In Bianca Lavina Gilmore v. Comm’r, T.C. Memo. 2019-97, the Tax Court decided whether the IRS properly levied the Taxpayer’s assets.
Taxpayer’s unpaid tax liabilities
Taxpayer resided in Arizona when she filed her petition.
Taxpayer owed taxes on her 2012 and 2015 federal tax returns which did not pay.
On December 2, 2016, the IRS issued Taxpayer a Final Notice of Intent to Levy and Notice of Your Right to a Hearing concerning the collection of her unpaid Federal income tax liabilities for 2012 and 2015.
Collections due process hearing
In response, the representative holding Taxpayer’s power of attorney timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), on Taxpayer’s behalf. The case was then transferred to the IRS Office of Appeals for the collections due process hearing.
The Office of Appeals reviewed Taxpayer’s transcripts and the administrative file. It determined that (1) Taxpayer’s CDP hearing request was timely, (2) the underlying assessments were properly made, (3) notice and demand were properly issued, and (4) there were balances due when respondent issued her the notice of intent to levy.
The settlement officer (SO) noted in the case activity record, that Taxpayer filed returns from 2012 through 2015, had a balance due for each of those periods, and had not made any estimated tax payments for 2016.
On February 14, 2017, the SO sent Taxpayer and the representative each letters acknowledging receipt of the CDP hearing request and scheduling a telephone conference with the representative for March 15, 2017. The SO requested that either Taxpayer or the representative provide him with, in addition to a number of other documents, “[p]roof that you are current with your estimated tax payment requirements for the Form 1040 period ending December 31, 2017” no later than March 10, 2017, adding that “Appeals cannot approve an installment agreement or accept an offer-in-compromise unless all required estimated tax payments for the current year’s income tax liability have been made.
On March 14, 2017, the representative faxed the SO a copy of the previously submitted Form 433-A, dated December 14, 2016, as well as some of the other requested documentation but failed to provide the SO with any documentation related to Taxpayer’s current compliance with her estimated tax payment obligations.
On March 15, 2017, the SO held a telephone conference with the representative.
The SO’s notes to the file record that the representative advised him, among other things, that Taxpayer: (1) sought either an installment agreement of $300 per month or an OIC, (2) did not dispute the underlying tax liabilities for 2012 and 2015, and (3) had closed her business and was now unemployed.
The SO informed the representative that in order for Taxpayer to qualify for an installment agreement or OIC, he needed to receive a number of items no later than March 29, 2017, including: (1) documentation proving her compliance with, inter alia, her estimated tax payment obligations, (2) information regarding when her business closed, and (3) updated financial information reflecting her financial condition after the closure of her business.
On March 30, 2017, the SO received a fax from the representative containing some, but not all, of the requested supporting documentation
On June 1, 2017, Appeals issued Taxpayer a notice of determination sustaining the proposed levy.
Tax court’s determination
Installment agreements, OICs, and suspensions of collection activity are collection alternatives that the taxpayer may propose, and that Appeals must “take into consideration”, determining whether to proceed with a proposed levy.
The notice of determination stated that one of the reasons for rejecting any collection alternative for Taxpayer was her failure to be in compliance with her current estimated tax payment obligations. It is not an abuse of discretion for an Appeals officer to deny collection alternatives because the Taxpayer is not in compliance with current tax obligations.
For these reasons, the determination to proceed with the proposed levy is sustained.