C. Michael & Gwendolyn E. Willock, Petitioner

T .C . Memo . 2009-17 8

UNITED STATES TAX COURT

C . MICHAEL AND GWENDOLYN E . WILLOCK, Petitioners _v . COMMISSIONER .OF-INTERNAL REVENUE, Responden t Docket No . 22391-07L . Filed August 3, 2009 .

C . Michael and Gwendolyn E . Willock, pro se .

Jeanne Gramling , for respondent .

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MEMORANDUM OPINIO N

PARIS, Judge : This case was submitted to the Court fully stipulated pursuant to Tax Court Rule 122 .

On August 23, 2007, respondent mailed to petitioners a Notice of Determination Concerning Collection Action(s) Unde r SERVED Aug 03 2009 Section 6320 and/or 63301 (notice of determination) regarding petitioners' 2001 income tax liability . In response to that notice, and pursuant to sections 6320 and 6330(d), petitioners timely petitioned this Court for review of respondent' s determination that a notice of Federal tax lien (NFTL) was a n appropriate method of collection .

The issue for decision is whether respondent abused his' discretion in upholding the filing of a NFTL .

Background Respondent mailed to petitioners' last known address a statutory notice of deficiency for taxable year 2001 on December 7, 2005 . This notice determined an income tax deficiency for that year in the amount of $152,270 .00, and an accuracy-related- penalty under section 6662 in the amount of $39,454 .00 .

Petitioners did not, file a petition in this Court seeking a redetermination of respondent's notice of deficiency for tax year 2001 . Therefore, after the expiration of the 90-day perio d for filing a petition in this Court had passed, . respondent assessed the tax, penalty, and interest, on April 11, 2006 . On that same date, respondent mailed to petitioners a notice and demand for payment of the assessed 2001 tax liability .

'Section references are to the Internal Revenue Code of 1986, as amended . Rule references are to the'Tax Court Rules of Practice and Procedure .

On January .23, 2007, a NFTL for petitioners' 2001-unpaid income tax liability was filed . On January 30, 20 .07,`(cid:127)respondent .

mailed a Notice of Federal Tax 'Lien Filing and Your . Right to a Hearing Under .IRC 6320 (Letter,3172) to petitioners for their .

2001 income :tax .

Petitioners`responded'to the notice by-timely-submitting a request for a collection-due process -(CDP) hearing on February 26, 2007 . In the request, petitioners stated that they opposed the filing of-the-Federal tax lien because the ."IRS agent disallowed legitimate_business_expenses *. * * On July 23, 2007, respondent's Appeals Office mailed"to petitioners a letter confirming receipt of petitioners .' CDP hearing request, and scheduling .August'14, 2007 ., as the date for theCDP telephone ., hearing . The letter also advised . petitioners that because petitioners had a priory opportunity to dispute the underlying tax liability for 2001, they would not . be :permitted to do,so durin g the CDP hearing .

Petitioners did not'p.resent any reason why the filing of the Federal tax lien should not remain in place,-nor did petitioners present any collection alternatives during the hearing .

Respondent-'s Appeals Office determined that'the recording of th e notice of Federal'taxlien was appropriate and that the lie n should not be withdrawn . The,Appeals Office''sconclusions were memorialized in the notice of . determination mailed to petitioners on August 23, 2007 .

On October 1, 2007,. petitioners, then residing in the State of North Carolina, filed a petition with this Court requesting that the Federal tax lien not be sustained . As grounds for relief the petition states in its entirety that "[a] determination letter was issued on the timely request regarding .

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the, filing of a tax lien . The taxpayers exercise their right to petition the Tax Court regarding such ." On October 7, 2008, during the Court's motion hearing² in Winston-Salem, North Carolina, the parties submitted this .-matter to the Court for decision without trial under Rule 122 . The stipulated facts and accompanying exhibits are incorporated herein by this reference .

Discussion Under section 6321, if a person liable for a tax fails to pay it after demand, the unpaid amount, including any interest, and penalties, becomes a lien in favor of the United States "upon all property and rights to property, whether real or personal, , 2At the October 7, 2008, hearing, the Court discussed .petitioners' then-pending motion for summary judgment and amended motion for summary judgment . Petitioners argued in the motions that respondent was barred . from assessing any tax or penalties for the tax'year at issue because the period for assessment as described in section 6501 had expired . The Court determined, however, that petitioners . signing of IRS Form 872 before the period for assessment expired voluntarily extended the period for assessment under section 6501(c) . Therefore, the Court denied petitioners' motions on June .18, 2009 .

.belonging' o such persona The 'lien arises when the tax is assessed . Seca 6322 . Section 6323 explains thatthe Internal RevenueService (IRS) may file a notice of Federal -tax lien to protect its-lien against subsequent creditors and purchasers o f the taxpayer's property .

A taxpayer may appeal the_filing ;.of a notice of tax lien to the IRS under section 6320 by requesting an administrative hearing . The-taxpayer is additionally-afforded the opportunity ' for judicial`-review of'a determination sustaining the notice o f Federal tax-lien in .the Tax Court `pursuant to section ` 6330(d) .

Petitioner's hav e chosen to~` seek `-Ijudicial review of respondent' s determination .

Petitioners are not contesting the underlying tax liability ; thus, the Court reviews the determination to see whether there has been an abuse of discretionby respondent's Appeals Office in the 'determination . See Lunsford v . Commissioner , 117 T .C . 183, 185 (2001) (citing Nicklausv .,Commissioner , 117 T .C . 117, 12 0 (2001)) . The Court has described the standard by which the Commissioner's determinations in CDP"cases are reviewed as a n "abuse of discretion," meaning "arbitrary, capricious, clearly unlawful, . or without sound basis in fact or law ."

Ewing v .

Commissioner , 122 T .C . 32, 39 (2004), rev'd on other grounds, 439 F .3d 1009 (9th Cir . 2006) ; see 'also Woodral v . Commissioner , 112 T .C . 19, 23 (1999) . Utilizing this standard, this Court does not 6 - find that respondent's Appeals Office abused its discretion .

Petitioners offered no collection alternatives or other defenses to the lien . Respondent simply used the available methods under the Internal Revenue Code for protecting the United States ' claims against subsequent creditors .

Conclusion Based on the record, the Court holds that the Appeals Offic e did not abuse its discretion in determining that respondent's filing of a NFTL was an appropriate collection action .

Finally, in reaching the conclusions described herein, the Court has considered all arguments made, and, to the extent not mentioned above, finds them to be moot, irrelevant, or without merit .

To reflect the foregoing, Decision will be entere d for respondent .