Paul L. & Caryn Ann Brecht, Petitioner

T .C . Memo . 2008-2 .1 3

UNITED STATES TAX COUR T

PAUL L . AND CARYN ANN BRECHT, Petitioners v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket*No . .11470 -07L . . Filed September 15 2008 .

Daniel A . Uribe ,'for petitioners .

Kim-Khanh .Thi Nguyen ,,for respondent .

MEMORANDUM OPINIO N

MARVEL, Judge :

This matter is before the Court on .

f respondent's motion for summary judgment filed under Rule 121 .1 'All Rule references are to the Tax Court and Procedure, and all section references are Revenue Code .

Rules of Practic e SERVED SEP 15 2 Mh 2 - Backgroun d This is an appeal from respondent's determination upholding the use of a levy to collect petitioners' unpaid Federal income tax liabilities for 2000, 2001, and 2002 . Petitioners resided in California when the petition was .filed .

Respondent determined deficiencies, additions to tax, and .penalties with respect to petitioners' 1999, 2000, 2001, and 2002 Federal income tax and issued a notice of deficiency for thos e years . In response petitioners timely filed a petition with the Court at docket No . 22876-04 disputing respondent's determination . Appeals Officer Kevin Foist (Appeals,Officer Foist) was assigned to review petitioners' case at docket No .

22876-04 . On June 15, 2005, Appeals Officer Foist met with two of petitioners' representatives, Robert A . Concolino (Mr .

Concolino) and an unenrolled representative . At the meeting petitioners' representatives requested a full abatement of interest and penalties . Appeals Officer Foist responded that "it was unlikely that the interest would ever be abated . " On August 5, 2005, Appeals Officer Foist sent Mr . Concolino a letter enclosing a proposed decision document in docket No .

22876-04 . The letter stated :

If you owe the Internal Revenue Service, the enclosed decision document does not include interest . By law, interest accrues from the due date of the return . If you wish to stop or reduce interest on part or all of the taxes, you can submit an advance payment * *'* along with your decision document * * * The estimated total amount you owe asof June 30, 2005 is shownxin the-enclosed audit statement .

The letter also enclosed a ;statement estimating the tota l penalties and interest if .petitioners paid the deficiencies by June 30, 2005 (June 30, 2005, statement) .

On August 15, 2005, petitioners signed the proposed decisio n document in docket No . 22876-04 .

On September 26, ;;2005, th e Court entered the decision in, docket No . 228 76-04 (stipulate d decision) . In the stipulated decision, the Court ordered an d decided that petitioners were liable for Federal income ta x deficiencies, additions to tax, and section 6662 penalties fo r 1999, 2000, 2001, and 2002 . The stipulated decision that th e Court entered contained the following statement : 'It stipulated that interest will be assessed as provide d the deficiencies & penalties due from petitioners .

On February 27, 2006, respondent assessed the ; deficiencie s additions to tax, penalties, and interest for 2000-022 i n ,accordance with the stipulated decision . On April ii, 2006, M r Concolino sent Appeals Officer Foist a check dated March 13 , 2006, for $1.39,979 .80, representing "the total amount as set :

forth on the Decision of the United States Tax Court date d 2We assume that respondent also assessed petitioners' 199 9 tax liability (including the addition to tax, penalty, and . interest), but-we do not have a Form 4340 ; Certificate of Assessments, Payments, :and Other Specified Matters', . for' 1999 in! the record .

September 26, 2005" .° The amounts set forth in the stipulated decision consisted of the tax deficiencies, additions to tax, and penalties for 1999-2002, but not interest . Appeals Officer Foist acknowledged receipt of the check . .

On June 17, 2006, respondent sent petitioners a Final Notic e of Intent to Levy and Notice of Your Right to a Hearing (notice) in which respondent stated his intent to levy to collect petitioners' unpaid 2000, 2001, and 2002 tax liabilities .'

Petitioners timely submitted Forms . 12153, Request for a Collection Due Process Hearing, for those years, which state d only that the "amount due was paid" .

On January 10, 2007, petitioners participated in a face-to- face section 6330 hearing with Appeals Officer Teresa Pec k (Appeals Officer Peck) . At the hearing petitioners argued only that they paid the amounts due pursuant to the stipulate d decision . Petitioners did not propose a collection alternative .or submit any financial information on which Appeals Officer Peck could have evaluated potential collection alternatives .

On January 10, 2007, Appeals Officer Peck sent petitioners a letter explaining that the parties had agreed to the penalties in the stipulated decision and that the decision contained an acknowledgment that interest would be assessed . She als o 3The notice does not cover 1999 presumably because respondent applied petitioners' . payment to satisfy the 1999 tax liability in full .

explained that petitioners could not-request a,red6termination o f the interest because they . did not file-a-timely motion for redetermination of interest under section 7481(c)On March 27i , 2007, Ronald . J . Channels (Mr . ~ Channels) , on'behalf o f petitioners , replied to Appeals Officer Peck - that, petitioners had paid the , amount stated in the stipulated decision . and that respondent erred in assessing interest on petitioners -' 1999-200 2 income tax deficiencies,additions'to tax, and penalties .

