Nacoleon James Hillsman, Jr., Petitioner

UNITED STATES TAX COURT

NACOLEON AMES HILLSMAN, JR .,,Petitioner v . COMMISSION R OF INTERNAL REVENUE, Respondent Docket No . 1161 1 -07L . Filed October 28, 2008 .

Nacoleon .James I illsman, Jr . , pro se .

CHIECHI, Judge : This case is before the Court on respon- dent's motion for summary judgment as supplemented .- We shal l -Respondent fil d a declaration of Appeals Team .Manager° Debra Dufek in suppo t of respondent's motion for summary judg- ment (respondent's d claration) . We shall refer collectively t respondent's motion or summary judgment as supplemented and respondent's declara ion .as respondent's motion .

SERVED OCT 2 8 2008

grant respondent's motion .

Background The record establishes and/or the parties do not dispute the following .

Petitioner' s address shown in the petition in this case was in Chicago, Illinois .

On December 30, 2002, respondent prepared a substitute for return for petitioner's taxable year 1999 .

On September 19, 2005, petitioner filed a Federal income tax (tax) return for his taxable year 1999 (1999 return) . In that return, petitioner showed total tax of $37,819 and tax due of $29,052 . When petitioner filed his 1999 return, he did not pay the tax due shown in that return .

On February 6, 2006, respondent assessed the total tax shown in petitioner's 1999 return, additions to tax under sections 6651(a)(1)2 and 6654(a)-of $6,943 and $1,280, respectively, and interest as provided by law of $14,051 .07 for petitioner's taxable year 1999 .3 (We shall refer to any unpaid assessed(cid:127) amounts with respect to petitioner's taxable year 1999, as'wel l ZAll section references are to the Internal Revenue code in effect at all relevant times . All Rule references are to the Tax Court Rules of Practice and Procedure .

.3 On Apr . 15 , 2006, respondent credited a refund of $1,40 2 due to petitioner for his taxable year 2005 against the liability for-petitioner's taxable year 1999 .

as interest as provided bylaw accrued after February 6, 2006, a s petitioner'°s unpaid 999 .1`iability .

) On February,6, 006, respondent-issued-to'petitioner a notice of balance du with respect to petitioner's unpaid 1999 liability . RF, a On April `15 1 20 6 ., -respondent issued to petitioner a final notice of intent to levyand . notice of your right to a hearing :

(notices ofi intent to levy) with . respect= to petitioner's unpaid'- 1999 liability⁴ .

On June 7, 2006, petitioner- submitted-to respondent Form .

656, Offer-in .Compro ise', in,which-petitioner offered to compro mise petitioner's un aid .1999 liability (petitioner's . June 7, 2006 offer-in-compromise) . In that form,=petitioner offered to compromise . that liability by paying $11,716-over a 24-month period . On July 19, 2006, respondent rejected petitioner's Jun 7, 2006'offer-in-corn romise .

On July 20', .2006, , respondent filed a notice of` Federal- ., tax lien with respect to petitioner's unpaid 1999 .liability . On Ju y 21, 2006, respondent issued to petitioner. a notice` of Federal tax lien :filing and your right to a . hearing underSRC 6320 (notice of tax lien) -with respe t to petitioner's unpaid .1999 liability .

4The record doe not establish that petitioner requested a .

hearing with respond nt's Appeals Office(cid:127)(Appeals Office) with respect to the notic of intent to levy . .

i 4 - 'On August 18, 2006, petitioner submitted to respondent Form 13711, Request for Appeal of Offer in Compromise , in which .he appealed respondent's rejection of petitioner's June1'-7, 20 .0 6 offer-in-compromise .

