HARTMANN v. COMM., Cite as 107 AFTR 2d 2011-XXXX, 03/22/2011 ________________________________________ I.R.C. § 7122(a) permits the IRS to promulgate guidelines to assist the officers in determining the adequacy of an offer. I.R.C. § 7122(c). The Treasury regulations provide those guidelines and state that a “nonprocessable” offer may be returned to the taxpayer. 26 C.F.R. § 301.7122-1(d)(2). The IRS can may settle or not settle any tax debt. See I.R.C. § 7122(a) § 301.7122-1(d)(2). The failure to timely pay owed taxes is a perfectly reasonable basis for rejecting an offer in compromise relating to other unpaid taxes. JOHN A. HARTMANN, Appellant v. COMMISSIONER OF INTERNAL REVENUE. Case Information: Code Sec(s): Court Name: UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT, Docket No.: No. 10-3501, Date Decided: 03/22/2011Submitted Pursuant to Third Circuit LAR 34.1(a) February 15, 2011. Disposition: HEADNOTE . Reference(s): OPINION John A. Hartmann 18 Montague Avenue West Trenton, NJ 08628Appearing pro se Gary R. Allen, Esq. Jonathan S. Cohen, Esq. John Schumann, Esq. United States Department of Justice Tax Division 950 Pennsylvania Avenue, N.W. P.O. Box 502 Washington, D.C. 20044 John A. DiCicco, Esq. United States Department of Justice Office of Special Litigation P.O. Box 7238 Washington, DC 20044 Wendy Gardner, Esq. Internal Revenue Service 1085 Raymond Boulevard Suite 1500 Newark, NJ 07102 William J. Wilkins, Esq. Internal Revenue Service 1111 Constitution Avenue, N.W. Washington, DC 20224Counsel for Appellee UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT, Appeal from the United States Tax Court Tax Court No. 09-27758 (Tax Court Judge: Honorable Robert N. Armen, Jr.) Before: RENDELL, CHAGARES and ALDISERT, Circuit Judges OPINION OF THE COURT Judge: PER CURIAM PRECEDENTIAL John A. Hartmann appeals from the decision of the United States Tax Court granting the Commissioner of Internal Revenue's (“IRS”) motion for summary judgment in this action to collect unpaid taxes. Because Hartmann's arguments on appeal do not demonstrate the existence of a genuine issue of material fact, or that the IRS is not entitled to judgment as a matter of law, we will affirm the decision of the Tax Court. I. Hartmann filed a federal income tax return for 2006, but did not pay the liability reported on the return. The IRS subsequently assessed the delinquent tax, along with interest and a failure-to-pay penalty and issued Hartmann a notice and demand for payment. After Hartmann failed to remit payment, the IRS sent him a final notice of intent to levy upon his property, and informed him of his right to request a collection due process hearing (“CDP”). 1 Hartmann filed a timely request for a CDP hearing and indicated that he intended to propose a tax collection alternative. Following an October 2009 CDP hearing, and after failing to receive documentation from Hartmann in support of a tax collection alternative, the IRS Office of Appeals issued a Notice of Determination approving the proposed levy. Hartmann timely challenged that determination before the Tax Court. The IRS moved for summary judgment. In May 2010, the Tax Court granted the IRS' motion for summary judgment and sustained the determination made by the IRS. Hartmann timely appealed from that order. II. The Tax Court had jurisdiction under 26 U.S.C. § 6330(d)(1), and we have jurisdiction under 26 U.S.C. § 7482(a)(1). We exercise plenary review of the Tax Court's order granting the IRS' summary judgment motion. See Conn. Gen. Life Ins. Co. v. Comm'r, 177 F.3d 136, 143 [83 AFTR 2d 99-2142] (3d Cir. 1999). Like Rule 56(c) of the Federal Rules of Civil Procedure, Rule 121(b) of the Tax Court Rules of Practice and Procedure provides that summary judgment may be granted “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 as a matter of law.” Craig v. Comm'r, 119 T.C. 252, 259–60 (2002). III. We conclude that Hartmann has failed to demonstrate that the Tax Court erred in granting the IRS's summary judgment motion. Hartmann argues here, as he did before the Tax Court, that the levy upon his property cannot be sustained because the IRS improperly refused to consider a proposed tax collection alternative to satisfy his delinquent federal income taxes. Contrary to Hartmann's assertion, the record demonstrates that the IRS did provide him with an opportunity to submit a proposed collection alternative with supporting documentation, but that he failed to timely do so. In a September 3, 2009 letter, the Settlement Officer (“SO”) assigned to Hartmann's case informed him that the IRS would consider a proposed collection alternative, but that, in support of such a proposal, Hartmann had to submit certain documentation. (See Tax Court Record at 4.) Specifically, the letter stated that Hartmann had to provide the following within fourteen days of the date of the letter: (1) a completed collection information statement (IRS Form 433-A for individuals and/or Form 433-B for businesses); (2) signed copies of his 2007 and 2008 tax returns; (3) proof of his estimated tax payments for 2009; (4) IRS Form 656 (offer in compromise); (5) the application fee; and (6) an advance partial payment. Listed as enclosures to the letter were Form 433-A, Form 433-B, and Form 656. Id. The letter also informed Hartmann that a telephone hearing with the SO was scheduled for October 7, 2009. Id. Hartmann then sent a letter to the SO asking that the CDP hearing be rescheduled and, per his request, it was rescheduled for October 20, 2009. The parties do not dispute that Hartmann and the SO discussed his desire to have an installment payment agreement during the hearing. However, at that time, Hartmann had neither submitted the required documentation, nor had he made a partial payment. On October 26, 2009, after failing to receive the documentation that the SO requested in the September 3, 2009 letter, the IRS Office of Appeals issued Hartmann a Notice of Determination sustaining the proposed levy. Hartmann argued for the first time on petition to the Tax Court that he was effectively denied the right to file a collection alternative proposal because the enclosures intended to accompany the SO's September 3, 2009 letter had been omitted. He also argued that the SO improperly failed to remind him of the filing requirements during the October 20, 2009 CDP hearing, further excusing his obligation to comply with them. As an initial matter, there is no evidence that Hartmann timely complied with any of the requirements for filing a collection alternative. Indeed, he does not dispute the Tax Court's finding that his 2007 and 2008 tax returns were not filed until November 6, 2009 and March 11, 2010, respectively. As the Tax Court noted, the record demonstrates that the filing requirements were clearly set forth in the SO's September 3, 2009 letter, regardless of whether the enclosures were omitted. In his September 23, 2009 letter to the SO, in which he acknowledged his receipt of the September 3, 2009 letter, Hartmann made no mention of the allegedly missing enclosures. However, Hartmann, who has been involved in other proceedings before the IRS, was undoubtedly aware that certain forms must be submitted to the IRS before it will consider or approve a tax collection alternative. See Hartmann v. Comm'r, 351 F. App'x. 624 [104 AFTR 2d 2009-7250] (3d Cir. 2009). Hartmann's further assertion that the SO did not remind him of the need to submit these materials during the October 20, 2009 hearing is of no consequence. Again, even if the assertion were true, there is no dispute that the SO's September 3, 2009 letter explicitly informed him that alternative collection methods would not be considered absent timely submission of the required documentation. Therefore, we agree with the Tax Court that the IRS did not abuse its discretion in sustaining the proposed levy where Hartmann failed to comply with the requirements for filing a proposed collection alternative. Cf. Christopher Cross, Inc. v. United States, 461 F.3d 610, 613 [98 AFTR 2d 2006-6085] (5th Cir. 2006) (“[t]he failure to timely pay owed taxes is a perfectly reasonable basis for rejecting an offer in compromise relating to other unpaid taxes”); Olsen v. United States, 414 F.3d 144, 152–54 [96 AFTR 2d 2005-5081] (1st Cir. 2005) (no abuse of discretion in rejecting an offer in compromise where taxpayer failed to provide financial information during the administrative hearing). Accordingly, we will affirm the decision of the Tax Court. ________________________________________ 1 CDP hearings are informal proceedings that provide a delinquent taxpayer with an opportunity to be heard before the IRS can levy upon his or her property in order to satisfy outstanding tax liabilities. See generally 26 U.S.C. § 6330. During the hearing, the taxpayer is permitted, inter alia, to propose collection alternatives such as a settlement or payment schedule, and the Settlement Officer ultimately must determine whether the proposed levy “balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.” Id. at § 6330(c)(3). The Settlement Officer's decision generally is reviewable by the Tax Court for abuse of discretion. See Kindred v. Comm'r, 454 F.3d 688, 694 [98 AFTR 2d 2006-5472] (7th Cir. 2006). § 6330 Notice and opportunity for hearing before levy. ________________________________________ (a) New Law Analysis Requirement of notice before levy. (1) New Law Analysis In general. No levy may be made on any property or right to property of any person unless the Secretary has notified such person in writing of their right to a hearing under this section before such levy is made. Such notice shall be required only once for the taxable period to which the unpaid tax specified in paragraph (3)(A) relates. (2) New Law Analysis Time and method for notice. The notice required under paragraph (1) shall be— (A) given in person; (B) left at the dwelling or usual place of business of such person; or (C) New Law Analysis sent by certified or registered mail, return receipt requested, to such person's last known address; not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period. (3) Information included with notice. The notice required under paragraph (1) shall include in simple and nontechnical terms— (A) New Law Analysis the amount of unpaid tax; (B) New Law Analysis the right of the person to request a hearing during the 30-day period under paragraph (2) ; and (C) New Law Analysis the proposed action by the Secretary and the rights of the person with respect to such action, including a brief statement which sets forth— (i) the provisions of this title relating to levy and sale of property; (ii) the procedures applicable to the levy and sale of property under this title; (iii) the administrative appeals available to the taxpayer with respect to such levy and sale and the procedures relating to such appeals; (iv) the alternatives available to taxpayers which could prevent levy on property (including installment agreements under section 6159 ); and (v) the provisions of this title and procedures relating to redemption of property and release of liens on property. (b) New Law Analysis Right to fair hearing. (1) New Law Analysis In general. If the person requests a hearing in writing under subsection (a)(3)(B) and states the grounds for the requested hearing, such hearing shall be held by the Internal Revenue Service Office of Appeals. (2) New Law Analysis One hearing per period. A person shall be entitled to only one hearing under this section with respect to the taxable period to which the unpaid tax specified insubsection (a)(3)(A) relates. (3) New Law Analysis Impartial officer. The hearing under this subsection shall be conducted by an officer or employee who has had no prior involvement with respect to the unpaid tax specified in subsection (a)(3)(A) before the first hearing under this section or section 6320 . A taxpayer may waive the requirement of this paragraph . (c) Matters considered at hearing. In the case of any hearing conducted under this section — (1) New Law Analysis Requirement of investigation. The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met. (2) New Law Analysis Issues at hearing. (A) New Law Analysis In general. The person may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy, including— (i) New Law Analysis appropriate spousal defenses; (ii) New Law Analysis challenges to the appropriateness of collection actions; and (iii) New Law Analysis offers of collection alternatives, which may include the posting of a bond, the substitution of other assets, an installment agreement, or an offer-in-compromise. (B) New Law Analysis Underlying liability. The person may also raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability. (3) New Law Analysis Basis for the determination. The determination by an appeals officer under this subsection shall take into consideration— (A) New Law Analysis the verification presented under paragraph (1) ; (B) New Law Analysis the issues raised under paragraph (2) ; and (C) New Law Analysis whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary. (4) New Law Analysis Certain issues precluded. An issue may not be raised at the hearing if— (A) (i) the issue was raised and considered at a previous hearing under section 6320 or in any other previous administrative or judicial proceeding; and (ii) the person seeking to raise the issue participated meaningfully in such hearing or proceeding; or (B) New Law Analysis the issue meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A) . This paragraph shall