive an opportunity to dispute such liability. Sec. 6330(c).

Petitioner's only request of the Appeals officer was for a delay while he pursued the collection alternative of seeking a private letter ruling on his employment status for the years subject to the enforced collection. Petitioner was afforded additional time, but, instead of seeking a ruling, he applied to respondent's examination division, which found him to be an employee. ¹ Collection was delayed for at least 6 months while petitioner sought the administrative resolution of his outstanding tax liabilities. Petitioner contends that respondent abused his discretion by not allowing him an additional stay to seek a ruling.

Respondent did not impede petitioner in seeking an alternative to collection. Instead, respondent's Appeals Officer waited until he received notification that petitioner's attempt to administratively resolve his employment status had resulted in the decision that the status for the years under consideration were unchanged and hence that the liabilities remained outstanding and collectible. We note that although petitioner was advised of the decision that the examination personnel had decided that his employment status was that of employee during November 2000, and of respondent's determination to proceed with collection during December 2000, petitioner did not begin the process of seeking the private letter ruling until more than 1 year later (about 8 days before trial). Under these circumstances, we find that petitioner was given a full and fair opportunity to seek an alternative resolution of his tax liabilities.

To reflect the foregoing,

An appropriate decision will be entered permitting respondent to proceed with collection.

¹ Petitioner, at trial, stated that someone in respondent's office had told him to seek an examination instead of a private letter ruling. Petitioner, however, was unable to provide the name of the person who might have given him that advice. It is petitioner's belief that respondent's examination personnel do not have as much latitude in deciding employment status and that he would have been successful in seeking a private letter ruling because the individuals who consider rulings have a broader spectrum of matter they can consider in the process. Petitioner contends that he is entitled to extra time before collection is permitted, because it was respondent's "error" to send him to the wrong place for relief. Petitioner has not shown a sufficient factual predicate for his argument. Even if petitioner had shown that he had received the alleged advice from someone in respondent's office, petitioner was not forced to seek one type of relief rather than another. It was his choice to seek an examination of his employment status, rather than seeking a ruling during the time allotted.

[2002-1 USTC ¶50,444] Brian David Erickson, Plaintiff v. United States of America , Defendant

U.S. District Court, No. Dist. Calif. , San Jose Div., C-01-20798-JF, 3/14/2002 , 2002 U.S. Dist. LEXIS 8963.

[Code Sec. 6330 ]

Collection Due Process: Hearing procedures: Issues raised at hearing.--The government's motions for summary judgment were denied with respect to its proposed levy action to collect frivolous return penalties assessed against a pro se individual for three tax years. The government conceded that the IRS Appeals officer improperly refused to address the taxpayer's challenge to the imposition of the penalties at his Collection Due Process (CDP) hearing; thus, the issue was remanded to IRS Appeals. Moreover, the Appeals officer declined to consider the taxpayer's conditional alternative to collection. Given the court's determinations that the CDP hearing was defective and that the case had to be remanded on other issues, it concluded that consideration of the propriety of the levy as a means for collection was premature.

[Code Sec. 6203 ]

Collection Due Process: Assessment: Form 4340: Hearing procedures: Summary judgment.--The government's motions for summary judgment were denied with respect to its proposed levy action to collect frivolous return penalties assessed against a pro se individual for three tax years. Forms 4340 presented to the taxpayer at his collection due process hearing did not make explicit references to 23C dates. The district court declined to follow Tax Court precedent, which held that a Form 4340 that does not list a 23C requirement fulfills the verification requirement of Code Sec. 6330 if the taxpayer can point to no irregularity in the assessment process. See J.D. Lunsford, Dec. 54,553 (2001). Thus, summary judgment was denied and the issue was remanded for further proceedings.

Brian David Erickson, Soquel, Calif., pro se. David W. Shapiro, United States Attorney, San Fransisco, Calif. 94102, Emily J. Kingston, United States Attorney's Office, Jay R. Weill, San Francisco, Calif., for defendant.

è Caution: This court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.ç

OPINION ¹

FOGEL, District Judge:

On March 14, 2002 , the Court heard argument on Defendant's motion seeking dismissal or summary judgment as to a portion of Plaintiff's claims and remand as to the remainder of Plaintiff's claims. The Court also addressed Defendant's motion to strike Plaintiff's late-filed opposition and Plaintiff's request for recovery of costs. The Court will deny the motion to strike Plaintiff's late-filed opposition; deny Defendant's motion to dismiss or, in the alternative, for summary judgment; remand the matter for further proceedings; and denying Plaintiff's request for costs.

I. BACKGROUND

Plaintiff, proceeding pro se, appeals Defendant's determination that he owes three $500 frivolous return penalties and that such penalties may be collected by levy. The penalties relate to Plaintiff's federal income tax returns for the years 1996, 1997 and 1998. Those returns indicated that Plaintiff earned no taxable income despite the fact that the attached W-2 forms indicated that he earned significant wages during the years in question. The returns requested a refund of all wages withheld. The IRS assessed a $500 frivolous return penalty with respect to each return pursuant to 26 U.S.C. §6702. That section provides in relevant part that:

(a) Civil penalty.--If--

(1) any individual files what purports to be a return of the tax imposed by subtitle A but which--

(A) does not contain information on which the substantial correctness of the self-assessment may be judged, or

(B) contains information that on its face indicates that the self-assessment is substantially incorrect; and

(2) the conduct referred to in paragraph (1) is due to--

(A) a position which is frivolous, or

(B) a desire (which appears on the purported return) to delay or impede the administration of Federal income tax laws,

then such individual shall pay a penalty of $500.

26 U.S.C. §6702(a).

On January 11, 2001 , the IRS sent Plaintiff a Final Notice--Notice of Intent to Levy which requested full payment of the assessed penalties and informed Plaintiff of his right to a Collection Due Process Hearing ("CDP Hearing") pursuant to 26 U.S.C. §6330. Plaintiff timely requested a CDP Hearing, which was held on July 2, 2001 before an IRS Appeals Officer. Following the hearing, the Appeals Officer issued a Notice of Determination stating that all legal and administrative requirements for the proposed levy had been met and that the proposed levy was not more intrusive than necessary. Plaintiff timely filed the instant pro se action appealing this determination.

II. DEFENDANT'S MOTION TO STRIKE PLAINTIFF'S LATE OPPOSITION

Defendant moves to strike Plaintiff's late-filed opposition, which was due by February 19, 2002 and was not filed until February 28, 2002 . The Court in its discretion will deny the motion to strike and consider Plaintiff's opposition.

III. DISCUSSION

The requirements of a CDP Hearing are set forth in 26 U.S.C. §6330. That section provides that "the appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." 26 U.S.C. §6330(c)(1). It further provides that the taxpayer may raise at the hearing "any relevant issue relating to the unpaid tax or the proposed levy," including the appropriateness of the proposed collection action and offers of collection alternatives. 26 U.S.C. §6330(c)(2)(A). The taxpayer also may raise challenges to the existence or amount of the underlying tax liability if the taxpayer did not receive statutory notice of deficiency or did not otherwise have an opportunity to dispute such liability. 26 U.S.C. §6330(c)(2)(B). The Appeals Officer's determination must take into consideration the verification of the Secretary presented under §6330(c)(1); any issues raised by the taxpayer under §6330(c)(2); and whether any proposed collection action balances the need for the efficient collection of taxes against the taxpayer's legitimate concern that any collection action be no more intrusive than necessary.

Plaintiff challenges several aspects of the CDP Hearing, addressed in turn below.

Imposition Of The Penalties

Plaintiff attempted to challenge whether the frivolous return penalties should have been imposed as permitted under §6330(c)(2)(B). The Appeals Officer refused to address such challenge. Plaintiff asserts that such refusal was improper. Defendant concedes that the Appeals Officer should have addressed this issue and moves for remand so that the Appeals Officer may address the issue.

Verification

At the hearing, Plaintiff requested the verification from the Secretary that all legal requirements had been met in assessing the three $500 frivolous return penalties against him as required under §6330(c)(1). The Appeals Officer offered Forms 4340, which were computer printouts indicating the various tax liabilities and penalties assessed against Plaintiff. Plaintiff asserts that these computer printouts were not signed by any individual and provided no indication of origin and therefore did not constitute appropriate verification of the Secretary as required under §6330(c)(1). Defendant moves for dismissal or summary judgment as to this issue on the basis that the Forms 4340 constituted adequate verification.

The Court has been unable to discover any controlling authority on this issue. The Ninth Circuit has held in other contexts that "a Form 4340 is adequate to prove a valid assessment if it lists the '23C date,' indicating the date on which the actual assessment was made." Huff v. United States [93-2 USTC ¶50,633], 10 F.3d 1440, 1446 (9th Cir. 1993). In Huff, the Court concluded that the IRS could not rely upon the proffered Form 4340 to prove validity of the disputed assessment, because the Form did not list any 23C dates. Defendant cites Huff for the proposition that the Forms 4340 satisfied the requirements of §6330(c)(1) in the present case. However, the Huff Court 's discussion did not §6330(c)(1); accordingly, any application of Huff must be by analogy. Moreover, the Forms 4340 in the present case do not make explicit reference to any 23C dates. Defense counsel represented at the hearing that the 23C dates are present on the face of the Forms 4340, although they are not designated as such. Even applying Huff then, there is at least a serious question as to whether the Forms 4340 are adequate to demonstrate that the assessments against Plaintiff were valid.

Several tax court decisions have concluded that Forms 4340 are sufficient to verify valid tax assessments for purposes of §6330(c)(1). See, e.g., Lunsford v. Commissioner of Internal Revenue [CCH Dec. 54,553], 117 T.C. 183, 187-88 (2001); Davis v. Commissioner of Internal Revenue [CCH Dec. 53,969], 115 T.C. 35, 40-41 (2000). These decisions are not binding upon this Court. In Lunsford, the tax court cited Huff for the proposition that, where the Form 4340 does not list a 23C date, further examination is required to determine whether an assessment was made. Lunsford [CCH Dec. 54,553], 117 T.C. at 187-88. The Lunsford court went on to state, however, that "where the taxpayer can point to no evidence of any irregularity in the assessment process, the presumption of a valid assessment remains intact." Id. at 188.

This Court declines to follow the Lunsford court's holding that a Form 4340 which does not list a 23C date nonetheless fulfills the verification requirement of §6330(c)(1). Given the ambiguity as to whether the Forms 4340 at issue in this case list 23C dates, and the fact that the matter will be remanded on other grounds, the Court will deny Defendant's motion on this issue and remand for further proceedings.

Alternative To Levy

Finally, Plaintiff offered an alternative to the proposed levy, in that he offered to pay the frivolous return penalties if the Appeals Officer could point out any statutory authority for the assessment of the penalties against him. The Appeals Officer declined to do so and concluded that Plaintiff's conditional offer of payment did not provide a real alternative to the levy proposed by the IRS. Defendant moves for dismissal or summary judgment as to this issue. Given this Court's conclusions that the CDP Hearing was defective for the reasons noted above, consideration of the propriety of a levy as a means for collection would be premature. Accordingly, the Court will deny Defendant's motion on this issue.

Given the defective nature of the CDP Hearing provided to Plaintiff, this Court will remand the matter so that Plaintiff may be given a CDP Hearing which complies with statutory requirements. Plaintiff's request for costs will be denied.

IV. ORDER

It is hereby ordered:

(1) Defendant's motion to strike Plaintiff's late-filed opposition is DENIED;

(2) Defendant's motion to dismiss or, in the alternative, for summary judgment is DENIED;

(3) The matter is remanded for further proceedings consistent with this order; and

(4) Plaintiff's request for recovery of costs of suit is DENIED.