On August 28, 2006, petitioner timely submitted to respon- dent Form 12153 ; Request for a Collection Due Process Hearing (petitioner's Form 12153), with respect to the notice of tax lien. In that form, .petitioner indicated his disagreement with the notice of tax lien and requested a hearing with the Appeals Office . In petitioner's Form 12153, petitioner statedin perti- nente part : "My initial Offer in Compromise,* * * has, been` ill forwarded to the Office of Appeals . A final determination :- regarding the outcome has not been .issued, therefore,-the Federal Tax Lien should be removed until ** *~final resolution has been issued . " By letter dated October 19, 2006, a settlement officer with- the Appeals Office who was assigned petitioner's Form 1215.3 (settlement officer) acknowledged receipt of that form . That letter stated in pertinent part :

;; ; .I have scheduled a telephone conference call for you on November 21, 2006 at 9 :00AM [sic] . This call will be your primary opportunity to discuss with me . the .reasons- you disagree with the collection action and/or to discuss alternatives to the collection action .

On or about November 30, 2006, the settlement officer sen t petitioner a letter that stated in pertinent part :

I sent you .a le tion Due Proces uled for 11/21 / I confirmed yo u someone in the schedule your d for January 2 [sic] . I hope the-,offer befor this time, the release of th e -Once I' complete will make a det hearing you req administrative already provid e ter offering you a telephonic Collec- conference . The conference was sched- 006 .

rejected offer has been assigned'to .

ew York Appeals Office . I will re- e process hearing on the filed tax lien * * hat a decision would have been made o n ' * a* * .At ; [ill-egible], , 2006 [sic] @ 10 : 00AM the= scheduled hearing - date .

ppeals Office will not recommend a ax lien .

your hearing on the tax-lien issue ., we rmination in the Collection Due Process ested by reviewing the Collectio n ile and whatever information you hav e On a date not d sclosed by the record, petitioner made a so- called short-term d e erred payment offers of-$15,000 .02 to b e paid over°a-period 24 months to compromise petitioner's unpaid '1999 liability . On anuary 24, 2007, respondent accepted that offer (petitioner' s ccepted offer-in-compromise) . . .

On April 23, 20 7, the Appeals Office issued to petitioner a notice of determina t on concerning collection action(s .) under section 6320'and/6 ; 330 (notice of determination) with respect to petitioner's taxa le year-1999 . That notice stated in pert i nent part :

'The term "sho r amount that a taxpa y liability and that i 24 months , after wri of Internal Revenue Internal Revenue Man -term deferred payment offer" refers to a n r offers to compromise the . taxpayer's tax to be paid in more than 90 days, but"within ten notice of acceptance by the Commissioner Commissioner) of the offered amount . Se e al (IRM) pt . 5 .8 .1 .9 .4(3) (Sept . 1, 2005) .

Summary of Determinatio n Based on all the documents that were presented we determined the filing of the tax lien was appropriate . The Service followed all applicable procedures and guidelines in the filing of the Notice of Federal Tax Lien .

Since the filing of the tax lien your offer-in-compro- mise was submitted for acceptance . The Offer Unit determined the amount offered was adequate . The, tax lien will ;; .be released once you,have met the terms of the offer-in-compromise .

The notice of determination included an attachment tha t stated in pertinent part :

I

SUMMARY AND RECOMMENDATION

.You requested a hearing from Appeals under the provi- sions of Internal Revenue Code (IRC) [section] 6320 on the above income tax periods . The Form 12153,'Request for a Due Process Hearing was : timely filed . You were provided the opportunity to a telephone, correspondence, or face-to-face hearing . A telephone hearing was conducted .

The Internal Revenue Service followed all legal .,,,and administrative requirements in filing the tax lie n .`against you . It was determined that this action was' the most efficient collection method when the Notice of .Federal Tax Lien was requested .

The Offer Unit filed the offer [sic] after rejecting your submitted offer-in-compromise . You filed a timely appeal with the Offer Unit-protesting the rejection . The Offer Unit reinvestigated your offer and has recom- mended acceptance of your offer . The'tax lien will be released as soon as the terms of the offer are met .

BRIEF BACKGROUND

A tax lien was filed against you because of your out-, standing tax liability amount . Your income tax was prepared by the Service because you neglected to file the tax return .

ill return You'-filed an off liability . Your timely appeal pr Officer contacte offer . The,Settll was . recommended r-in=compromise to resolve the tax offer was rejected and you filed a testing the rejection . The Settlement the Offer Unit on the status of your ' ement Officer was notified your offer nd submitted for approval .