not apply to any issue with respect to which subsection (d)(2)(B) applies. (d) Proceeding after hearing. (1) New Law Analysis Judicial review of determination. The person may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter). (2) New Law Analysis Jurisdiction retained at IRS Office of Appeals. The Internal Revenue Service Office of Appeals shall retain jurisdiction with respect to any determination made under this section , including subsequent hearings requested by the person who requested the original hearing on issues regarding— (A) New Law Analysis collection actions taken or proposed with respect to such determination; and (B) New Law Analysis after the person has exhausted all administrative remedies, a change in circumstances with respect to such person which affects such determination. (e) New Law Analysis Suspension of collections and statute of limitations. (1) New Law Analysis In general. Except as provided in paragraph (2) , if a hearing is requested under subsection (a)(3)(B) , the levy actions which are the subject of the requested hearing and the running of any period of limitations under section 6502 (relating to collection after assessment), section 6531(relating to criminal prosecutions), or section 6532 (relating to other suits) shall be suspended for the period during which such hearing, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such hearing. Notwithstanding the provisions of section 7421(a) , the beginning of a levy or proceeding during the time the suspension under this paragraph is in force may be enjoined by a proceeding in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1) and then only in respect of the unpaid tax or proposed levy to which the determination being appealed relates. (2) New Law Analysis Levy upon appeal. Paragraph (1) 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. (f) New Law Analysis Exceptions. If— (1) the Secretary has made a finding under the last sentence of section 6331(a) that the collection of tax is in jeopardy, (2) the Secretary has served a levy on a State to collect a Federal tax liability from a State tax refund, (3) New Law Analysis the Secretary has served a disqualified employment tax levy, or (4) New Law Analysis the Secretary has served a Federal contractor levy this section shall not apply, except that the taxpayer shall be given the opportunity for the hearing described in this section within a reasonable period of time after the levy. (g) New Law Analysis Frivolous requests for hearing, etc. Notwithstanding any other provision of this section, if the Secretary determines that any portion of a request for a hearing under this section or section 6320 meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A), then the Secretary may treat such portion as if it were never submitted and such portion shall not be subject to any further administrative or judicial review. (h) New Law Analysis Definitions related to exceptions. For purposes of subsection (f)— (1) Disqualified employment tax levy. A disqualified employment tax levy is any levy in connection with the collection of employment taxes for any taxable period if the person subject to the levy (or any predecessor thereof) requested a hearing under this section with respect to unpaid employment taxes arising in the most recent 2-year period before the beginning of the taxable period with respect to which the levy is served. For purposes of the preceding sentence, the term “employment taxes” means any taxes under chapter 21, 22, 23, or 24. (2) New Law Analysis Federal contractor levy. A Federal contractor levy is any levy if the person whose property is subject to the levy (or any predecessor thereof) is a Federal contractor. CHRISTOPHER CROSS, INC. v. U.S., Cite as 98 AFTR 2d 2006-6085 (461 F.3d 610), 08/21/2006 , Code Sec(s) 6330; 7122 ________________________________________ CHRISTOPHER CROSS, INC., PLAINTIFF-APPELLANT v. UNITED STATES OF AMERICA, DEFENDANT-APPELLEE. Case Information: Code Sec(s): 6330; 7122 Court Name: U.S. Court of Appeals, Fifth Circuit, Docket No.: No. 05-30606, Date Decided: 08/21/2006. Prior History: District Court, (2005, DC LA) 95 AFTR 2d 2005-1970, denying reconsideration of (2004, DC LA) 95 AFTR 2d 2005-1322, affirmed. Tax Year(s): Year 2002. Disposition: Decision against Taxpayer. Cites: 461 F.3d 610, 2006-2 USTC P 50524. HEADNOTE 1. Collection due process—review of administrative determination—jurisdiction—failure to state claim for relief—offer-in-compromise. District Court properly upheld IRS's