JUDGMENT

The evidence and arguments having been considered and a decision having been rendered,

IT IS ORDERED AND ADJUDGED that the matter be remanded to the IRS for further proceedings.

¹ This disposition is not designated for publication and may not be cited.

[Dec. 54,757(M)]Alan M. and Marcia F. Schulman v. Commissioner

Docket No. 9567-01L., T.C. Memo. 2002-129., Filed May 29, 2002

[Appealable, barring stipulation to the contrary, to CA-7.]

[Code Secs. 6159 and 6330 ]

Hearing before levy: Settlement officers: Installment agreements: Abuse of discretion.--An IRS settlement officer did not abuse her discretion in failing to accept married taxpayers' proposed installment agreement to satisfy their unpaid tax liabilities. The record established that the officer's consideration of the taxpayers' collection alternative was a reasonable determination based on a financial analysis of the couple's monthly income and expenses and their ability to pay. Moreover, her disallowance of the taxpayers' claimed expenses under their proposed installment plan was not arbitrary, and she gave due consideration of the proposals they submitted.

Alan M. and Marcia F. Schulman, pro sese. James E. Schacht, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

RUWE, Judge:

Petitioners were issued a notice of determination pursuant to section 6330(c)(3), ¹ in which it was determined that a proposed levy should proceed for petitioners' unpaid tax liabilities. Petitioners filed a petition for judicial review under section 6330(d)(1)(A) from that determination. The only issue for decision is whether the settlement officer abused her discretion in failing to accept petitioners' collection alternative.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. At the time of filing of the petition, petitioners resided in Bayside, Wisconsin .

Petitioner Alan Schulman is employed as a C.P.A., and his wife is an educator. As of January 11, 2001 , petitioners owed unpaid Federal income taxes, penalties, and interest as follows:

                                                            Unpaid assessment

Tax period                                                       amount

1993 ............................ .......................     $4,701.17

1994 ....................................................      3,733.13

1995 ....................................................      6,102.33

1996 ....................................................      6,492.48

1997 ....................................................      8,226.46

1998 ....................................................      6,097.53

On January 11, 2001 , respondent rejected petitioners' proposed installment agreement to pay $75 per month for their unpaid tax liabilities. Respondent estimated that petitioners' monthly income was $6,639, consisting of Mr. Schulman's salary of $3,856 and his wife's salary of $2,783. Respondent estimated total monthly necessary living expenses of $5,861, ² consisting of:

Item of expense                                            Expense allowed

National standard expenses ...............................     $ 1,473

Housing/utilities ........................................       1,440

Transportation ...........................................         965

Health care ..............................................         324

Taxes (income and FICA) ..................................       1,451

Court-ordered payments ...................................         150

Child/dependent care .....................................           0

Life insurance ...........................................          58

Secured/legally-perfected debts ..........................           0

Other ....................................................           0

   Total .................................................       5,861

Respondent concluded that petitioners had the ability to pay $778 per month, the net difference between petitioners' monthly income and their monthly expenses.

On April 9, 2001 , respondent issued to petitioners a Letter 1058, Final Notice/Notice of Intent to Levy and Notice of Your Right to a Hearing. In that notice, respondent proposed a levy for the collection of $36,032.35 in unpaid income taxes, penalties, and interest for the taxable years 1993, 1994, 1995, 1996, 1997, and 1998. On April 17, 2001 , petitioners filed a Form 12153, Request for a Collection Due Process Hearing. Petitioners' attachment to that form states their disagreement with respondent's proposed monthly installment payment and includes "a listing of monthly expenses to provide information that will assist in reaching a compromise":

Item of expense                                               Expense claimed

Housing and utilities

   Rent .................................................     $ 1,355

   Gas ..................................................          90

   Electric .............................................          70

   Telephone ............................................         100

   Cable ................................................          45

   Water ................................................          60

     Total ..............................................       1,720

Transportation

   Gas, oil et al. ......................................         195

   Loans ................................................         660

   Insurance ............................................         180

     Total ..............................................       1,035

Health care

   Insurance ............................................         455

   Dental ...............................................          65

   Prescription copays ..................................         120

     Total ..............................................         640

Taxes

   Federal ..............................................         805

   Social Security ......................................         385

   

Wisconsin

 ............................................         295

     Total ..............................................       1,485

Court-ordered payments ..................................         150

Life insurance ..........................................          58

Retirement ..............................................         120

Computer loan ...........................................          55

Credit card payments ....................................         300

Student loan payments ...................................         220

Loan not current being repaid $11,500 .......................

                                                       ---------------

Total ...................................................       5,783

A telephone conference was held on May 21, 2001 , and, thereafter, the parties exchanged correspondence.

On June 8, 2001 , respondent's settlement officer sent petitioners the following letter regarding the proposed installment agreement:

I have not received a more viable proposal for payment of your 1993 thru 1998 (and 1999) Federal Income Taxes.

As we discussed during our telephone conference on 5/21/2001 , although you do not demonstrate an ability to pay in full within the near future, an adjustment of your expenses should be made so that within one year you can commence substantial payments to allow payment in full of all the liabilities listed on the Notice of Intent and the 99 and prospective 2000 tax debt. An installment agreement in the amount of $75.00 could be initially allowed which would increase to $748.00 per month in one year. I am sorry, but the unsecured and incidental debt you list in your April 2001 financial statements *** [is] not allowable when forbearance would result in payment in full of all tax liabilities, penalty and interest.

The standards for allowable living expenses are prescribed in the Internal Revenue Manual are the guide used by both the Compliance and Appeals functions. I cannot *** [forgo] these guidelines unless there is a special circumstance such as critical health needs.

In response to this letter, petitioners submitted a Form 433-A, Collection Information Statement for Individuals, dated June 20, 2001 , in which they stated: "I would like to reach a compromise between the $75 that was previously agreed to + the $735 [sic] that the IRS has calculated." The Monthly Income and Expense Analysis, as part of that form, lists monthly income of $6,965, which consists of Mr. Schulman's salary of $3,965 and his wife's salary of $3,000, as well as the following expenses:

Item of expense                                            Expense claimed

National standard expenses ............................. $     1,453

Housing/utilities ......................................       1,750

Transportation .........................................       1,030

Health care ............................................         695

Taxes (income and FICA) ................................       1,485

Court-ordered payments .................................         150

Child/dependent care

Life insurance .........................................          60

Secured/legally-perfected debts ........................

Other expenses

   Loan payments .......................................         910     (685)

   Student loans .......................................

     Total .............................................       7,533

On June 26, 2001 , the settlement officer sent a letter to petitioners, which enclosed a list of the following allowable expenses:

Item of expense                                               Expense allowed

National standard expenses ..............................     $ 1,473

Housing/utilities .......................................       1,214

Transportation ..........................................       1,024

Health care .............................................         400

Taxes (income and FICA) .................................       1,685

Court-ordered payments ..................................         150

Child/dependent care

Life insurance ..........................................          60

Secured/legally-perfected debts .......................

Other expenses

   Loan payments ........................................           0

   Student loans ........................................         210

     Total ..............................................       6,216

The letter states:

I have received your updated collection information statement dated 6/20/01 and Mr. Schulmans' [sic] wage verification. Enclosed is a calculation of the allowable Necessary Living Expenses.

Note that significant changes were made to the allowable amounts for health care, taxes and the student loan repayment is being allowed. The health care figure is based on an average monthly premium of 171.00 co-pays averaging 140.00 and the remaining is for miscellaneous medical supplies or needs. The monthly tax figure was adjusted because I believe you are under-estimating your monthly combined State and Federal Income Tax accrual. The school loan is being allowed because I am assuming it is for the education of either one of you for the purpose of enhancing your careers and earning capacity. Student loans repayments for current or former dependents are not allowable unless a critical health situation exists.

Your gross income of $6965.00 minus the allowable expenses totaling $6216.00 leaves a monthly payment capability of $751.00. ³ Again, the unsecured charge card or loan debt is not allowable.

Upon submission of your 1999 and 2000 Federal Income Tax Returns I would consider an agreement of $75.00 per month for one year, to be increased to $750.00 per month. All tax returns must be filed timely during a pending agreement.

Should you have information to further substantiate some of the expenses you have claimed I will consider it. I will wait until 7/10/2001 to hear from you regarding this proposal for resolution of your unpaid Federal Income Tax Accounts.

My tentative determination is to sustain the Notice of Intent to Levy absent filed returns and an agreement to pay in full as described above. Your financial statement reveals you have the ability to pay in full by making substantial monthly payments.

On July 6, 2001 , petitioners sent a letter in response to the settlement officer's letter:

I received your letter of June 26, 2001 and I must disagree with your findings. I have made some adjustments to the form 433-A based on new information that I received and your changes and have included a new form 433-A.

The housing and utilities are based upon the actual monthly expenditures. The health care is based upon actual monthly insurance premiums and out of pocket co-pays for prescription medications. The loan payments are also actual payments being made on outstanding credit card balances.

I am again requesting a compromise monthly payment at a level that can be made on a regular basis. If we are not able to reach a compromise, than I am requesting to take the next step in the appeal process.

The letter attached a new Form 433-A, which listed the following amounts as necessary living expenses:

Item of expense                                            Expense claimed

National standard expenses ...............................     $ 1,473

Housing/utilities ........................................       1,715

Transportation ...........................................       1,045

Health care ..............................................         589

Taxes (income and FICA) ..................................       1,685

Court-ordered payments ...................................         150

Child/dependent care

Life insurance ...........................................          60

Secured/legally-perfected debts

Other expenses ...........................................

   Loan payments .........................................         685

   Student loans .........................................         210

     Total ...............................................       7,612

On July 19, 2001 , a Form 3193, Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330; was issued to petitioners in which the Appeals Office "sustained" the notice of intent to levy and verified that "All administrative procedures were followed prior to issuance." ⁴ On July 30, 2001 , petitioners filed a timely petition with this Court from that determination. On August 28, 2001 , petitioners filed an amended petition in which they disagreed with the settlement officer's proposed monthly installment payment and alleged that she failed to compromise or to otherwise accept their claimed expenses.

OPINION

A taxpayer is entitled to notice before levy and notice of the right to a fair hearing before an impartial officer of the Internal Revenue Service Office of Appeals. Secs. 6330(a) and (b), 6331(d). If the taxpayer requests a hearing, he may raise in that hearing any relevant issue relating to the unpaid tax or the proposed levy, including challenges to the appropriateness of the collection action and "offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise." Sec. 6330(c)(2)(A). A determination shall be made which shall take into consideration those issues, and "whether any 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).

In the instant case, petitioners raise only issues relating to collection alternatives, specifically whether the settlement officer failed to consider certain expenses that petitioners claimed as part of their proposed installment agreement. ⁵ Because petitioners do not dispute the existence or amount of their underlying tax liabilities, we review the determination for an abuse of discretion. Lunsford v. Commissioner [Dec. 54,553], 117 T.C. 183, 185 (2001); Nicklaus v. Commissioner [Dec. 54,477], 117 T.C. 117, 120 (2001).

The settlement officer's consideration of petitioners' collection alternative, an installment agreement, was reasonable. Her determination was based on a financial analysis of petitioners' monthly income and expenses and their ability to pay. She allowed certain expenses in amounts greater than those originally claimed by petitioners, e.g., taxes. And, her disallowance of claimed expenses was based on applicable procedures contained in the Internal Revenue Manual. ⁶ The settlement officer informed petitioners that, under those procedures, she could not allow expenses for unsecured debt as they had claimed. She also informed them that certain other expenses they had claimed had not been substantiated. She provided petitioners considerable time and opportunity to submit additional information to substantiate expenses they had previously claimed, but which were disallowed, and to submit evidence of any "special circumstance". The settlement officer offered a 1-year period for petitioners to modify their spending habits and lifestyle before full monthly payments would be required.

