Keefe v. Commissioner of Internal Revenue, 040820 FEDTAX, 19134-19 L

Docket Nº:19134-19 L
Opinion Judge:Diana L. Leyden Special Trial Judge
Case Date:April 08, 2020
Court:United States Tax Court




No. 19134-19 L

United States Tax Court

April 8, 2020


Diana L. Leyden Special Trial Judge

Petitioners timely filed a petition in this case on October 23, 2019. Petitioners seek review of a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination), dated September 20, 2019.[1] The notice of determination sustained a proposed levy with respect to petitioners' unpaid tax liability for 2008. On February 6, 2020, respondent filed a Motion for Summary Judgment (motion) supported by a declaration of Appeals Officer Nicole L. Mullin. On February 28, 2020, petitioners filed an Opposition to Motion for Summary Judgment (opposition). By Order dated March 24, 2020, respondent's motion was assigned to the undersigned for disposition.

Upon review of the record on respondent's motion, the Court concludes that there are not any genuine issues of material fact and that respondent is entitled to judgment as a matter of law. More specifically, the undisputed material facts show that: (1) petitioners are not entitled to challenge their unpaid liability for 2008 in this collection case; and (2) the Appeals officer did not abuse her discretion in not processing petitioners' offer in compromise based on doubt as to liability or in declining to stay collection pending the outcome of petitioners' appeal to the U.S. Court of Appeals for the Second Circuit of the decision entered against them in their Tax Court deficiency case for 2008.


The following facts are established by the record and/or are not disputed by the parties.

On May 14, 2014, respondent issued a notice of deficiency to petitioners for taxable years 2008, 2009, and 2010. On June 30, 2014, petitioners filed a petition, at docket No. 15189-14, challenging that deficiency notice. Following a trial in that case, on June 19, 2018, the Court entered its decision and with respect to tax year 2008 decided that there was due from petitioners the following deficiency in Federal income tax, addition to tax, and accuracy-related penalty:

Penalty/Addition to Tax
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
2008 $140, 592.00 $1, 089.00 $12, 561.40
On August 9, 2018, petitioners filed a notice of appeal from the decision of the Court with respect to 2008, 2009 and 2010 to the U.S. Court of Appeals for the Second Circuit. Petitioners did not post an appeal bond under section 7485. Currently, that appeal remains pending before the U.S. Court of Appeals for the Second Circuit. Pursuant to this Court's above decision, and as relevant to this case, the Internal Revenue Service (IRS)[2] assessed the tax, addition to tax, penalty and interest against petitioners for 2008. Petitioners did not remit payment. On April 1, 2019, the IRS issued to petitioners a Notice CP90, Intent to Seize Your Assets and Notice of Your Right to a Hearing for 2008, 2009, and 2010. On April 4, 2019, petitioners submitted a timely Form 12153, Request for a Collection Due Process or Equivalent Hearing, only with respect to 2008. On the Form 12153, petitioners checked the boxes for "Offer in Compromise" and "I Cannot Pay Balance" as collection alternatives and wrote "[t]he taxpayer wishes to propose a collection alternative and reserves the right to supplement this Request by submitting to the Appeals Officer to whom this is assigned additional documents and information as may be necessary." On July 9, 2019, IRS Appeals Officer Nicole Mullin (AO Mullin) held a telephonic conference with petitioners' representative. At that conference, the representative stated petitioners would submit an offer in compromise. On July 24, 2019, petitioners sent to AO Mullin a Form 656-L, Offer in Compromise (Doubt as to Liability). In their Form 656-L petitioners sought to compromise their liabilities for 2004 thru 2017. In an attachment to that Form 656-L petitioners further requested "the decision regarding this request and the case itself be placed on hold pending the outcome of the appeal." On July 30, 2019, AO Mullin forwarded that Form 656-L to the Centralized Offer In Compromise Unit in Brookhaven, New York (Brookhaven COIC unit), for processing. The Brookhaven COIC unit deemed petitioners' Form 656-L to be unprocessable because, among other things, some of the liabilities petitioners sought to compromise were liabilities "pending and or finally determined by the Tax Court, other courts or by the Commissioner's final closing agreement." On August 6, 2019, AO Mullin informed petitioners' representative that petitioners' Form 656-L was being returned unprocessed. AO Mullin further informed petitioners' representative that she could assist petitioners in determining if an...

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