administrative determination to reject corp.'s OIC and proceed with collection: Appeals Officer's decision to return OIC as non-processible was, regardless of any alleged impropriety in her reference to IRM, appropriate and within her discretion under Code Sec. 7122 and regs where evidence showed that taxpayer wasn't current on its tax payments for 2 preceding quarters. Reference(s): ¶ 63,305.01(10) ; ¶ 63,305.01(5) ; ¶ 71,225.05(15) Code Sec. 6330 ; Code Sec. 7122 OPINION UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT, Appeal from the United States District Court for the Eastern District of Louisiana Before JONES, Chief Judge, and BARKSDALE and BENAVIDES, Circuit Judges. Judge: BENAVIDES, Circuit Judge: This case concerns whether an Internal Revenue Service (“IRS”) appeals officer abused her discretion in returning an offer in compromise submitted by Christopher Cross, Inc. (“Taxpayer”). Specifically, Taxpayer challenges the appeals officer's reliance on the Internal Revenue Manual. For the reasons set forth below, we find that the appeals officer acted within her discretion in rejecting Taxpayer's offer in compromise. Therefore, we affirm the district court's dismissal of Taxpayer's claims. I. BACKGROUND The facts are undisputed. Taxpayer admittedly owes the IRS unpaid employment taxes for the periods ending March 31, 2002, June 30, 2002, September 30, 2002, and December 31, 2002. On December 10, 2002, the IRS issued to Taxpayer a Notice of Intent to Levy with respect to unpaid employment taxes, including penalties and interest, for the first three quarters of 2002. On May 5, 2003, the IRS issued Taxpayer another Notice of Intent to Levy with respect to unpaid employment taxes, including penalties and interest, for the fourth quarter of 2002. Taxpayer's assessed liability totaled $134,078. In response to each Notice of Intent to Levy, Taxpayer requested a Collection Due Process (“CDP”) hearing. See I.R.C. § 6330. IRS Appeals Officer Brenda Esser (the “Of- [pg. 2006-6086] ficer”) conducted a CDP hearing respecting both Notices. On August 13, 2003, Taxpayer submitted an offer in compromise (the “Offer”) with respect to employment taxes due for all four quarters. In the Offer, Taxpayer proposed to pay a total of $85,000 under a deferred-payment schedule. On September 10, 2003, the Officer returned Taxpayer's Offer, stating that, “[Taxpayer] failed to make its federal tax deposits timely for the entire two quarters prior to the quarter [Taxpayer] submitted the offer .... Unless and until [Taxpayer] can demonstrate a willingness and ability to meet these circumstances, [Taxpayer] does not qualify for offer-in-compromise consideration.” On the same day, the Officer issued a Notice of Determination upholding the proposed levy to collect unpaid employment taxes as set forth in the two Notices of Intent to Levy. Specifically, the Officer stated that (1) the IRS had met all statutory, procedural, and administrative requirements before issuing the Notices of Intent to Levy; (2) Taxpayer had not presented an acceptable payment alternative; and (3) the proposed levy balanced the need for efficient tax collection with Taxpayer's legitimate concern that the collection action be no more intrusive than necessary. Additionally, the Officer stated that Taxpayer's Offer was “nonprocessable” because Taxpayer had not timely made federal tax deposits and because Taxpayer had more than sufficient equity in its current accounts receivable and moveable assets to pay the tax debts at issue. Taxpayer filed suit seeking review of the Notice of Determination. In its complaint, Taxpayer alleged that the IRS had violated its statutory rights under the Internal Revenue Code by failing to consider the Offer. The Government subsequently filed a motion to dismiss, claiming, inter alia, that Taxpayer failed to state a valid claim upon which relief could be granted under Federal Rule of Civil Procedure 12(b)(6). The district court dismissed the case for failure to state a claim. It held that the IRS's procedures for declaring offers to compromise “nonprocessable” violated neither the Taxpayer's due process rights nor the Internal Revenue Code and that the Officer was within her discretion and authority to reject Taxpayer's offer to compromise. Taxpayer filed a motion for reconsideration, which the court denied. Taxpayer appeals. II. STANDARD OF REVIEW “In a collection due process case in which the underlying tax liability is properly at issue, the Tax Court (and hence this Court) reviews the