Petitioners submitted additional information, however, they continued to claim expenses which were previously disallowed and which they had been told could not be allowed. They did not provide substantiation for certain expenses, e.g., medical expenses, but, nevertheless, they continued to claim those expenses. Petitioners' letter of July 6, 2001 , shows clearly that an installment agreement could not be reached by the parties given the wide disparity in petitioners' claimed expenses and the expenses allowable under the Internal Revenue Manual guidelines. Indeed, in that letter petitioners claimed expenses in amounts greater than those they had claimed in their June 20, 2001 , letter. Given those circumstances, the determination to sustain the levy was not an abuse of discretion.

The crux of petitioners' contentions in this case is that certain expenses should have been allowed by the settlement officer in greater amounts. Petitioners dispute two items which the settlement officer refused to allow additional expenses for. First, petitioners contend that the expenses for housing and utilities should have been based on the local standards applicable to Ozaukee County, Wisconsin, and not Milwaukee County, Wisconsin, since "Our house is less than one half mile from Ozaukee county and is more consistent with the costs of that county than with those of Milwaukee county." ⁷ Petitioners propose an average of the allowable expense standards for the two counties; i.e., $1,394, be used to determine a proper monthly installment payment. Second, petitioners claim that the settlement officer "arbitrarily" allowed $400 of medical expenses, whereas she should have allowed $695, the amount petitioners listed on the June 20, 2001, Form 433-A that they submitted. ⁸ We do not find that the settlement officer abused her discretion in disallowing petitioners' claimed expenses.

The settlement officer was entitled to rely on the standards applicable to Milwaukee County . Petitioner husband admitted at trial that both he and his wife lived and worked in Milwaukee County . Petitioners did not introduce any evidence of any meaningful ties to Ozaukee County , other than the relative proximity of their residence. We cannot agree that the settlement officer abused her discretion in relying on the housing and utility standards applicable to Milwaukee County . And, it was not an abuse of discretion for her to refuse to accept what petitioners claimed to be their actual housing and utility expenditures. The expenses claimed by petitioners exceeded the applicable local standards for housing and utilities. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.15.1.3.2.2 (2), at 17,657 ("Taxpayers will be allowed the local standard or the amount actually paid, whichever is less").

The settlement officer allowed $400 of medical expenses on the basis of average monthly premiums, copays, and miscellaneous medical supplies or needs. Petitioners claim that $695 in medical expenses should have been allowed, which amount they claim to be their "actual out-of-pocket health insurance, copays, things like that." However, it is clear that the settlement officer did not accept those additional amounts, because petitioners provided no substantiation. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.15.1.3(8)(a), at 17,655: "A taxpayer is required to provide evidence and justification for claimed expenses, except National Standards". ⁹ Petitioners presented no evidence at trial or on brief to otherwise substantiate their expenses. ¹⁰ We hold that the settlement officer did not abuse her discretion in computing petitioners' allowable monthly expenses.

On the basis of the record as a whole, it is clear that the parties were, and are still, unable to agree to an appropriate monthly installment payment. The settlement officer's proposed monthly installment payment was computed under the guidelines provided in the Internal Revenue Manual. We have reviewed those computations, and we find them to be reasonable. The settlement officer's disallowance of petitioners' claimed expenses was not arbitrary, and she gave due consideration to each of the proposals they submitted. We hold that the settlement officer did not abuse her discretion, and respondent may proceed with the proposed levy action. See Estate of Doster v. Commissioner [Dec. 54,603(M)], T.C. Memo. 2002-2 ("To the extent respondent considered installment payments as a collection alternative, there was no abuse of discretion").

An appropriate decision will be entered permitting respondent to proceed with collection.

APPENDIX

Attachment--3193

Notice of Determination

Settlement Officer Ursula Kordasiewicz Wastian has not had prior contact with the taxpayers concerning this specific tax return or the years listed. No other Collection Due Process Appeals are pending at this time for the specific tax returns or years listed.

Notice of Intent to Levy Issued on 4/9/2001 . The taxpayers submitted a Request for a Collection Due Process Hearing on 4/14/2001 .

ISSUES RAISED BY THE TAXPAYER

The taxpayer is requesting an installment agreement or an offer in compromise be granted based on financial information he submitted to the compliance employee and again to the Settlement Officer. The Service does consider both collection alternatives after an analysis of income and monthly expenditares [sic] claimed on a Collection Information Statement. Certain restrictions do apply in that expenses considered reasonable and allowable under the Internal Revenue Manual are granted and the taxpayer must be in full compliance with all Federal Tax Return filing requirements.

The taxpayers submitted financial information to the compliance function and to appeals which contained expenses not normally allowable in the area of unsecured debt. The Internal Revenue Manual permits a taxpayer a one year period of time to adjust their spending habits and life-style to allow for payment in full of accrued liabilities over the life of an installment agreement. A proposal of initial payments in the amount of $75.00 per month to be increased to $750.00 at the one year anniversary was made to the taxpayers. They do not agree with this proposal and did not counter with anything more viable.

Additionally, the Service could not seriously entertain an installment agreement or an offer in compromise until the taxpayer became current with all filing requirements. The 1999 and 2000 Federal Income Tax Returns remain unfiled.

VERIFICATION OF LEGAL AND PROCEDURAL REQUIREMENTS

A review of the compliance case history reveals the Revenue Officer communicated the Services' policy regarding allowable expenses and current compliance to the taxpayer prior to issuance of the Notice of Intent to Levy. An independent review of this determination was also conducted per the Internal Revenue Manual and was sustained. Sources of collection were identified prior to issuance of the Notice of Intent to Levy. All administrative procedures were followed.

BALANCING THE NEED FOR EFFICIENC [sic] COLLECTION WITH THE CONCERN THAT COLLECTION IS NO MORE INTRUSIVE THAN NECESSARY

The taxpayers has [sic] been given repeated explanations and policy guidelines relative to allowable expenses and current compliance. Both the compliance employee and Settlement Officer have provided the taxpayer with alternatives to the levy however he insists on more reasonable terms. The financial information reveals an ability to pay all the subject taxes, penalty and interest in full by making substantial monthly payments after giving one year to adjust his life-style. Resolving the unsecured charge card debt and excessive housing expenses will permit substantial payments. The compliance issue is also a road-block to these collection alternatives at this time. Levy activity at this time is not considered overly intrusive considering the attempts made by the Service to resolve this situation and lack of compliance with filing Federal Income Tax Returns in a timely manner.

RECOMMENDATION

The Notice of Intent to Levy is sustained.

¹ Unless otherwise indicated, all section references are to the Internal Revenue Code as amended.

² In computing their proposed monthly installment payment, petitioners claimed monthly necessary living expenses as follows:

Item of expense                                               Expense claimed

National standard expenses ..............................     $     0

Housing/utilities .......................................       1,440

Transportation ..........................................         965

Health care .............................................         324

Taxes (income and FICA) .................................       1,451

Court-ordered payments ..................................         150

Child/dependent care ....................................           0

Life insurance ..........................................          58

Secured/legally--perfected debts ........................           0

Other ...................................................           0

   Total ................................................       4,388

³ Due to a subtraction error, this number should have been $749.

⁴ An attachment to this form describes the determination to sustain the levy and is attached to this opinion as an appendix.

⁵ The notice of determination states that petitioners requested an offer in compromise; however, petitioners do not raise any issues relating to any offer in compromise, and the record does not show that they filed a Form 656, Offer in Compromise. Indeed, at trial, Mr. Schulman indicated his unwillingness to satisfy the procedures applicable to an offer in compromise.

⁶ The Internal Revenue Manual provides procedures for proposed installment agreements. See 2 Administration, Internal Revenue Manual (CCH), sec. 5.15.1 to 5.15.1.4, at 17,653-17,660. Those procedures contain guidelines for allowable expenses, which include necessary and conditional expenses. Necessary expenses are those that meet the necessary expense test; i.e., "they must provide for a taxpayer's and his or her family's health and welfare and/or the production of income" and they must be reasonable. There are three types of necessary expenses: (1) Those based on national standards, e.g., food, housekeeping supplies, apparel and services, and personal care products and services; (2) those based on local standards, e.g., housing, utilities, and transportation; and (3) other expenses, which are not based on national or local standards, e.g., health care. Conditional expenses are those expenses that do not meet the necessary expense test, but which may be allowable if the tax liability, including projected accruals, can be fully paid within five years.

⁷ The local standards for housing and utilities for calendar year 2002 list the allowable expenses for a family of four in Milwaukee County , Wisconsin , at $1,255, and in Ozaukee County , Wisconsin , at $1,533.

⁸ Petitioners now propose additional amounts of medical expenses, increasing their total to $726, as well as an increase in the tax expenses allowed from $1,685 to $2,065. We decline to discuss those additional amounts, since they were not raised before the settlement officer and were not raised at trial. "It is the responsibility of the taxpayer to raise all relevant issues at the time of the pre-levy hearing." H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 755, 1020. In addition, petitioners have submitted with their brief a revision of the expenses used by the settlement officer which shows total expenses of $7,071. Petitioners propose "a monthly payment of $300 as a way of settling this case". Again, this revision is relevant, for purposes of our review, only to the extent it was proposed to the settlement officer.

⁹ See also sec. 301.6330-1(e)(1), Proced. & Admin. Regs.: "Taxpayers will be expected to provide all relevant information requested by Appeals, including financial statements, for its consideration of the facts and issues involved in the hearing."

¹⁰ At trial, Mr. Schulman testified:

Q Mr. Schulman, did you ever provide Ms. Wastian any evidence of your medical expenses?

A Yes. They're on a schedule.

Q But did you provide them to her when you conferred with her?

A I don't know if they were given to her, but somebody in the Service, in the office, had them, yes. In a notice to Ms. Marge Flaig, who, I guess, was the revenue officer who you had before, in an attachment to Form 12153 in April of 2001, it listed health care for insurance, health insurance, dental and prescription copays.

*******

Q And did you submit any additional information beyond this, in terms of where these line items consisted of?

A No. Nobody ever asked me.

[2003-2 USTC ¶50,720]Owens Motor Coach, Inc., Plaintiff v. United States of America , Defendant.

U.S. District Court, West. Dist. Pa. ; Civ. 03-682, October 14, 2003 .

[ Code Sec. 6330]

Internal Revenue Service: Collection Due Process: Hearing procedures. --

The IRS was entitled to proceed with a levy against corporation following its Collection Due Process hearing. The taxpayer presented neither evidence nor argument that an installment agreement was an appropriate alternative to the levy; thus, the IRS Appeals officer's refusal to accept its proposal for an installment agreement was not an abuse of discretion.

Steven Sablowsky, Goldblum & Sablowsky LLC, for plaintiff. Gerald A. Role, Department of Justice, for defendant.

MEMORANDUM OPINION

AMBROSE, Chief District Judge: This is an Appeal from a Notice of Determination by the IRS, under 26 U.S.C. §§6320 and 6330. Plaintiff avers that Defendant improperly denied it an installment agreement as an alternative method of paying its tax obligations, and instead sustained a levy. Defendant has filed a Motion to Dismiss or for Summary Judgment, partially on grounds that it did not abuse its discretion in declining to approve a collection alternative. The parties have submitted affidavits and evidence relating to the Motion.

After appropriate procedures, the IRS filed a Notice of Tax Lien against Plaintiff, as the result of $245,544.22 in unpaid federal tax obligations. Plaintiff requested, and received, a hearing before an appeals officer. In connection with the hearing, Plaintiff expressed its desire to enter into an installment agreement. In the interim, Plaintiff made delinquent federal tax deposits and paid certain of its tax liabilities. Because those actions were untimely, however, penalties and interest had accrued and remained unpaid. A Notice of Determination denied Plaintiff's request for an alternative collection method, and determined that a notice of levy was appropriate.

Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In considering a motion for summary judgment, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L.Ed.2d 202, 106 S.Ct. 2505 (1986).

The parties agree that the applicable standard of review is whether the appeals officer abused his discretion in deciding the issue before him. E.g., Stop 26-Riverbend, Inc. v. United States [ 2003-1 USTC ¶50,360], No. C2-02-0285, 2003 U.S. Dist. LEXIS 5528, at **3-4 (S.D. Oh. March 12, 2003). An abuse of discretion is an arbitrary action not justifiable in light of the facts and circumstances presented in the record. E.g., Dudley's Comm. and Indus. Coating, Inc. v. United States [ 2003-1 USTC ¶50,397], 3:02-0106, 2003 U.S. Dist. LEXIS 6243, at **22-23 (M.D. Tenn. March 18, 2003). Under this standard, I may not substitute my judgment for that of the appeals officer. See, e.g, Christian v. Commissioner of IRS [ 2003-2 USTC ¶50,562], No. 02-9120, 2003 U.S. Dist. LEXIS 11288, at **1-2 (E.D. Pa. June 5, 2003).

Under the statutes on which Plaintiff relies, a taxpayer has no inherent right to receive a collection alternative. A taxpayer subject to a proposed levy, however, has the right to request a hearing, at which the taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy, including ... challenges to the appropriateness of collection actions; and ... offers of collection alternatives, which may include ... an installment agreement...." 26 U.S.C. §6330(c)(2). A subsequent determination by an appeals officer "shall take into consideration," inter alia, "whether any 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." 26 U.S.C. §6330(c)(3).

A decision by an appeals officer to reject collection alternatives may be based upon a number of factors, including whether the taxpayer supports a proposed collection alternative with relevant financial information to show that payments could be made under the alternative; whether the taxpayer is current on its tax obligations; and the escalating amount of the outstanding tax liability. Stop 26-Riverbend [ 2003-1 USTC ¶50,360], 2003 U.S. Dist. LEXIS 5528 at *7. "Where an employer is not in current compliance with its federal employment tax obligations, a settlement officer does not abuse his or her discretion by declining to consider settlement alternatives." PCT Servs., Inc. v. U.S. [ 2003-2 USTC ¶50,536], No. 1:02-CV-2085-BBM, 2003 U.S. Dist. LEXIS 10667, at *10-11 (N.D. Ga. May 19, 2003) (collecting cases).

In opposition to Defendant's Motion, Plaintiff's argument rests on the level of intrusion occasioned by the levy. In particular, Plaintiff argues that the appeals officer paid only "lip service" to the balancing requirement of Section 6330(c), because the levy will effectively close Plaintiff's business. Plaintiff does not aver that the IRS failed to meet any other statutory or procedural requirements, and concurs with all of the facts set forth in Defendant's Memorandum in support of its Motion.

In the present case, the Notice of Determination and the appeals officer's affidavit demonstrate that the officer considered several factors in reaching his determination. For example, Plaintiff owed the IRS penalties and interest. In addition, Plaintiff had a history of late payments and deposits. Moreover, the hearing officer considered the fact that Plaintiff could not post bond or provide other collateral. According to the record, the hearing officer considered these facts in reaching his decision, and expressly weighed the intrusion of the levy with the need for efficient collection of taxes. ¹ I sympathize with those who will be affected by the levy; that I might have reached a different conclusion, however, is not the governing legal standard. There is no basis for characterizing the IRS determination as arbitrary, capricious, or unjustifiable in light of the record. Rather, the appeals officer proffered several rational explanations for his decisions. Plaintiff has not identified any factual or legal grounds that would create a genuine issue of material fact, or otherwise compel a different conclusion. As a matter of law, the appeals officer did not abuse his discretion in declining collection alternatives. The United States is therefore entitled to judgment in its favor.

AND NOW, this 14 ^th day of October, 2003, it is ORDERED, that Defendant's Motion to Dismiss, or in the Alternative, for Summary Judgment (Docket No. 4) is GRANTED. The Clerk of Court is directed to mark this case "CLOSED" forthwith.

¹ I note that the record reflects the officer's request for updated financial statements, but there is no indication that Plaintiff provided the requested documents. The record also indicates that the appeals officer was aware that Plaintiff's owner is attempting to, but has not yet succeeded in, securing financing for the outstanding tax obligations.

[2004-1 USTC ¶50,194]William B. Miller v. Internal Revenue Service.

U.S. District Court, East. Dist. Pa. ; Civ. 03-0936, February 11, 2004 .

[ Code Secs. 6303, 7421 and 7422]

Jurisdiction: District court: Claim for refund: Notice and demand for tax: Last known address: Anti-Injunction Act.

A federal district court lacked jurisdiction over a married individual's pro se complaint alleging that he was not given proper notice of his tax liability. The taxpayer failed to pay some or all of his tax liability before filing his claim, which was construed as a claim for refund. As such, the taxpayer's proper remedy would have been to file a claim in the Tax Court upon receipt of the notice of liability. Moreover, the taxpayer's claim was barred by the Anti-Injunction Act. Pursuant to the Anti-Injunction Act, the court was not entitled to enjoin the IRS from collecting taxes from the taxpayer. Finally, even if jurisdiction was proper, the taxpayer's claim lacked merit. The IRS established that it mailed the notice at issue to the taxpayer's last known address and, therefore, complied with the notice requirements.

[ Code Sec. 6330]

Collection Due Process: Hearing: Procedures.

A federal district court dismissed an individual's challenge to an adverse Collection Due Process determination. The taxpayer failed to establish that the Appeals officer abused his discretion in determining that the taxpayer was not eligible for an installment agreement. Evidence indicated that the Appeals officer, who had no prior involvement with the taxpayer's case, reviewed the file and concluded that all administrative and procedural requirements were satisfied. As such, the taxpayer's claim lacked merit.

MEMORANDUM

BAYLSON, District Judge: Presently before this Court is a Motion for Summary Judgment filed by Defendant Internal Review Service ("Defendant") against pro se Plaintiff William B. Miller ("Plaintiff"). For the reasons detailed below, the Court will grant Defendant's motion.

I. Factual Background

On October 26, 2000, Defendant sent Plaintiff a letter and Form 2751 detailing a $475,774.66 penalty being assessed against him arising out of his role as Secretary of Centennial Printing Corporation ("Centennial") and Chief Financial Officer of The Eastwind Group, Inc., the parent company of Centennial (Gov't. Ex. 6, 6.1). On November 1, 2000, Defendant sent Plaintiff a letter and Form 2751 detailing a $44,230.61 penalty being assessed to him as it relates to the Lavelle Company ("Lavelle") (Gov't Ex. 5, 5.1). ¹ Both of these liabilities were for trust fund recovery penalties related to unpaid unemployment taxes of the respective companies from March 31, 1999 to June 30, 1999. Both letters detailed the procedure Plaintiff should follow if he wished to appeal these penalties. In Plaintiff's case, the proper appeal would have been to file a written protest to the office of the Regional Director of Appeals for Defendant. (Gov't Ex. 5, 6). Plaintiff filed no such written appeal. Plaintiff alleges that he never received either of these letters. (Compl. ¶6).

On August 21, 2001, Defendant sent Plaintiff a Letter 3172, giving him notice of a lien that was to be placed on him and detailing how to request a collection due process hearing under 26 U.S.C. §6320 (Gov't Ex. 1). Plaintiff acknowledges receiving this letter. (Compl. ¶8). On September 7, 2001, Plaintiff sent a letter to Revenue Agent Kerry Martin in Jenkintown , PA detailing his situation with regard to the liability. (Compl. ¶8). Plaintiff also met with Agent Martin at Defendant's Office in Jenkintown , PA. (Compl. ¶9). On September 20, 2001, Plaintiff filed a Form 12153, requesting a collection due process hearing, with an attachment detailing that he was appealing the lien and challenging the underlying liability. (Gov't Ex. 2, 2.1).

On January 15, 2002, IRS Appeals Officer Jay Helm, Jr. in Houston , Texas called Plaintiff and had a phone conversation with him regarding Plaintiff's liability, and suggested to Plaintiff that he make an offer of compromise for some partial amount of the tax liability. (Compl. ¶9, Anderson Decl. ¶7-9).

On January 7, 2003, Appeals Officer Kenneth Anderson held a collection due process hearing with Plaintiff via telephone. (Anderson Declaration ¶12, Compl. ¶10). Anderson had no prior involvement in Plaintiff's case. Anderson reviewed Plaintiff's file and determined that all administrative and procedural requirements had been met. (Anderson Decl. ¶13). Anderson claims he informed Plaintiff during the telephone hearing that he would be issuing a determination letter. (Anderson Decl. ¶12). Plaintiff denies that he was told that a determination letter would be issued (Compl. ¶11, Resp. ¶8). During this telephone hearing, Plaintiff expressed that he did not owe these penalties and Anderson responded by informing him that he had a chance to challenge this tax liability after he received the letters in October and November of 2000, and that because he did not challenge the liability at that time, he could not do so now. (Anderson Decl. ¶14, Resp. ¶9). Defendant alleges that Plaintiff also requested an installment agreement and Anderson informed him that he could not enter into an installment agreement because he had not filed his 2001 tax return. (Anderson Decl. ¶12). Plaintiff alleges that this exchange never took place. (Resp. ¶8). Plaintiff informed Anderson that the reason he had not filed his 2001 return was because the tax refund sent to Plaintiff and his wife as part of the Economic Growth and Tax Reconciliation Act of 2001 had been seized and he did not want to risk having other joint property seized. (Compl. ¶13, Anderson Decl. ¶12)

On January 16, 2003, a Notice of Determination Concerning Collection was issued and sent to Plaintiff, stating that no installment agreement was available because Plaintiff failed to file his 2001 tax return, that Plaintiff could not at this time challenge his tax liability, and that there were no collection alternatives other than a lien because Plaintiff had not attempted to pay any of his liability. (Gov't Ex. 4)

Plaintiff filed a Complaint in this Court on February 19, 2003, and an amended Complaint on June 5, 2003. Defendant filed a motion for summary judgment on October 16, 2003 and briefing was completed on December 18, 2003.

II. Legal Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.

A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. After the moving party has met its initial burden, "the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson, 477 U.S. at 255.

III. Discussion

Although Plaintiff's Complaint does not explicitly state any claims for relief, as he is a pro se Plaintiff, this Court will construe his pleadings liberally. From the statements in his Complaint, it appears that Plaintiff is raising three claims. The first is that he received improper notice of his tax liability because he did not receive either Form 2751 informing him of his liability. (Compl. ¶6). The second is that he is challenging his collection determination that resulted in a lien. (Compl. ¶11, 17). And the third is that he is challenging his wife's liability, as their joint tax refund was seized by Defendant. (Compl. ¶14, 20).

A. Improper Notice of Liability

Plaintiff, in his Complaint, argues that he did not receive notice of his tax liability in October and November of 2000 and, thus, could not have challenged his liability according to the appropriate procedures. A preliminary question regarding this inquiry is whether this Court even has jurisdiction over Plaintiff's challenge to his underlying tax liability.