Channels 'requested an 'explanation of respondent's interest calculation'.' 'On April 4, .2007, Appeals Officer Peck sent petitioners a response-letter and attached several interest 'an d penalty detail reports,`the"June 30, 2005, statement with' handwritten notes,'and Notice 746, Information About-Your Notic e Penalty and-Interest .

On April 16,° 2007, respondent sent petitioners a Notice of Determination Concerning Collection Action(s) Under Section . 632 0 and/or"6330' sustaining respondent ' s proposed collection action s for 2000, 2001,' and'2002 . On May 22, 2007 , petitioners ' petitio n was filed .' In`their petition petitioners challenge onl y respondent's assessment of interest on the°2000-02{income`tax deficiencies, additions to,tax,'=and'penalties ° ,Sec 7481(c) .provides generally that a taxpayer may file a motion in""the Court for a redetermination of interest within 1 year after the date the Court's-decision becomes final . j¹ a 6 - On April 17, 2008, we issued petitioners a notice setting their case for trial during the Court's September 22, 2008, Los Angeles, California, trial session- . On July 23, 2008, respondent filed the motion for summary judgment . On August 20, 2008, petitioners filed their . response .

Discussion = I .

Summary Judgmen t Summary judgment is a procedure designed to expedite litigation and .avoid unnecessary, time-consuming, and expensive trials . Fla . Peach Corp . v . Commissioner , 90 T .C . 678, 681 .(1988) .. Summary judgment may be granted with respect to all or any part of the legal issues presented "if the pleadings, answers to interrogatories, depositions, admissions, and any-other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as,to any material fact and that a decision may be rendered asa matter-of law ." Rule 121(a) and (b)- ; Sundstrand Corp . v . Commissioner. ;,-98 T .C.

51_8,1 .520 (1992), affd . . 17 F .3d 965 (7th Cir . 1994) Zaentz .v . Commissioner , 90 T .C . 753, 754 (1988) . The moving party bears the burden of establishing that there is no genuine issue of material fact, and factual inferences will be drawn in a manner most favorable to the party opposing summary judgment .

Dahlstrom v . Commissioner ,

Rule 121 .(d) Dahlstrom 'v : Commissioner, supra at 820-821 .

II ..

.Section! .-633 0 Section 6330(a) provides-that no levy may be made on any property . .or right to property-of any pers=uhless ;the Secretary has' -notified such person .`in .writing of the right to a hearing before the . levy is made, . If the person makes a request for a hearing, a hearing 'shall' be held before an .impartial officer or employee of the Internal Revenue Service Off ice"of?'Appeals 'Sec .

6330(b)(1 ) , (3): . At the hearing, a taxpayer may raise any#` relevant issue, including appropriate' spousal defenses, challenges to the appropriateness, of the=.collection action, and collection - alternatives . Sec . ,6330 .(c). (2) (A)(cid:127) : A taxpayers-may' contest the existence or amount of the underlying tax liability at the ; hearing if the taxpayer did not receive",a notice of deficiency for the tax liability-in-question I-or did not-otherwise have an earlier, opportunity to dispute the .tax .l(cid:127)iability' . Sec .

6330(c)(2)(B) .; see also Sego V . Commissioner , 114`T .C . 604, 60 9 (2000), .

Following a-hearing, the :Appeals .Office must determine whether the-proposed levy action may proceed :' ThelAppeals offic e is required to take .into consideration : (1) Verificatio n presented by the Secretary that the requirements of applicable law and administrative .procedures have been met, (2) relevant, issues raised by . the taxpayer, and (3)_ whether the proposed levy action appropriately balances the need for efficient collection of taxes with a taxpayer's concerns regarding the intrusiveness of the proposed levy action . Sec⁴. 6330(c)(3) .

Section 6330(d)(1),grants this Court jurisdictionto review the determination Made by the Appeals Office in connection with the section 6330-.hearing . Where the underlying tax liability is not in dispute, the Court . will .rev .iew the ' determination . of the Appeals Office for abuse of discretion .

Lunsford v .

Commissioner ., 117 T .C-. 183, 185 (2001 ) ; Sego v . Commissioner , supra at 610 ; Goza v . Commissioner , 114 T .C . 176, 182 (200 0 ) .

abuse of discretion occurs if the Appeals,Office exercises its, discretion "arbitrarily, capriciously or without sound basis in fact or law ."

Woodral v . Commissioner , 112 T .C . 19, 23 (1999) .