underlying liability de novo and reviews the other administrative determinations for an abuse of discretion.” Jones v. Comm'r, 338 F.3d 463, 466 [92 AFTR 2d 2003-5508] (5th Cir. 2003) (citing Craig v. Comm'r , 119 T.C. 252, 260 (2002)); see Living Care Alternatives of Utica v. United States, 411 F.3d 621, 626 [95 AFTR 2d 2005-2668] (6th Cir. 2005) (holding that, when there is no challenge to the validity of the underlying tax liability at the CDP hearing, the appeals officer's decision is reviewed under an abuse of discretion standard). Furthermore, several other circuits have held that “Congress likely contemplated review for a clear abuse of discretion in the sense of clear taxpayer abuse and unfairness by the IRS, lest the judiciary become involved on a daily basis with tax enforcement details that Congress intended to leave with the IRS.” Robinette v. Comm'r, 439 F.3d 455, 459 [97 AFTR 2d 2006-1391] (8th Cir. 2006) (internal quotation marks omitted); see Olsen v. United States, 414 F.3d 144, 150 [96 AFTR 2d 2005-5081] (1st Cir. 2005); Living Care, 411 F.3d at 631. We adopt this standard. III. DISCUSSION A. Statutory Framework Consideration of an offer in compromise submitted in the context of a CDP hearing is governed by section 7122 of the Internal Revenue Code, which sets out the exclusive method of compromising federal tax liabilities. See Olsen, 414 F.3d at 153; I.R.C. § 7122. Specifically, section 7122 provides that the “Secretary may compromise any civil or criminal case arising [pg. 2006-6087] under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense ....” I.R.C. § 7122(a) (emphasis added). The statute further specifies that the “Secretary shall prescribe guidelines for officers and employees of the [IRS] to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute.” I.R.C. § 7122(c). The Treasury regulations state that “[t]he IRS may ... return an offer to compromise a tax liability if it determines that the offer was submitted solely to delay collection or was otherwise nonprocessable.” 26 C.F.R. § 301.7122-1(d)(2). The Internal Revenue Manual (the “Manual”) provides specific circumstances in which an offer is “nonprocessable.” One such circumstance is when an in-business taxpayers has failed to timely deposit, file, and pay “all required employment tax returns for the two (2) preceding quarters prior to filing the offer ....” I.R.M. § 5.8.3.4.1(1)(a). B. The Officer Did not Clearly Abuse her Discretion in Returning the Offer [1] Taxpayer argues that the Officer did not have the authority to return the Offer based upon a provision of the Manual, and, therefore, the Officer abused her discretion. We find no abuse of discretion. Even assuming the Manual is not law and assuming that an appeals officer should not rely upon the Manual in making its determination, the Officer in this case acted within her discretion. While the Officer cited the Manual in making her determination, we are not judging the appropriateness of that citation. Instead, we judge whether the Officer abused her discretion in returning the Offer. The Officer's determination was in accordance with the Internal Revenue Code and Treasury regulations. The Internal Revenue Code provides that the Secretary, through its agents, may compromise a civil case. See I.R.C. § 7122(a). The statute also orders the Secretary to promulgate guidelines to assist the officers in determining the adequacy of an offer. I.R.C. § 7122(c). The Treasury regulations provide those guidelines and state that a “nonprocessable” offer may be returned to the taxpayer. 26 C.F.R. § 301.7122-1(d)(2). Here, the Officer acted under the power granted to her by the Internal Revenue Code to settle or not settle this civil case. See I.R.C. § 7122(a). She determined that the Offer was inadequate because Taxpayer was not current on the payment of its estimated tax for two periods ending March 31, 2003 and June 30, 2003. See I.R.C. § 7122(c). Based on this inadequacy, she returned the Offer as “nonprocessable” under the Treasury regulations. See 26 C.F.R. § 301.7122-1(d)(2). The failure to timely pay owed taxes is a perfectly reasonable basis for rejecting an offer in compromise relating to other unpaid taxes. Whether or not she properly relied on the Manual, the Officer made a determination grounded in the discretion afforded to her by law and provided a reasonable basis for finding the Offer inadequate. 