Taxpayers who are challenging tax determinations have two avenues of relief, after exhausting administrative procedures. The first is to challenge the liability in the U.S. Tax Court upon receipt of a notice of liability. This is the appeal that Plaintiff failed to make. The second means of relief is to pay some or all of the liability and then sue for a refund in either the Court of Federal Claims or a U.S. District Court. ² See Bowser v. Comm'r of IRS [ 78-1 USTC ¶9102], 1977 U.S. App. LEXIS 12984 (3d Cir. June 10, 1977) (delineating the two means of review of a determination of tax liability). Because of these two distinct avenues of relief, courts have found that taxpayers cannot challenge tax liabilities that they have not yet paid in a U.S. District Court. See Randle v. IRS [ 2003-2 USTC ¶50,660], 2003 U.S. Dist. LEXIS 14983 (E.D. Pa. July 21, 2003) (holding that the Tax Court has jurisdiction over challenges to unpaid liabilities), Hart v. IRS [ 2001-1 USTC ¶50,328], 2001 U.S. Dist. LEXIS 3288 (E.D. Pa. February 9, 2001) (same). This position is based, in part, on the concept of distinct jurisdictions of the Tax Court and District Courts.

In addition, the Anti-Injunction Act, 26 U.S.C. §7421, prohibits U.S. District Courts from enjoining the Internal Revenue Service from collecting a tax liability. See Sager v. IRS [ 2002-2 USTC ¶50,766], 2002 U.S. Dist. LEXIS 21511, at *8-9 (W.D. Pa. October 10, 2002) (citing Flynn v. U.S. [ 86-1 USTC ¶9285], 786 F.2d 586, 588 (3d Cir. 1986)) (holding that the Anti-Injunction Act bars district courts from restraining the collection of taxes and that a suit for refund is the appropriate method for disputing liabilities in a district court). Thus, when taxpayers such as Plaintiff challenge an unpaid tax liability in a U.S. District Court, they are essentially asking a court to enjoin the IRS collecting their taxes, and the court is barred from providing such relief. As this Court, then, does not have jurisdiction to consider Plaintiff's challenge to his tax liability, it will not do so.

Additionally, Plaintiff's argument regarding the consequences of his failure to receive notice of his tax liability is not supported by the cases. The IRS only has to show that it mailed notice to the taxpayer's last known address. Berger v. IRS [ 69-1 USTC ¶9103], 404 F.2d 668, 673-4 (3d Cir. 1968). The IRS has made that showing in this case. See Gov't Ex. 5, 5.1, 6.1 (including proof of mailing).

B. Collection Determination

Plaintiff also challenges the collection determination by Defendant that Plaintiff is not eligible for an installment agreement, based on the fact that Plaintiff did not file his 2001 tax returns. ³ The standard for this Court's review of an Internal Revenue Service collection due process hearing is the abuse of discretion standard pursuant to 26 U.S.C. §6330. Christian v. Comm'r of IRS [ 2003-2 USTC ¶50,562], 2003 U.S. Dist. LEXIS 11288 (E.D. Pa. June 5, 2003). In applying this standard the Court will "consider whether the decision was based on consideration of the relevant factors and whether there has been a clear error of judgment... Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one." Id. , quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971). This Court may not substitute its judgment for that of the IRS Appeals Officer provided his determination was not arbitrary and capricious. Id. A collection due process hearing requires that an appeals officer who has not been previously involved with a taxpayer's case review the taxpayer's file to determine whether all administrative and procedural requirements have been met. 16 U.S.C. §6330(b)(3). In this case, Appeals Officer Anderson, who did not have any prior involvement with Plaintiff, reviewed Plaintiff's file and determined that all administrative and procedural requirements had been met. (Anderson Decl. ¶10, 13). There are no facts presented by Plaintiff suggesting that this is untrue, and there are no facts that evidence an abuse of discretion by Defendant. Accordingly, Plaintiff's challenge to the collection determination is without merit and there is no issue of material fact as to whether Defendant's decision represented an abuse of discretion.

C. Wife's Liability

Plaintiff also challenges the fact that the amount refunded jointly to Plaintiff and his wife was seized by Defendant, arguing that his wife does not share in his liability. Regardless of the merits of Plaintiff's claim, he does not have standing to bring this claim on his wife's behalf.

The Third Circuit applies a three part test to determine whether third party standing is appropriate. This test is prudential, rather than stemming from the "case or controvery" requirement, and reflects an interest in limiting access to the federal courts to those litigants best suited to assert a claim. See Pennsylvania Psychiatric Society v. Green Spring Health Services, Inc., 280 F.3d 278, 288-89 (3d. Cir 2002) (quoting Campbell v. Louisiana, 523 U.S. 392, 397, 140 L. Ed. 2d 551, 118 S. Ct. 1419 (1998)). "To successfully assert third-party standing: (1) the plaintiff must suffer injury; (2) the plaintiff and the third party must have a `close relationship'; and (3) the third party must face some obstacles that prevent it from pursuing its own claims." Nasir v. Morgan, 2003 U.S. App. LEXIS 24013, at *26 (3d Cir. November 25, 2003).

In Plaintiff's case, there is no suggestion that Plaintiff's wife is prevented in any way from bringing suit to recover her share of the seized tax refund. See Williams v. U.S. [ 94-1 USTC ¶50,245], 24 F.3d 1142 [1143] (9th Cir. 1994) (holding that widow who erroneously paid her husband's income taxes had standing to sue for refund); Knies v. Commissioner of IRS, 1992 U.S. App. LEXIS 331 (7th Cir. December 3, 1991) (holding that wife had standing to sue for refund of wrongful levy against joint property). Accordingly, this Court need not grapple with the other elements of third party standing at this stage. Plaintiff is without standing to bring a claim for refund of his wife's share of the seized tax refund, because his wife may do so herself.

III. [IV.] Conclusion

For the reasons stated above, Plaintiff's claims challenging his tax liability and his wife's liability are improperly before this Court. In addition, Plaintiff's claim challenging his collection determination is without merit. Thus, Defendant has met its burden and the Motion for Summary Judgment will be granted.

An appropriate order follows.

¹ Plaintiff's role in Lavelle is not detailed by either party. Plaintiff does not mention the penalty related to Lavelle in his Complaint, and states in his Response to the Motion for Summary Judgment that this penalty is not the subject of this suit. (Resp. ¶5). Defendant, however, mentions this penalty and includes it in the exhibits to the Motion for Summary Judgment. In addition, both the Lavelle and Centennial penalties are the subject of the collection action being challenged (Gov't Ex. 1). Accordingly, the Lavelle penalty will not be addressed as it relates to Plaintiff's challenges to the underlying tax liability, but will be addressed as it relates to the collection action claims.

² As Plaintiff has not yet paid any of his liability, this mechanism is not currently available to him. Regardless of the outcome of the case currently pending before this Court, however, Plaintiff could still pay a portion of his liability and sue for a refund. 26 U.S.C. §6511, 6532, 7422.

³ The Court notes that there is some suggestion in the case law that does not bind this Court that a district court does not have jurisdiction over a challenge to the collection determination when the U.S. Tax Court has jurisdiction over a challenge to the underlying liability. See Sager v. IRS [ 2002-2 USTC ¶50,766], 2002 U.S. Dist. LEXIS 21511, at *6-8 (W.D. Pa. October 10, 2002) (holding that the Tax Court, not the District Court has jurisdiction over a taxpayer's challenge to both a collection determination and the underlying liability). But see Bartolomeo v. IRS [ 2003-2 USTC ¶50,706], 2003 U.S. Dist. LEXIS 19584, at *9-12 (W.D. Pa. September 30, 2003) (holding that a district court cannot review a challenge to underlying liability, but can review a challenge to a collection decision raised in the same suit). This Court will address the challenge to the collection determination.

[2004-1 USTC ¶50,174] STA Painting Co. v. Internal Revenue Service.

U.S. District Court, East. Dist. Pa. ; Civ. 02-CV-7133, February 11, 2004 .

[ Code Sec. 6330]

Internal Revenue Service: Collection Due Process: Hearing procedures. --

The IRS was entitled to proceed with a levy against a commercial painting contractor following its Collection Due Process hearing. The IRS Appeals officer's refusal to accept the taxpayer's proposal for an installment agreement was not an abuse of discretion. The record indicated that the taxpayer previously failed to pay an agreed upon lump-sum payment and defaulted on prior installment agreements. There was also a continued escalation of the entity's tax liability during the Appeals process.

MEMORANDUM & ORDER

SURRICK, District Judge: On September 4, 2002, a Complaint for Redetermination was filed by STA Painting Co. ("STA"), pursuant to 26 U.S.C. §6330, seeking review of the determinations of an Internal Revenue Service ("IRS") Appeals Officer issued on August 15, 2002, sustaining certain collection activities by the IRS against Plaintiff for non-payment of employment taxes. Defendant IRS has moved for summary judgment seeking affirmation of the Appeal Officer's determinations. (Doc. No. 8.) Plaintiff has filed a cross motion for summary judgment seeking remand alleging that the Appeals Officer's decision rejecting an installment agreement was an abuse of discretion. (Doc. No. 9.) For the following reasons, we will grant Defendant's motion and deny Plaintiff's cross motion.

I. Background

STA, a commercial painting contractor, filed this suit seeking review of three determinations by James J. Polsenki ("Appeals Officer") rejecting Plaintiff's attempt to settle its employment tax deficiency through an installment agreement rather than through lien or levy of its assets. Plaintiff has properly sought review of the Appeals Officer's determinations pursuant to 26 U.S.C §6330(d).

In May of 2001, the IRS sent STA a notice of intent to levy for its failure to pay employment taxes for the periods ending June 30, 2000, September 30, 2000, and December 31, 2000. This notice informed STA of its right to a collection due process ("CDP") hearing pursuant to 26 U.S.C. §6330(a)(1). ¹ On June 15, 2001, STA requested a CDP hearing and provided the IRS with specific reasons why a levy was inappropriate. STA requested payment through an installment plan. (Def.'s Mot. for Summ. J. Ex. 1.) STA met with the Appeals Officer twice in September of 2001, to discuss its liability. It proposed an installment agreement in which it would pay $3,000 a week until the principal for each quarter had been paid off, and a lump sum payment of $85,000 to be paid by December 31, 2001. (Def.'s Mot. for Summ. J. Ex. 5.) STA claims that pursuant to this installment proposal, twenty-one $3,000 payments or $63,000 was paid to the IRS between October 5, 2001, and August 30, 2002. STA also made lump sum payments to the IRS of $6956.64 on September 19, 2001, and $8024.30 on September 23, 2001. Despite these payments, on August 15, 2002, the Appeals Officer advised STA that it was ineligible for an installment agreement due to its lack of compliance and that a levy was the appropriate collection action. (Def.'s Mot. for Summ. J. Ex. 6.)

In June of 2001, the IRS also notified Plaintiff that it was filing a notice of a lien, pursuant to 26 U.S.C. §6320, ² for the deficiency in employment taxes for the periods ending June 30, 2000 and September 30, 2000. (Def.'s Mot. for Summ. J. Ex. 2.) Again, STA requested a CDP hearing appealing the notice of the lien, arguing that the appeal of the aforementioned levy action (described above) prevented the IRS from filing a "collection action," while the appeal was pending. (Def.'s Mot. for Summ. J. Ex. 3.) After meeting with the Appeals Officer, the IRS responded to this argument on August 15, 2002, informing STA that since it did not meet any of the requirements for withdrawal of the notice of lien, this lien would remain in full force and effect until the liability was fully paid. (Def.'s Mot. for Summ. J. Ex. 7.)

In September of 2001, the IRS sent STA a notice of intent to levy for STA's failure to pay employment taxes for the period ending March 31, 2001. STA again requested a CDP hearing, incorporating the arguments made to the IRS in its earlier CDP requests. (Def.'s Mot. for Summ. J. Ex. 4.) STA's proposal for an installment agreement covered this period of delinquency as well. (Def.'s Mot. for Summ. J. Ex. 5.) In addition, STA discussed the installment plan with the Appeal Officer on December 11, 2001. Again, the IRS denied STA's request, advising that STA was ineligible for the installment agreement due to its lack of compliance. (Def.'s Mot. for Summ. J. Ex. 8.)

