Irving & Elaine Steinberg, Petitioner

T .C . Memo . 2006-217

UNITED STATES TAX COUR T

IRVINC COMMI S and ELAINE STEINBERG, Petitioners v . ~IONER OF INTERNAL REVENUE, Responden t Docket No .

4135-05L . Filed October 16, 2006 .

Gerald W . K 11 , Barry H . Cantor , and Cheryl R . Frank , for petitioners .

Derek W . Ka zmarek, for respondent .

MEMORANDUM OPINIO N

SWIFT, Jud e : This matter is before us under Rule 121 on respondent's motion for summary judgment .

Unless otherwise indicated, all section references are to the Internal Revekue Code in effect for the year in issue, an d

SEEMED OCT 1 6 2006

all Rule referer i ces are to the Tax Court Rules of Practice an d Procedure .

Background At the time the petition was filed, petitioners resided in Las Vegas, Neva d L .

For 1990, 1 91, 1992, and 1993, petitioners filed with respondent their joint Federal income tax returns . For these years petitioner still owe respondent approximately $750,000 i n cumulative total Federal income taxes, including accrue d interest .

In November of 2003, petitioners sold their home an d purchased for $5 9,000 a new home in an expensive neighborhood of Las Vegas, Nevad , paying $122,000 as a cash downpayment . None of the proceeds rom the 2003 sale of petitioners' prior home was used by petition rs to make a payment on petitioners' outstanding Federal income taxes for 1990, 1991, 1992, and 1993 .

On March 8, 2004, in an effort to collect petitioners' unpaid Federal i come taxes, respondent mailed to petitioners a notice of intent to levy on petitioners' property .

On March 15, 2004, petitioners filed a request for a hearing with respondent's Appeals Office challenging respondent's proposed levy and seeking approval of an offer-in-compromise, in which petitioners offered to make a total payment of $77,000 with regard to their Federal income taxes for 1990 through 1993 .

Beginning September 9, 2004, petitioners, petitioners' attorney, and espondent held a series of phone calls and written correspondence relating to petitioners' Appeals Office hearing .

Some financial nformation was submitted by petitioners, an d respondent's Ap eals officer reviewed that material and asked petitioners fo r additional information .

Petitioner submitted some additional financial informatio n to respondent's Appeals Office, but certain financial informatio n that had been r quested by respondent's Appeals officer was no t provided by pet tioners . For example, petitioners neve r submitted documents requested by respondent's Appeals officer that would have lestablished the fact of payment of petitioners' medical and drug expenses .

Based on th financial information petitioners submitted , respondent's App*als officer determined that petitioners ha d I significantly mo e discretionary monthly income, equity in assets , and realizable collection potential (RCP) tha n petitioners woul acknowledge .

The figures petitioners and respondent 's Appeals officer respectively calculated are se t forth below :

I Petitioners Respondent Discretiona y Monthly Income $ $ 2,93 7 Equity in A sets 82,853 319,53 5 RCP 127, 087 460,511 The disag eement between petitioners and respondent's Appeals office focused on whether certain alleged life insurance and medical an drug expenses should be treated as discretionary or as nondiscr tionary expenses and on whether petitioners had adequately established that they actually were incurring and paying the exp nses being claimed . During the Appeals Office hearing, petitioners did not submit the documentation necessary to substantiat their payment of the disputed expenses .

The chart below sets forth the respective amounts petitioners cl im and respondent would allow for life insuranc e and medical an drug expenses :

Type o Expenses Petitioners Respondent Life Insurance $2,311 $ 500 MedicalL and Drug 1,553 1,20 0 Petitioners, alleged life insurance expenses are based on whole life insurance policies on the life of each petitioner .

Respondent's o fer-in-compromise guidelines allow taxpayers' expenses only for term life insurance coverage . Se e

Under sec ion 6330, where a taxpayer's underlying tax liability is not in dispute, our standard of review ove r respondent's Appeals office's determination on a taxpayer's - 5 - ' appeal of a notice of levy is whether respondent's Appeals Office abused its disc etion .

Lunsford v . Commissioner , 117 T .C . 183, 185 (2001) . Welare asked to affirm, as a matter of summary judgment, respo dent's Appeals Office's determination to reject petitioners' of er-in-compromise and to sustain respondent's notice of levy .

We may grant summary judgment where there remains no material fact i sue and where a party is entitled to judgment as a matter of law . Rule 122(a) ; Dahlstrom v . Commissioner , 85 T .C .

812, 821 (1985) ; Espinoza v . Commissioner , 78 T .C . 412, 416 (1982) .

The adminis rative file herein establishes that respondent's Appeals officer eviewed petitioners' financial data that was properly and tim ly submitted during the Appeals office's consideration of petitioners' appeal, that petitioners failed to submit to respondent's Appeals Office requested information on time, and that po titioners spent over $100,000 in cash as a downpayment to puirchase an expensive new home at a time when the y had substantial Flederal income taxes due .

Based on . the e facts, we conclude as a matter of law that respondent's Appe is office did not abuse its discretion i n issuing the notic of determination rejecting petitioners' offer- in-compromise and sustaining respondent's levy notice .

6 - The questi n before us is not whether respondent's Appeals Office would ha e decided differently had it received additional information . R ther, the question before us is whether respondent's Appeals Office acted appropriately and within its proper discreti n based on information it received during the Appeals office consideration of petitioners' appeal . The recor d before us answe s that question in the affirmative .

Petitioner now claim additional legal expenses , transportation xpenses, and income averaging in order t o establish that -espondent's calculation during the Appeals Office hearing of petitioners' RCP was too high .

I These itemis constitute new issues and will not be allowed .

I See Magana v . Commissioner, 118 T .C . 488, 493-494 (2002) .

Furthermore, as we stated in Murphy v . Commissioner , 125 T .C .

301, 315 (2005), when Appeals officers make reasonable requests for relevant d cumentation from taxpayers and taxpayers do not produce the do umentation in a reasonable time, the Appeals officer commit no abuse of discretion in making a determination without regard to the missing information .

For the r asons stated, we shall grant respondent's motion for summary ju gment .

To reflec* the foregoing, An appropriate order and decision will be entered for respondent .

2. Administrate n, Internal Revenue Manual (CCH), sec . 5 .15 .1 .10, at 17,662 (May !1, 2004) .