Tax Court Denies IRS Request to Permit Levy in Collection Case

PERCY SQUIRE,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Pursuant to Tax Court Rule 50(f), orders shall not be treated as precedent,
except as otherwise provided.

UNITED STATES TAX COURT
WASHINGTON, DC 20217

ORDER

On July 17, 2019, petitioner filed a petition challenging a Notice of Determination Concerning Collection Actions under IRC Sections 6320¹ or 6330 (notice of determination) dated June 14, 2019. This notice of determination sustained a notice of intent to levy because petitioner did not provide any information to consider a collection alternative and based on petitioner's balance for 2017, he was not in compliance with making estimated tax payments.

On September 16, 2019, respondent filed a Motion to Permit Levy (motion). Petitioner filed an Opposition to Motion to Permit Levy (opposition) on October 22, 2019. On November 5, 2019, respondent's motion was assigned to the undersigned for disposition. Upon review of the record, the Court will deny respondent's motion.

A taxpayer's request for a Collection Due Process (CDP) hearing automatically suspends the levy actions "for the period during which such hearing, and appeals therein, are pending." Sec. 6330(e)(1). Section 6330(e)(2) provides that this suspension "shall not apply to a levy action while an appeal is pending if the underlying tax liability is not at issue in the appeal and the court determines that the Secretary has shown good cause not to suspend the levy." See Burke v. Commissioner, 124 T.C. 189 (2005).

Respondent contends² that the underlying tax liability for tax year 2016 is not at issue because petitioner did not challenge the underlying tax during the CDP hearing. In his opposition, petitioner states "[m]y collection arguments challenged 'the existence and amount of the underlying tax liability.'" However, petitioner did not provide any documentation to support this statement. Assuming, without finding, that petitioner did not challenge the underlying tax liability during the CDP hearing, the question that remains is whether respondent has shown good cause why the levy should no longer be suspended.

Section 6330 does not include a definition of the term "good cause". The Court has held, however, that respondent may show good cause that a levy should not be suspended where the taxpayer has used the collection review procedure to espouse frivolous and groundless arguments and otherwise needlessly delay collection. Burke v. Commissioner, 124 T.C. at 196-197.

Respondent argues that petitioner is using the CDP statutes solely as a mechanism to delay collections. To support this argument, respondent points to the fact that petitioner has filed four petitions, including this case, in the last eight years, all of which have disputed Notices of Determination Concerning Collection Action. Respondent relies on the outcomes of two of petitioner's prior cases and the fact that petitioner did not make the required estimated tax payments for tax year 2018 to support his contention that petitioner is exploiting the collection review procedure to unreasonably delay respondent from collecting taxes from petitioner.

Based on the minimal record in this case, the Court concludes that respondent has failed to establish good cause to remove the suspension of the levy under section 6330(e)(1). The information submitted by the parties does not show that petitioner willfully exploited the collection review procedure primarily to delay collection of the taxes that he self-reported. According to the notice of determination, petitioner participated in a conference with the settlement officer. Respondent did not provide evidence that petitioner made frivolous arguments during this process or that petitioner filed the request for a CDP hearing primarily to delay the collection of taxes for tax year 2016. Accordingly, the Court will deny respondent's motion.

Upon due consideration, it is

ORDERED that respondent's Motion to Permit Levy, filed September 16, 2019, is denied, without prejudice.

(Signed) Diana L. Leyden
Special Trial Judge

Dated: Washington, D.C.
January 2, 2020