Petitioners' only argument throughout the section 6330 hearing process was directed to the interest assessed in - connection with the 2000-02 income tax deficiencies, additions to tax,,, and penalties . Petitioners allege in their petition that with regard to interest the respondent "failed to correctly apply * * * the Internal Revenue Code in his determination to assess the liability against .the taxpayer", and they allege in their Forms 12153 only that the "amount due was paid" .

9 - We generally lack jurisdiction to determine tfie appropriateness of .-the .interest,computed under section 6601 , except in two circumstances-.

Urbano-v . Commissioner , 122 T .C .

384, 390-(2004) . : First, under section 748 .1(c), the . Court may redetermine an overpayment of interest if the taxpayer files a motion with the.,Court within-1 year after the date1a decision of the Court becomes final .

Id .

Petitioners did`rottmely move the Court for :a . redetermination of interest under section 7481(c or satisfy the section 7481(c) requirements .5 Second, we° may review the Commissioner's denial . of an abatement of interest under section 6-404-(h),, .a- Id .

Section 6404(e) authorizes th e Secretary to .(cid:127)abate the assessment of interest attributable to an unreasonable ` error . or delay by the Internal Revenue Service in performing~a minister_ial'br managerial act .'. Although the Court has jurisdiction to'review the Appeals officer's determination regarding interest' if a taxpayer requests an abatement of interest in,a section 6330° .hearing, Katz v .- Commissioner , 11 5 Sec . 7481(c) (2)'(A) (ii) requires the taxpayer%to have "paid) the entire amount of the deficiency plus interest,"!fo .r the Tax Court'to have -overpayment jurisdiction regarding interest . Petitioners clearly did not .satisfy :this requirement .

r _ r 6Sec . 6404(e) was amended by the,Taxpayer Billtof Rights :,2, Pub . L .-104°-168, sec . 301,'110 Stat . 1457 (1996), to .permit the Secretary to abate interest with respect to an "unreasonable" error or'delay resulting from managerial and ministerial acts . . The amendment applies to interest accruing with respect to deficiencies or payments for tax years beginning after July 30, 1996.

Id .

a T .C . 329, 340-341 (2000), we will not consider an issue regarding abatement of interest if it was not-properly raised at the section 6330 hearing and/or considered in the notice of determination, Magana v . Commissioner , 118 T .C . 488, 493-494 (2002) .

In their objection to respondent's motion for summary judgment, petitioners argue that they are entitled to an, abatement of interest under section .6404(e)( .1) . . Although petitioners and the Appeals officer apparently discussed the :

appropriateness of the assessed interest as well . as a general request by petitioners to abate interest during the section 6330 hearing, petitioners do not allege that they actually made a claim for abatement under section,6404(e) or that they presented any information during the section 6330 hearing to support a section 6404(e) abatement claim . Moreover, there .is no indication in the administrative record submitted with respondent's motion that petitioners presented any information to the Appeals officer during the section 6330 hearing to establish that they were entitled to abatement under section 6404(e), and petitioners do not allege to the contrary in their objection to respondent's motion . We conclude, therefore, that petitioners have failed to support their interest abatement request . with sufficient specificity to preserve the issue for Court review .

See Poindexter v .- Commissioner , 122 T .C .` 280, 284 - 2 186 (200 4 affd . 132 ;Fed .-Appx .' 919 (2d Cir . 2005) . " The' . undisputed factsx,establish that ' during, the section 6330 hearing process petitioners did not propose a€collectio n alternative or otherwise submit any financia l information from which Appeals Officer Peck could .have i collection alternatives . The undisputed facts also establis h that, after reviewing the administrative record and determining that the requirements of section .6330 had been satisfied, the Appeals officer reasonably concluded that the collection actio n could proceed . We find no abuse of discretion in her determination .

'In their objection,to respondent's motion, petitioners allege only that the Internal Revenue Service (IRS) failed to provide them with a specific payoff amount after the stipulated decision ' was . entered and that the IRS waited approximately 2 months after petitioners made their $139,979 .80 payment to attempt to collect interest . Even if we treat petitioners- requestas a sec . 6404 abatement claim and we accept these statements as true for purposes of the summary judgment motion, they are insufficient to support a claim for abatement under sec 6404(e) .(1), which authorizes an abatement of interest attributable .to an unreasonable error or delay by an officer or employee of the IRS in performing a ministerial or!managerial act .

We conclude on the record before us-that-there is no . .genuine issue of material fact requiring,a trial, and we ;hold that respondent is entitled to the entry of a decision sustaining the proposed levy as a-matter . of law .

An appropriate order and iii - - decision will be entered .

85. T .C . 812, 821 (1985) ; Jacklin v . Commissioner , 79,T .C . 340 , 344 (1982) . The nonmoving party, however, cannot rest upon the 7- allegations . or denials in his pleadings but must "set forth specific . facts showing that"there is (cid:127)a 'genuine issue for trial :