1 Therefore, the Officer did not clearly abuse her discretion in returning the Offer. Furthermore, Taxpayer has offered no viable support for its contention that the Officer cannot utilize the guidelines set forth in the Manual when making the discretionary decision to return a submitted offer in compromise. See Living Care, 411 F.3d at 631. It therefore has “failed to present sufficient evidence to justify a remand.” Id. In sum, the Officer did not clearly abuse her discretion in returning the Offer, and the record evinces no clear taxpayer abuse or unfairness by the IRS. See id. We find additional support for finding no clear abuse of discretion in Living Care. The Sixth Circuit, addressing whether the IRS may reject a plan to present an offer in compromise, unequivocally stated that the “taxpayer must be current on payments for the previous two quarters to be eligible to submit an offer in compromise.” Living Care , 411 F.3d at 630. [pg. 2006-6088] Accordingly, it held that the “IRS was well within its discretion to reject [the taxpayer's] plan to present an offer in compromise.” Id. at 631. We join the Sixth Circuit in finding no clear abuse of discretion where an appeals officer makes a “fully support[ed]” decision regarding the processability of an offer. 2 Id. at 630. IV. Conclusion Our review of the Officer's determination is for clear abuse of discretion. Under that standard, the Officer made a reasoned decision under the Internal Revenue Code and Treasury regulations. Moreover, Taxpayer has failed to present authority stating the contrary. Therefore, Taxpayer has not stated a claim upon which relief can be granted. Accordingly, we AFFIRM the dismissal of Taxpayer's claims. ________________________________________ 1 Additionally, the Officer supported her decision by finding the following: (1) the IRS had met all statutory, procedural, and administrative requirements before issuing the Notices of Intent to Levy; (2) Taxpayer had not presented an acceptable payment alternative; and (3) the proposed levy balanced the need for efficient tax collection with Taxpayer's legitimate concern that the collection action be no more intrusive than necessary. ________________________________________ 2 The Seventh Circuit similarly has held that an appeals officer's consideration of a taxpayer's failure to remit estimated tax was not an abuse of discretion when that appeals officer denied a second CDP hearing to a taxpayer who had failed to comply with a previous installment plan designed to eliminate tax liabilities. See Orum v. Comm'r, 412 F.3d 819, 820–21 [95 AFTR 2d 2005-2931] (7th Cir. 2005). Although the officer in Orum relied on the failure to remit estimated tax and here the Officer relied on the failure to timely remit, the Seventh Circuit's holding is persuasive in determining that such reliance is a valid reason for an appeals officer's decision and within the officer's discretion. § 7122 Compromises. ________________________________________ (a) Authorization. The Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department of Justice for prosecution or defense; and the Attorney General or his delegate may compromise any such case after reference to the Department of Justice for prosecution or defense. (b) Record. Whenever a compromise is made by the Secretary in any case, there shall be placed on file in the office of the Secretary the opinion of the General Counsel for the Department of the Treasury or his delegate, with his reasons therefor, with a statement of— (1) The amount of tax assessed, (2) The amount of interest, additional amount, addition to the tax, or assessable penalty, imposed by law on the person against whom the tax is assessed, and (3) The amount actually paid in accordance with the terms of the compromise. Notwithstanding the foregoing provisions of this subsection , no such opinion shall be required with respect to the compromise of any civil case in which the unpaid amount of tax assessed (including any interest, additional amount, addition to the tax, or assessable penalty) is less than $50,000. However, such compromise shall be subject to continuing quality review by the Secretary. (c) Rules for submission of offers-in-compromise. (1) New Law Analysis Partial payment required with submission. (A) Lump-sum offers. (i) New Law Analysis In general. The submission of any lump-sum offer-in-compromise shall be accompanied by the payment of 20 percent of the amount of such offer. (ii) New Law Analysis Lump-sum offer-in-compromise. For purposes of this section, the term “lump-sum offer-in-compromise” means any offer of payments made in 5 or fewer installments. (B) Periodic