II. Review of the IRS Determination

Summary Judgment Standard of Review

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The party moving for summary judgment bears the initial burden of demonstrating that there are no facts supporting the non-moving party's legal position. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986).

The parties in this matter have agreed that it may be disposed by cross motions for summary judgment and that discovery is inappropriate. The parties agree that the only issue in this case is whether the decisions of the Appeals Officer were correct as a matter of law. Although the parties move for summary judgment, we shall construe the motions as motions for judgment, seeking affirmance or reversal of the IRS's determinations. ³

Standard of Review for Appeal Officer Determination

This case is properly before us under 26 U.S.C. §6330(d)(1)(B) which provides that "the person may, within 30 days of a determination under this section, appeal such determination --if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States." ⁴ Even though §6330 provides for judicial review, it is silent with respect to the standard of review to be applied by the district court. The Third Circuit has not yet spoken to the issue, however, district courts in this and other districts have applied an abuse of discretion standard. Christian v. Comm'r of IRS [ 2003-2 USTC ¶50,562], No. Civ. A. 02-9120, 2003 WL 21499013, *1 (E.D. Pa. June 5, 2003); see also Danner v. United States [ 2002-1 USTC ¶50,436], 208 F.Supp.2d 1166, 1170 (E.D. Wash. 2002); MRCA Info. Servs. v. United States [ 2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 199 (D. Conn. 2000) (comprehensive review of the House Report accompanying the enactment of the IRS Restructuring and Reform Act of 1998, H. Rep. No. 105-599 at 266 (1998), concluding that an abuse of discretion standard of review is appropriate when a district court reviews an IRS Appeal officer's determination pursuant to 26 U.S.C. §6330). We will also apply that standard.

The abuse of discretion standard requires a court to determine whether the administrative decision was based on a consideration of the relevant factors and whether or not there was a clear error of judgment. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971). Moreover, an agency must articulate a "rational connection between the facts found and the choice made." Bowman Trans. v. Arkansas-Best Freight, 419 U.S. 281, 285 (1974). "`The task of this court, is not to determine whether in its own opinion ...' that an installment agreement would best serve both the interest of the IRS and [taxpayer], `but to determine whether there is an adequate basis in law for the officer's conclusion that it did not."' See MRCA [ 2000-2 USTC ¶50,683], 145 F.Supp.2d at 199 (quoting RCA Corp. v. United States [ 81-2 USTC ¶9783], 664 F.2d 881, 886 (2d Cir. 1981)).

III. Discussion of Levy Actions

STA argues that the decision to impose the levy and reject the proposed installment agreement was not a rational decision. ⁵ (Mem. in Supp. of Pl.'s Cross Mot. for Summ. J. at unnumbered 6 (citing 26 U.S.C. §6330(c)(3)(C)).) Under §6330(c)(3)(C), the determination by the Appeals Officer must take into consideration the applicable law or administrative procedures, any issues raised by the taxpayer concerning the unpaid tax, the proposed levy or offers of collection alternatives, any challenges to the appropriateness of collection actions, and 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. 26 U.S.C. §6330(b).

The crux of Plaintiff's argument to the Appeals Officer was that the enforcement of the collection procedures would produce less revenue towards paying the deficiency than would simply allowing STA to continue paying pursuant to the proposed installment agreement. In its properly submitted requests for hearings (Def.'s Mot. for Summ. J. Exs. 1, 3, 4), its letter proposing an installment plan (Letter of Sept. 27, 2001), and in the three statutorily required hearings, Plaintiff offered many reasons why the installment plan was better for both parties than the action to levy assets and place a lien on its property. STA told the IRS that an installment plan would allow the IRS to collect the deficient amount while allowing STA to continue as a viable business. ⁶ STA advised that if the installment plan was rejected, STA would be forced out of business and the IRS would collect less total revenue. STA indicated that it had no real estate, only simple equipment, and no inventory that would produce any revenue through a levy. In addition, a levy on STA's only substantial asset --its accounts receivable --would force STA out of business because it would be unable to pay its wage labor and thus continue on as a company. ⁷ Finally, STA pointed to 26 U.S.C. §6330(c)(2)(A)(iii) which permits it to offer a collection alternative and argued that its installment plan was an acceptable alternative. ⁸ While admitting that its compliance with the proposed installment plan had not been perfect, STA noted that it had already paid almost $78,000 pursuant to the installment offer, and had voluntarily assigned some of its accounts receivable over to the IRS. (Tiedeken Decl. ¶9.)

Notwithstanding STA's arguments regarding the merits of an installment plan, the Appeals Officer rejected this alternative. The IRS offered the following reasons for this rejection:

You have been a chronic repeater in failing to deposit and pay trust fund taxes. While you were appealing the above tax periods, you failed to file, pay or deposit trust fund taxes for the period ending 6-30-2001 .

On September 27, 2001 , your representative proposed that you pay $3,000.00 per week to be applied to the September 30, 2001 quarter and would remain current on employment tax's. You also proposed to pay $85,000.00 by Dec. 31, 2001 . Although you have made a number of $3,000.00 payments, they have not been weekly as proposed and you never made the $85,000.00 payment toward back taxes. Therefore, you are in default of your own proposal.

Some of the $3,000.00 payments were erroneously applied to quarters other than September 30, 2001 but we are now applying them per your designation.

We have allowed you several months in which to obtain additional financing and pay the trust fund liabilities, but you have failed to do so. In addition, during the period of the appeal, you have incurred additional liabilities.

You agreed to deposit trust fund taxes as required by law. You failed to take these actions and incurred another trust fund liability.

You raised no other issues relating to the unpaid taxes and made no other proposals regarding collection alternatives. It appears that you are appealing for purposes of delay.

Balancing Efficient Collection and Intrusiveness

A levy on your bank account(s) or a seizure of your assets would probably yield some revenue in relation to the amount owed.

Further delay would only result in increasing the liabilities as you have done during the appeal. You are not eligible for an installment agreement or offer in compromise due to your lack of compliance.

(Def.'s Motion For Summary J. Ex. 6.)

The IRS argues that these reasons adequately support the Appeals Officer's decision. It cites MRCA in support of its position. In MCRA the court found no abuse of discretion where an appeals officer rejected an installment agreement because plaintiff failed to pay an agreed upon lump sum payment, plaintiff defaulted on prior installment agreements, and there was a continued escalation of plaintiff's tax liability during the appeals process. [ 2000-2 USTC ¶50,683], 145 F.Supp.2d at 200. Our research reveals other courts that have similarly concluded that the decision to levy and reject an installment agreement is not an abuse of discretion where the taxpayer had incurred additional deficiencies and has already failed to comply with an installment agreement. See PCT Servs., Inc. v. United States [ 2003-2 USTC ¶50,536], No. Civ. A. 02-2085, 2003 WL 21541283, * 5 (N.D. Ga. May 19, 2003); Stop 26 --Riverbend, Inc. v. United States [ 2003-1 USTC ¶50,360], No. C2-02-0285, 2003 WL 1908747, * 3 (S.D. Ohio March 12, 2003) (holding that where taxpayer provided no information to show that payments could be made and that it was continuing to accrue unpaid tax liabilities the decision by appeals officer to deny installment agreement was not an abuse of discretion); Kitchen Cabinets, Inc. v. United States [ 2001-1 USTC ¶50,287], No. Civ. A. 00-cv-0599, 2001 WL 237384, * 3 (N.D. Tex. March 6, 2001) (same); Jon H. Berkey, P.C. v. Dep't of the Treasury [ 2001-2 USTC ¶50,708], No. 00-cv-75149, 2001 WL 1397680, * 5 (E.D. Mich. Sept. 20, 2001) (finding that appeals officer's decision was not abuse of discretion where plaintiff "continues to fail to make scheduled payments, and continued to be in non-compliance with federal tax laws").

Notwithstanding the explanations offered by STA as to why it was unable to comply with the installment plan and stay current in its payment of taxes, it is apparent that the IRS had sufficient reason to believe that despite Plaintiff's good intentions an installment plan would not solve STA's deficiency problem.

IV. Discussion of Notice of Lien

STA argues that the filing of a lien by the IRS was inappropriate while it was contesting the levy action for the same deficiency period. On May 20, 2001, the IRS filed its intent to levy notice for the periods ending June 30, 2000, September 30, 2000 and December 31, 2000. STA filed a timely appeal on June 15, 2001. The IRS then filed a notice of lien for the June and September periods on June 20, 2001. Section 6330(e)(1) provides that during the time a levy action is under review, the levy action for that time period is suspended. Significantly, §6330(e)(1) makes no reference to the filing of liens. It states only that "the levy actions which are the subject of the requested hearing ... shall be suspended for the period during which such hearing, and appeals therein, are pending." Id. STA argues that the filing of a lien was inappropriate because §6330(e)(1) requires the suspension of the collection activity pending appeal of a levy action. The IRS defends arguing that a lien is not a collection action but a preservation of the status quo pending a decision on the levy action. It points out that "unless the service is permitted to preserve the position of the United States' revenue relative to other creditors of the taxpayer, by filing a notice of Federal tax lien, the taxpayer would be free to commit its assets to pay other creditors during the time the services' ability to levy is suspended by §6330(e)(1)." This places the United States at a significant disadvantage.

As noted above, §6330(e)(1) suspends only "levy actions which are the subject of the requested hearing." It says nothing about liens. We also note that §6320 dealing with liens provides in subsection (c) that "to the extent practicable, a hearing under this section shall be held in conjunction with a hearing under §6330." Perhaps the IRS had this in mind when it filed the notice of lien. We agree with the IRS that the filing of the lien under these circumstances was not prohibited by §6330(e)(1). Any other conclusion would make little sense.

V. CONCLUSION

Based upon the foregoing we conclude that the Appeals Officer did not abuse his discretion in rejecting STA's proposal of an installment agreement and that the determinations of the Internal Revenue Service were proper.

¹ "No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made...." 26 U.S.C. §6330(a)(1).

² The statutory provisions for the filing of a notice of a lien pursuant to 26 U.S.C. §6320 mirror the provisions in 26 U.S.C. §6330 which apply to the imposition of a levy.

³ "[A] motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure ... makes no procedural sense when a district court is asked to undertake judicial review of agency action." Lodge Tower Condo. Ass'n v. Lodge Props., Inc., 880 F.Supp. 1370, 1374 (D. Colo. 1995); see also Yeboah v. U.S. Dept. of Justice, 345 F.3d 216, 221 (3d Cir. 2003) (treating appeal from the denial of a Fed. R. Civ. Pro. 56(c) cross-motion for summary judgement, as a review of the INS District Director's decision for abuse of discretion); CDI Info. Servs., Inc. v. Reno, 101 F.Supp.2d 546, 547 (E.D. Mich. 2000) (construing the parties summary judgment memoranda as a motion and cross-motion for judgment).

⁴ We have jurisdiction over this case. The United States Tax Court "has exclusive jurisdiction to determine the correctness of deficiency assessments made by the Commissioner of Internal Revenue." Danner v. United States [ 2002-1 USTC ¶50,436], 208 F.Supp.2d 1166, 1170 (E.D. Wash. 2002). Since Plaintiff does not challenge the amount of liability, at issue in this case is not the "correctness" of the "assessment," but the propriety of the deficiency procedure used for collection. Moreover, since the Tax Court does not have jurisdiction with respect to employment tax liability, the district court is the proper court in which to file a complaint contesting the assessment of employment taxes. See Moore v. Comm'r of Internal Revenue [ CCH Dec. 53,802], 114 T.C. 171, 175 (2000).