)ISCUSSION AND ANALYSI S Verification of (legal procedural requirements :

Appeals has obt ined'verification from the IRS office collecting .the tax that the requirements of-any appli- cable law, regulation or administrative procedure with respect,to the proposed levy or NFTL filingt⁶³ have been met . Computerecords indicate that the notice and demand, notice of intent to levy . and/or notice of federal tax lie filing, and notice of a right to a Collection Due Process hearing were issued .

Assessment was tax and perio d roperly made per IRC § 6201 for eac h isted on-the CDP notice .

The notice and the taxpayer' s IRC [section] 6 3 when a taxpayer bility after no valid against . t notice of the l i for filing per of your account to pay after no 21 states that a statutory lien arises neglects or refuses to pay a tax lia ice demand [sic] and demand . To be ird parties except government . entities, en must be filed in the proper plac e RC [section] 6323(a) and (f) . A review indicates that you neglected or refused ice and demand .

IRC [section] 6 Service to with (NFTL) . A NFTL notice was prem with the Servic taxpayer enter e 23(j) allows the Internal Revenue raw a Notice of Federal Tax Lie n may be .withdrawn if the filing of the tureor otherwise not in accordanc e 's administrative procedures, if the into an .[installment] payment agree- 6See supra note refers to "the propo action that the Appe filing of the notice tioner's taxable yea Although the notice of-determinatio n ed levy or NFTL filing", the only collection is Office sustained in that notice was the of Federal tax lien with respect to peti- 1999 .

ment under Section 6159 to satisfy the tax .,liability for which the lien was imposed by means of the agree- ment unless such agreement provides otherwise, i f withdrawal of such notice will facilitate the collec- tion of the tax liability, or if with the consent of the taxpayer or National Taxpayer Advocate, the, .with- drawal of the notice would not [sic] be in the best interest of the taxpayer (as determined by the National Taxpayer Advocate) and the United States (as determined by the IRS) .

The filing of the NFTL was not premature and followed administrative guidelines .

There was no [installment] payment agreement [under section 6159] or the agreement,;pro- vided for the filing of the NFTL .

Neither the taxpayer nor Appeals contends that withdrawal would facilitate collection .

Withdrawal is considered not to be in the best interest of the Government .

There was a balance due when the CDP levy notice was issued or when the NFTL filing was requested .

`Prior involvement :

l!

I had no prior involvement with respect to the specific . tax periods either in Appeals or Compliance Coll'ectioft .

Collection statute verification :

The collection statute has been suspended ; the collec- tion period allowed by statute to collect these taxes, has been suspended by the appropriate computer codes for the tax periods at issue .

{ Collection followed all legal procedural requirements''. and the actions taken or proposed were appropriate under the circumstances .

Issues raised by the taxpaye r Collection Alternatives Offered by Taxpaye r Your due process request form indicated your initial offer was reject d and you appealed the decision . You believe the fill g of the tax lien was premature and the tax lien sho ld be removed until a final resolution' was made on your offer .

A review of your account revealed you had an outstand- ing tax liability totaling over $50,000 .00 . Because'of your outstanding tax liability amount and the rejection of your offer, the filing of .the tax lien was . no t premature .

A telephone hearing was'conducted with you and you notified the Set dement Officer that your offer ,has been approved . he Settlement Officer contacted the Offer Unit, Ms . S eck ..and verified the acceptance of your offer .

You were notified the tax lien would be released once the terms of your offer .were met ., Because . you chose not . to-sign the W iver form this determination lette r was issued to you .

Challenges to th e Existence of Amount of Liability You did not chal l nge the liability at your hearing .

You raised no ot h r relevant issues .

Balancing of need payer concern tha intrusive than necessary .

for efficient collection with tax- the collection action be no mor e not be withdrawn by'Appeals and is,' e] most appropriate action . IR C d 6330 require . that the Appeals ether a proposed collection action for efficient collection-'`of taxe s The tax lien'will believed to be [t [sections] 6320 a Office consider w balances the need with the legitimate concern that any collection be no more intrusive ha necessary . The filing of the tax lien was determine to be the most effective method of collection when it was filed .