payment offers. (i) New Law Analysis In general. The submission of any periodic payment offer-in-compromise shall be accompanied by the payment of the amount of the first proposed installment. (ii) New Law Analysis Failure to make installment during pendency of offer. Any failure to make an installment (other than the first installment) due under such offer-in-compromise during the period such offer is being evaluated by the Secretary may be treated by the Secretary as a withdrawal of such offer-in-compromise. (2) Rules of application. (A) New Law Analysis Use of payment. The application of any payment made under this subsection to the assessed tax or other amounts imposed under this title with respect to such tax may be specified by the taxpayer. (B) New Law Analysis Application of user fee. In the case of any assessed tax or other amounts imposed under this title with respect to such tax which is the subject of an offer-in-compromise to which this subsection applies, such tax or other amounts shall be reduced by any user fee imposed under this title with respect to such offer-in- compromise. (C) New Law Analysis Waiver authority. The Secretary may issue regulations waiving any payment required under paragraph (1) in a manner consistent with the practices established in accordance with the requirements under subsection (d)(3) . (d) Standards for evaluation of offers. (1) New Law Analysis In general. The Secretary shall prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute. (2) New Law Analysis Allowances for basic living expenses. (A) In general. In prescribing guidelines under paragraph (1) , the Secretary shall develop and publish schedules of national and local allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for basic living expenses. (B) Use of schedules. The guidelines shall provide that officers and employees of the Internal Revenue Service shall determine, on the basis of the facts and circumstances of each taxpayer, whether the use of the schedules published under subparagraph (A) is appropriate and shall not use the schedules to the extent such use would result in the taxpayer not having adequate means to provide for basic living expenses. (3) Special rules relating to treatment of offers. The guidelines under paragraph (1) shall provide that— (A) an officer or employee of the Internal Revenue Service shall not reject an offer-in-compromise from a low-income taxpayer solely on the basis of the amount of the offer, (B) in the case of an offer-in-compromise which relates only to issues of liability of the taxpayer— (i) such offer shall not be rejected solely because the Secretary is unable to locate the taxpayer's return or return information for verification of such liability; and (ii) the taxpayer shall not be required to provide a financial statement, and (C) New Law Analysis any offer-in-compromise which does not meet the requirements of subparagraph (A)(i) or (B)(i) , as the case may be, of subsection (c)(1) may be returned to the taxpayer as unprocessable. (e) Administrative review. The Secretary shall establish procedures— (1) for an independent administrative review of any rejection of a proposed offer-in-compromise or installment agreement made by a taxpayer under this section or section 6159 before such rejection is communicated to the taxpayer; and (2) which allow a taxpayer to appeal any rejection of such offer or agreement to the Internal Revenue Service Office of Appeals. (f) Deemed acceptance of offer not rejected within certain period. Any offer-in-compromise submitted under this section shall be deemed to be accepted by the Secretary if such offer is not rejected by the Secretary before the date which is 24 months after the date of the submission of such offer. For purposes of the preceding sentence, any period during which any tax liability which is the subject of such offer-in-compromise is in dispute in any judicial proceeding shall not be taken into account in determining the expiration of the 24-month period. (f [(g)]) New Law Analysis Frivolous submissions, etc. Notwithstanding any other provision of this section , if the Secretary determines that any portion of an application for an offer-in-compromise or installment agreement submitted under this section or section 6159 meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A) , then the Secretary may treat such portion as if it were never submitted and such portion shall not be subject to any further administrative or judicial review. www.irstaxattorney.com 888-712-7690