⁵ The parties agree that Plaintiff was given adequate and proper notice of the actions taken by Defendant, 26 U.S.C. §6330(a); a fair hearing was conducted by an impartial officer, 26 U.S.C. §6330(b); and Plaintiff was allowed to raise "any relevant issue relating to the unpaid tax" as required by 26 U.S.C. §6330(c)(2).

⁶ STA suggested that the installment agreement was an acceptable collection alternative, as it:

1. Affords to the IRS an immediate, continuous, effortless source of payment; and

2. Recognizes STA's commitment to pay, consistent with the construction industry's method of payment to subcontractor's such as STA;

3. Allows STA's union painters to remain employed and contributing to the American economy; and

4. Permits STA to remain a viable contributor to American's [sic] economy.

(Def.'s Mot. for Summ. J. at Ex. 5.)

⁷ STA makes clear that it employs only union painters, and has little flexibility when it comes to reducing or deferring payment of wages.

⁸ "The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, and installment agreement, or an offer-in-compromise." 26 U.S.C. §6330(c)(2)(A)(iii).

[Dec. 55,584(M]Thomas C. Johnson v. Commissioner.

Docket No. 3028-02L . T.C. Memo. 2004-73. Filed March 18, 2004 . [Appealable, barring stipulation to the contrary, to CA-11.]

[Code Sec. 6330]
[Collection Due Process: Hearing: Issued raised: Procedures.]

P filed a petition for judicial review pursuant to secs. 6320 and 6330, I.R.C., in response to a determination by R to leave in place a filed notice of Federal tax lien for the 1995, 1996, and 1999 years.

Held: Because (1) P is not entitled to dispute his underlying tax liabilities for 1995 and 1996, (2) P does not dispute his underlying liability for 1999, and (3) the record does not establish any abuse of discretion by R, R's determination to proceed with collection action is sustained.

Thomas C. Johnson, pro se. Horace Crump, for the respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

WHERRY, Judge: This case was filed in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330.¹ The issue for decision is whether respondent may proceed with collection as so determined.

FINDINGS OF FACT

On November 12, 1998 , respondent issued to petitioner separate notices of deficiency for the 1995 and 1996 tax years.² The notices reflected deficiencies of $1,123 and $3,518, for 1995 and 1996, respectively. The adjustments were based, for both years, on disallowance of exemptions claimed by petitioner for his two children and, for 1996, on disallowance of the earned income credit and a change in filing status from head of household to single. Petitioner and his wife, the children's mother, had separated in 1996. Petitioner received these notices but did not file a petition for redetermination with the Tax Court.

Petitioner was diagnosed with end stage renal disease in August of 1999 and subsequently began kidney dialysis treatment. During the period surrounding his marital separation and the onset of his illness, petitioner found it difficult to cope with his financial affairs. He did not file Federal income tax returns for 1997 or 1998. Petitioner then filed his 1999 return, which was posted at the Internal Revenue Service Center on May 29, 2000 . The return reported a tax liability that was not fully paid either by withholdings or by any payment submitted with the return. Respondent made no adjustments to petitioner's 1999 reporting and accepted the return as filed.

Following assessments of petitioner's tax liabilities for 1995, 1996, and 1999, respondent on or about September 5, 2000 , filed a notice of Federal tax lien with the Judge of Probate in Mobile County , Alabama . The notice of lien reflected a total unpaid balance of $7,235.61, comprising $1,726.20 for 1995, $4,361.32 for 1996, and $1,148.09 for 1999. Then, on September 8, 2000 , respondent issued to petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 regarding the just-described lien.

Respondent on October 10, 2000 , received from petitioner a Form 12153, Request for a Collection Due Process Hearing, with the following explanation of his disagreement with the lien: "12-31-95 and 12-31-96 is [sic] not correct. Would like to explain at the hearing or over the phone". Appeals Officer Daniel L. Shirah (Mr. Shirah) thereafter sent petitioner a letter dated October 3, 2001 , scheduling the requested conference.

A telephone conference between petitioner and Mr. Shirah was conducted on October 19, 2001 . During the conference there ensued some discussion of collection alternatives, among other things, and after the conference Mr. Shirah sent to petitioner for his completion Form 656, Offer in Compromise, and Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. Petitioner began filling out the documents but never submitted completed forms to respondent.

On January 10, 2002 , respondent issued to petitioner the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 sustaining proposed collection action.³ Petitioner on February 5, 2002 , filed with the Tax Court an imperfect petition challenging the notice. The petition reflected that petitioner wished to have his case heard for two reasons; i.e., he was experiencing hardship due to the disability of end stage renal disease, and he had now found proof that his liability was too great.

Petitioner then filed an amended petition on March 6, 2002 , consisting of 11 handwritten pages explaining his circumstances. He indicated therein that the tax years involved were 1995 through 1999 and concluded the amended petition with the following statement:

I also feel that my actual tax bill should be

               1995 --  204 possible                                                

              1996 --  2400 + reasonable penalties                                 

              1997 --  500 + reasonable penalties                                  

              1998 --  700 + reasonable penalties                                  

              1999 --  1100 + reasonable penalties                                 

                     _____

                    $  4900                                                        

I beg the court to have mercy on me and waive this my entire tax bill and remove the lein [sic] on my credit record. I'm sorry and plan to never again let this happen. [reproduced without certain handwritten punctuating or graphical markings]

At the time the petition and the amended petition were filed, petitioner resided in the State of Alabama .

On May 6, 2002 , respondent moved to dismiss for lack of jurisdiction and to strike insofar as the case related to 1997 and 1998, on the ground that no determination concerning collection action(s) had been made for those years. This motion was granted, and respondent thereafter answered the petition as it related to 1995, 1996, and 1999.

On August 22, 2003 , respondent filed a motion for summary judgment, which was calendared for hearing at the Court's October 20, 2003 , Mobile , Alabama , trial session. Both parties appeared and were heard, and the motion for summary judgment was taken under advisement. However, because the Court at that time also advised that it appeared unlikely that the motion would be granted in its entirety, the parties proceeded to try the case on the merits. In these circumstances, the Court shall now deny respondent's motion for summary judgment as moot.

OPINION

I. Collection Actions --General Rules

Section 6321 imposes a lien in favor of the United States upon all property and rights to property of a taxpayer where there exists a failure to pay any tax liability after demand for payment. The lien generally arises at the time assessment is made. Sec. 6322. Section 6323, however, provides that such lien shall not be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until the Secretary files a notice of lien with the appropriate public officials. Section 6320 then sets forth procedures applicable to afford protections for taxpayers in lien situations.

Section 6320(a)(1) establishes the requirement that the Secretary notify in writing the person described in section 6321 of the filing of a notice of lien under section 6323. This notice required by section 6320 must be sent not more than 5 business days after the notice of tax lien is filed and must advise the taxpayer of the opportunity for administrative review of the matter in the form of a hearing before the Internal Revenue Service Office of Appeals. Sec. 6320(a)(2) and (3). Section 6320(b) and (c) grants a taxpayer who so requests the right to a fair hearing before an impartial Appeals officer, generally to be conducted in accordance with the procedures described in section 6330(c), (d), and (e).

Section 6330(c) addresses the matters to be considered at the hearing:

SEC. 6330(c). Matters Considered at Hearing. --In the case of any hearing conducted under this section --

(1) Requirement of investigation. --The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.

(2) Issues at hearing. --

(A) In general. --The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including --

(i) appropriate spousal defenses;

(ii) challenges to the appropriateness of collection actions; and

(iii) offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise.

(B) Underlying liability. --The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.

Once the Appeals officer has issued a determination regarding the disputed collection action, section 6330(d) allows the taxpayer to seek judicial review in the Tax Court or, depending upon the circumstances, a U.S. District Court. In considering whether taxpayers are entitled to any relief from the Commissioner's determination, this Court has established the following standard of review:

where the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly at issue, the Court will review the Commissioner's administrative determination for abuse of discretion. [Sego v. Commissioner [Dec. 53,938], 114 T.C. 604, 610 (2000).]

II. Challenges to Underlying Liabilities

As indicated in the above quotation of section 6330(c)(2)(B), challenges to the underlying tax liability may be raised only where the taxpayer did not receive a notice of deficiency or otherwise have an opportunity to dispute such liability.

A. 1995 and 1996

With respect to 1995 and 1996, petitioner conceded to Mr. Shirah during his Appeals Office hearing that he had received the notices of deficiency issued by respondent. Thus, regardless of the validity of the arguments submitted by petitioner in his petition and amended petition concerning the adjustments made by respondent to his 1995 and 1996 returns, he is precluded from raising those disputes in this proceeding. The Court concludes that petitioner may not challenge his underlying tax liabilities for 1995 and 1996.

B. 1999

With respect to the 1999 year, the unpaid balance of $1,148.09 is based on the tax liability self-reported by petitioner on his filed return. Petitioner in his amended petition indicated that he believed his liability for 1999 should be $1,100. At trial, however, petitioner explained that he had just rounded the figure in preparing the amended petition and did agree to the $1,148.09 amount. Therefore, while section 6330(c)(2)(B) does not preclude taxpayers from challenging self-reported liabilities, Montgomery v. Commissioner [Dec. 55,501], 122 T.C. ___, ___ (2004) (slip op. at 14), it is clear that petitioner does not propose to do so here.

III. Review for Abuse of Discretion

In light of our conclusions supra regarding challenges to the underlying liabilities, disposition of this case rests upon whether the record reflects an abuse of discretion on the part of respondent in determining to proceed with collection efforts in the form of a filed lien. Action constitutes an abuse of discretion under this standard where arbitrary, capricious, or without sound basis in fact or law. Woodral v. Commissioner [Dec. 53,206], 112 T.C. 19, 23 (1999). The Court considers whether the Commissioner committed an abuse of discretion in rejecting a taxpayer's position with respect to any relevant issues, including those items enumerated in section 6330(c)(2)(A); i.e., spousal defenses, challenges to the appropriateness of the collection action, and offers of collection alternatives.

Here, petitioner apparently expressed interest in an offer in compromise. Section 7122(a), as pertinent here, authorizes the Secretary to compromise any civil case arising under the internal revenue laws. Regulations promulgated under section 7122 set forth three grounds for compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, or (3) promotion of effective tax administration. Sec. 301.7122-1(b), Proced. & Admin. Regs.⁴ With respect to the third listed ground, a compromise may be entered to promote effective tax administration where: (1)(a) Collection of the full liability would cause economic hardship; or (b) exceptional circumstances exist such that collection of the full liability would undermine public confidence that the tax laws are being administered in a fair and equitable manner; and (2) compromise will not undermine compliance by taxpayers with the tax laws. Sec. 301.7122-1(b)(3), Proced. & Admin. Regs.

To enable the Commissioner to evaluate a taxpayer's qualification for an offer in compromise, and particularly in the face of allegations of economic hardship, the taxpayer must submit complete financial data. Petitioner, however, has admitted that he never supplied a completed Form 656 or 433-A to respondent. Hence, although the Court is sympathetic to the economic difficulties brought on by petitioner's marital separation and medical condition, it cannot be said that respondent acted arbitrarily or capriciously in determining to leave in place the filed lien when petitioner submitted no offer in compromise or documentation of his financial circumstances.

Petitioner at trial communicated an interest in pursuing an offer in compromise on a prospective basis, and the Court would encourage these efforts. Nonetheless, as of the January 10, 2002 , date of the notice of determination, the record does not reveal any abuse of discretion on the part of respondent. We shall sustain respondent's collection efforts in the form of a filed Federal tax lien.

To reflect the foregoing,

An appropriate order denying respondent's motion for summary judgment and decision for respondent will be entered.

¹ Unless otherwise indicated, section references are to the Internal Revenue Code, as amended.

² A statutory notice of deficiency for 1995 that had previously been issued to petitioner on May 16, 1997, was returned to respondent unclaimed and is not germane to this proceeding.