It The tax lien will be released as soon as the terms of your offer are met .

As of April 23, 2007, the date on which the Appeals Office issued to petitioner the notice of determination, petitioner had not begun making the 24 monthly payments required under the term s of petitioner's accepted offer-in-compromise . Since May 18, 2007, petitioner has made, and as of August 4, 2008,has contin- ued to make, those required monthly payments .

Discussio n The Court may grant summary judgment where there is no genuine issue of'material fact and a decision may be, ;,rendered a s a matter of law . Rule 121(b) ; Sundstrand Corp . v . Commissioner ,

In petitioner' s response to respondent's motion, petitioner does not dispute the existence or the amount of petitioner's unpaid 1999 liability .

. Where, as is the case here, the validit y of the underlying tax liability 'is not properly placed at issue, the Court will review the determination of the Commissioner for abuse of discretion .

See Sego v . Commissioner , 114 T .C . 604, 610 (2000 ) ; Goza v . Commissioner , 114 T .C .'176, 181-182 (2000 ) It is petitioner's position that the Appeals Office abused its discretion in determining in the notice of determination t o sustain the Federal tax lien with respect to petitioner's unpaid 1999 liability and t e filing of the notice of that lien . ' According to petitio er, the Federal tax lien with respect t o that liability " was re-maturely placed on my account " and should be "removed" becauseIhe has been making the payments require d under"the terms of pe`titioner's accepted offer-in-compromise .

. If any pers refuses to pay t cluding any inte tax, or assessab that may accrue favor of the Uni to property, whe such person .

n liable to pay any tax neglects or e same after demand, the amount (in- est, additional amount, addition to e penalty, together with any cost s n addition thereto) shall be a lien in ed States upon all property and rights her real'or personal, belonging t o Section 6322 provides shall arise at the ti until the liability f or becomes unenforceab e_by reason of lapse of time ." As perti- nent here, section 63 2 (a)(1) provides that the Secretary of th e certificate of release of a Federal tax ays after the day on which the "Secretar y y for the amount assessed , together wit h 'In the notice of mined that "The tax li has] met the terms of Office also determined . respondent followed=all filing the notice of Fe tioner's unpaid 1999 li is not appropriate at t etermination, the Appeals Office deter- n will be released once * * * [petitioner he offerz-in-compromise ." The Appeal s in the notice of determination tha t applicable procedures and guidelines in eral tax lien with respect to peti- bility and that withdrawal of that notice is time .

all interest in respect thereof, has been fully satisfied or has become legally unenforceable" .

Consistent with section 6325(a)(1), part 5 .17 .2 .7 .3(2) of the IRM (Oct . 31, 2000) provides that "A Certificate of Release of the federal tax lien is authorized" where, inter alia,rthe "amount assessed (plus interest) is paid ." Part 5 .17 .2 .7 .3 .2(1 ) of the IRM (Oct . 31, 2000) provides in pertinent part :

(1) When the Service accepts an offer in compromise ; * * * the lien against the taxpayer is released, provided that all of the following conditions are met :

a . It is a cash offer, or all installments under the terms of the offer, including an"j accrued interest, have been paid .

If a taxpayer makes a cash offer to compromise a tax liability , the offer amount must be paid within 90 days after the date o n which the Commissioner accepts the offer . IRM pt . 5,1 .8 .1 .9 .4(3 ) (Sept . 1, 2005) .

On February 6, 2006, respondent assessed petitioner ' s unpaid 1999 liability and issued to petitioner a notice of ; balance due with respect to that liability .

On that date , a Federal tax lien arose by operation of law in favor . of the United States on al l property and rights to property belonging to petitioner with respect to petitioner's unpaid 1999 liability . See sec . 6322 . .

On a date not disclosed by the record, petitioner made a short- term deferred payment offer of $15,000 .02 to compromise that f liability .'

Pursuan t to that offer, petitioner agreed to pa y $15,000 .02 in 24 mo n hly payments to commence after writte n notice of respondent' s acceptance of that offered amount . On January 24, 2007, re s ondent accepted petitioner's offer o f $15,000 .02 to compr o ise petitioner ' s unpaid 1999 liability . As of April 23, 2007 , e date on which the°Appeals Office issued t o petitioner the notic e of determination, petitioner had not made all of the 24 months payments required under the terms of petitioner's accept e offer-in-compromise . We conclude tha t respondent was not re respect to petitioner's unpaid 1999 liability . 9 See sec .

6325 ( a)(1) ; IRM pt . 5 Nor was responde t required to withdraw the notice o f Federal tax lien file with respect to petitioner's unpaid 199 9 liability . Section 6 23(a)'provides that the "lien imposed by section 6321 shall n o be valid as against any purchaser, holder, of a security interes mechanic's lienor','or judgment lie n creditor until notice subsection (f) has b e n filed by the Secretary . When respondent 'Thus, petitione 9Form 656 , . Offer Commissioner has acce the taxpayer remains has satisfied all of IRM pt . 5 .9 .4 .9-1(1) for petitioner's unpa the terms of petition in Compromise , indicates that, where th e ted an offer to compromise a tax liability, iable for that liability until the taxpayer he terms of the offer-in-compromise . See Jan . 1, 2006) . Petitioner remains liable d 1999 liability until he satisfies all of is accepted offer-in-compromise .

m 14 - assessed petitioner's unpaid-1999 liability on February 6,, ;.20 .06, a Federal tax lien arose by operation of law in favor of the United States on all property and rights to property ; belonging to petitioner with respect to petitioner's unpaid 1999 liability .

Pursuant to section 6323(a), on July 20, 2006„ respondent filed a notice of Federal tax lien with respect to that liability in order to protect respondent's interest in petitioner's property against other creditors of petitioner .' ° Section 6323(j)(1) provides in pertinent part :

(1) In general .--The Secretary may withdraw a notice of a lien filed under this section * * * if the Secretary determines that-- (A) the filing of such notice was premature or otherwise not in accordance with administrative procedures of the Secretary * * * We conclude that the filing of the notice of Federal tax lien with respect to petitioner's unpaid 1999 liability was not premature .

We also conclude that the .,filing of the notice,of Federa l tax lien with respect to petitioner's unpaid 1999 liability was otherwise "in accordance with administrative procedures of the Secretary" . Cf . sec . 6323(j) (1) (A) . Part 5 .12 .2 .3(!.1) of the IRM 10See also pt . 5 .12 .2 .4 .1(1) of the IRM (May 20, 2005) (generally a notice of Federal tax lien should be filed if "the aggregate * * * [ unpaid balance of assessment] is $5,000 or more") . As of the date on which respondent filed the. notice of Federal tax lien with respect to petitioner's unpaid 1,99,9 liabil ity, petitioner's unpaid 1999 liability was substantially in excess of $ 5,000 .

(May 20, 2005) provides that the Commissioner must make reason- able efforts to contact a taxpayer before filing a notice of Federal tax lien in order to advise the taxpayer that such a notice may be filed if the taxpayer does not make full payment o f a tax liability when requested .

. Part 5 .12 .2 .3(1) of the IRM further provides that the issuance of a notice of balance due under section 6303(a) constitutes reasonable efforts to contact the taxpayer . Before filing the notice of Federal tax lien, respondent issued to petitioner a notice of balance due with respect to petitioner's unpaid 1999 liability and thereby made reasonable efforts to contact him, as required by the Internal Revenue Manual .

Based upon our e amination of the entire record before us, we find that the Appeals Office did not abuse its discretion in making the determinatons in the notice of determination with .

respect to petitioner s taxable year 1999 .

We have consider d all of the contentions and arguments of the parties that are, of discussed herein, and we find them to b e without merit, irreleant, and/or moot .

On the record be ore us, .we shall grant respondent's motion To reflect the foregoing, An order granting respondent's motion and decision for respondent will be entered .

98. T .C . 518, 520 (1992), affd . 17 F .3d 965 (7th Cir . 1994) . We conclude that there are no genuine issues of material fact regarding the questions raised in respondent's motion .