³ We note that the notice of determination refers in apparent error to "levy", rather than "lien", action.

⁴ Sec. 301.7122-1, Proced. & Admin. Regs., contains an effective date provision stating that the section applies to offers in compromise pending on or submitted on or after July 18, 2002. Sec. 301.7122-1(k), Proced. & Admin. Regs. Previous temporary regulations by their terms apply to offers in compromise submitted on or after July 21, 1999, through July 19, 2002. Sec. 301.7122-1T(j), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 39027 (July 21, 1999). Because the final and temporary regulations do not differ materially in substance in any way relevant here, and for purposes of simplicity and convenience, the final regulations will be cited. We further note that temporary regulations are entitled to the same weight and binding effect as final regulations. Peterson Marital Trust v. Commissioner [Dec. 49,935], 102 T.C. 790, 797 (1994), affd. [96-1 USTC ¶60,225] 78 F.3d 795 (2d Cir. 1996).

[2005-1 USTC ¶50,266]Reid & Reid, Inc. v. United States of America .

U.S. District Court, Dist. Md. ; Civ. CCB-03-2697, January 4, 2005 .

[ Code Sec. 6330]

Collection Due Process: Abuse of discretion: Location of hearing. --

The IRS did not abuse its discretion by denying the taxpayer's request for an alternative collection agreement because, according to the Internal Revenue Manual (IRM), installment agreements cannot be approved for taxpayers that are not complying with current deposit and filing requirements. Further, while the IRM instructed that the hearing be held at the taxpayer's place of business, in this case, failure to do so did not amount to an abuse of discretion by the settlement officer.

ORDER

BLAKE, District Judge: For the reasons stated in the accompanying Memorandum, it is hereby Ordered that:

1. the defendant's Motion for Summary Judgment (docket no. 12) is GRANTED;

2. judgment is entered in favor of the defendant, except as to those aspects of the complaint where the court lacks subject matter jurisdiction, which are dismissed; and

3. the clerk shall CLOSE this case.

MEMORANDUM

Reid & Reid, Inc. ("Reid"), a Maryland company, filed its complaint to appeal and contest the Notice of Determination Under Section 6330 of the Internal Revenue Code issued by the Internal Revenue Service ("IRS") with respect to certain payroll taxes owed by Reid. Specifically, Reid alleges that the IRS failed to satisfy the procedural requirements of the Collection Due Process ("CDP") hearing that took place on July 30, 2003 and that this failure amounts to an abuse of discretion. Reid seeks a remand to require the IRS to provide a hearing in full compliance with 26 U.S.C. §6330. The IRS denies abusing its discretion at the CDP hearing and has moved for summary judgment. In addition, the IRS argues that this court lacks subject matter jurisdiction over Reid's claim with regard to corporate income taxes and Reid's appeal of the Notice of Federal Tax Lien.

Having reviewed the parties' briefs, I have concluded that this court has subject matter jurisdiction over the payroll taxes at issue in the complaint and over the IRS's decision following the CDP hearing with respect to the Notice of Intent to Levy, although the court lacks subject matter jurisdiction over Reid's claims to the extent they involve corporate income taxes and the federal tax lien. In addition, I have concluded that the IRS did not abuse its discretion by denying Reid's request for an alternative collection agreement. Accordingly, I will grant the IRS's motion for summary judgment.

BACKGROUND

On January 7, 2003, Reid received a Notice of Intent to Levy from the IRS (Def.'s Ex. 101) and on January 13, 2003, Reid received a Notice of Federal Tax Lien. (Def.'s Ex. 102). On January 15, 2003, Reid mailed the IRS a request for a CDP hearing concerning the Notice of Intent to Levy, but Reid did not request a hearing with respect to the Federal Tax Lien at that time. (Def.'s Ex. 103). Settlement Officer Kathryn Dugan was assigned to conduct a hearing regarding Reid's request. At the hearing, which was held on July 30, 2003 at the Baltimore Appeals Office, Reid requested an alternative collection agreement to pay its tax liability over a period of time. (Reid Aff. ¶5). At the conclusion of the hearing, Officer Dugan granted Reid additional time to supplement the proposal with missing financial information. (Reid Aff. ¶¶7-8). After the hearing, however, while Officer Dugan was considering Reid's request, she discovered that Reid was not in compliance with filing or deposit requirements for the second quarter, for taxes due on July 31, 2003. (Dugan Decl. ¶¶12-15). The IRS contends that installment agreements cannot be accepted for parties that are not meeting their deposit and filing requirements. Consequently, Officer Dugan rejected Reid's installment proposal. In addition, on July 30, 2003, Reid orally requested a separate hearing regarding the federal tax lien. This request was denied because the IRS claims the request was not made within the statutory time period provided by 26 U.S.C. §6320(a)(3)(b).

Reid contends that when the meeting on July 30 concluded, all parties agreed that the hearing would be continued at a later date, after the IRS received the additional information it requested. (Reid Aff. ¶8). On August 8, 2003, Reid provided Officer Dugan with that information. Reid alleges it repeatedly attempted to contact Officer Dugan after the hearing but she did not respond. (Reid Aff. ¶¶10-11). On August 22, 2003, the IRS sent Reid its Decision Letter rejecting Reid's request for a collection agreement. (Dugan Decl. ¶15-16; Def.'s Exs. 106-107). Reid is not challenging the underlying tax liability, but does seek further consideration of alternative collection plans.

ANALYSIS

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment

shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The Supreme Court has clarified that this does not mean that any factual dispute will defeat the motion:

By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original).

"A party opposing a properly supported motion for summary judgment 'may not rest upon the mere allegations or denials of [his] pleadings,' but rather must 'set forth specific facts showing that there is a genuine issue for trial.'" Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 525 (4th Cir. 2003) (alteration in original) (quoting Fed. R. Civ. P. 56(e)). The court must "view the evidence in the light most favorable to ... the nonmovant, and draw all reasonable inferences in her favor without weighing the evidence or assessing the witness' credibility," Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 644-45 (4th Cir. 2002), but the court also must abide by the "affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial." Bouchat, 346 F.3d at 526 (internal quotation marks omitted) (quoting Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993), and citing Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986)).

Decisions following CDP hearings under 26 U.S.C. §6330 are reviewed under an abuse of discretion standard. See Dudley's Commercial and Industrial Coating, Inc. v. United States Internal Revenue Service [ 2003-1 USTC ¶50,397], 292 F.Supp.2d 976, 985 (M.D. Tenn. 2003); Bartolomeo v. United States [ 2003-2 USTC ¶50,706], 292 F.Supp.2d 728, 732 (W.D. Pa. 2003); MRCA Information Services v. United States [ 2000-2 USTC ¶50,683], 145 F.Supp.2d 194, 199 (D. Conn. 2000). "An abuse of discretion is an arbitrary action not justifiable in light of the facts and circumstances presented in the record." Dudley 's Commercial and Industrial Coating [ 2003-1 USTC ¶50,397], 292 F.Supp.2d at 985 (citations omitted). Although this standard is not explicitly set forth in the statute, the legislative history states:

Where the validity of the tax liability is not properly part of the appeal, the tax payer may challenge the determination of the appeals officer for an abuse of discretion. In such cases, the appeals officer's determination as to the appropriateness of the collection activity will be reviewed using an abuse of discretion standard of review.

Id. (quoting H.Rep. No. 105-599 at 266 (1998)). The history indicates that Congress intended courts to apply an abuse of discretion standard, and neither party argues otherwise.

I. Subject Matter Jurisdiction

The IRS contends this court lacks subject matter jurisdiction to review Reid's CDP hearing to the extent it involves corporate income taxes. United States District Courts only have subject matter jurisdiction to review CDP hearings under 26 U.S.C. §6330 if the subject of the hearing is not within the jurisdiction of the United States Tax Court. 26 U.S.C. §6330(d)(1)(B). Because the United States Tax Court has jurisdiction over income taxes, this court does not. See White v. United States [ 2003-1 USTC ¶50,259], 250 F.Supp.2d 919, 922 (M.D. Tenn. 2003). Reid's complaint, however, states "this case only involves payroll taxes," and it appears only $179.55 of the $145,362.80 owed by Reid stems from corporate income tax liability. (Pl.'s Exhibit A). The remaining amount encompasses form 940 and 941 taxes, which cover Federal Unemployment Tax Act taxes, an excise tax paid by the employer, and a trust fund tax, over which this court possesses subject matter jurisdiction. (Pl.'s Exhibit A). See Moore v. Commissioner of Internal Revenue [ CCH Dec. 53,802], 114 T.C. 171, 175 (2000); Chatterji v. Commissioner of Internal Revenue [ CCH Dec. 30,205], 54 T.C. 1402, 1405 (1970); Living Care Alternatives of Utica, Inc. v. United States [ 2004-1 USTC ¶50,225], 312 F.Supp.2d 929, 933 (S.D. Ohio 2004).

The IRS also argues this court lacks subject matter jurisdiction to review Officer Dugan's decision with respect to the federal tax lien. Under 26 U.S.C. §6320(a)(3)(B), a party has 30 days to request a CDP hearing after the receipt of a Notice of Federal Tax Lien. Reid received a Notice of Federal Tax Lien on January 13, 2003, and did not formally request a hearing regarding the tax lien until July 30, 2003, more than six months later. If a hearing is requested by a party after the expiration of the 30 day statutory period and the IRS provides a hearing, the hearing is considered an equivalent hearing, rather than a statutory CDP hearing. Living Care Alternatives of Utica, Inc. [ 2004-1 USTC ¶50,225], 312 F.Supp.2d at 932. This difference is significant because, unlike CDP hearings, equivalent hearing decisions are not reviewable in United States District Courts. Id.

Reid claims that even though it did not formally request a hearing regarding the lien within 30 days, the IRS should have anticipated that when Reid requested a CDP hearing regarding the Notice of Intent to Levy on January 15, 2003, this hearing request encompassed both the Lien and Levy, because both notices were received within a week of each other and both pertained to the same tax liability owed by Reid. (Pl.'s Mem. Opp'n Summ. J at 7-8). In support of its argument, Reid cites to a Congressional Report concerning the IRS Restructuring and Reform Act of 1998, which stated

[t]he conferees anticipate that the IRS will combine Notice of Intent to Levy and Notice of Lien hearings whenever possible.... If the taxpayer requests a hearing following receipt of a Notice of Lien or Notice of Intent to Levy and, prior to the date of the hearing, receives the other notice, the scheduled hearing will serve both purposes and the taxpayer is obligated to raise all relevant issues at such a hearing.

H.R. Conf. Rep. No. 105-599, at 266 (1998). In addition, 26 U.S.C. §6320(b)(4) states "[t]o the extent practicable, a hearing under this section shall be held in conjunction with a hearing under section 6330."

Though Reid did not formally request a hearing regarding the lien within the time required by statute, the IRS should have anticipated that when Reid requested a hearing concerning the levy, it would also be challenging the lien, because the lien and levy are so closely related and the notice for each arrived within a week of the other. The record, however, indicates that rather than raise any issue regarding the lien at the hearing on July 30, Reid merely requested an additional CDP hearing to address the lien. (Dugan Decl. ¶8). As is evident from the Congressional Report discussed above, while the IRS is encouraged to combine both the lien and levy hearings into one, "the taxpayer is obligated to raise all relevant issues at such a hearing." H.R. Conf. Rep. No. 105-599, at 266 (1998). The record does not indicate, aside from the request for a hearing concerning the lien, that Reid attempted to discuss the lien or was denied this opportunity by the IRS at the July 30 hearing. Therefore, because Reid did not timely request a hearing for the tax lien, the July 30 hearing was an equivalent hearing with respect to the lien, and this court lacks subject matter jurisdiction to review it.