The opinion of the court was delivered by: LAWRENCE KAHN, District Judge
MEMORANDUM-DECISION AND ORDER*fn1
Plaintiff William Negron Ramos ("Negron") filed this action to
dispute Defendant Internal Revenue Service's ("IRS") April 14,
2004 determination ("determination") with respect to his tax
liability. Negron seeks to have the Court overturn this
determination of the IRS Appeals Office and order in its place
Negron's Offer in Compromise ("OIC"). Negron requests damages in
the amount of $2,500 for a business investment that he made in
reliance on representations made to him by an IRS agent regarding
the amount of time it would take the IRS Appeals Office to issue
a determination of his tax liability. He also requests that his
suspension from the electronic tax filing program based upon his
outstanding tax liability be limited to the current tax year
only. Currently before the Court are the IRS' motion to affirm
its determination concerning collection action and motion to
dismiss Negron's claims for damages and alteration of his
suspension from the electronic filing program.
II. Facts The IRS assessed a trust fund recovery penalty against Negron
for the tax period ending September 30, 1995 for failure to pay
income and Federal Insurance Contribution Act (FICA) taxes owed
by a failed business for which he was a principal. Complaint
(Dkt. No. 1) at 3; IRS Motion (Dkt. No. 7) at 2. The original
debt was approximately $13,000. Complaint (Dkt. No. 1) at 3. On
April 17, 2003, the IRS sent him a Final Notice of Intent to Levy
and Notice of Your Right to a Hearing letter. Final Notice (Dkt.
No. 7, Ex. B) at 1; Complaint (Dkt. No. 1) at 7. According to
this letter, Negron owed $23,121.38, which included the
assessment of $12,899.73 plus statutory additions of $10,221.65.
Final Notice (Dkt. No. 7, Ex. B) at 2. Negron timely requested a
Collection Due Process ("CDP") hearing, seeking a reconsideration
of his last OIC because he had been unemployed for six months.
Request (Dkt. No. 7, Ex. C) at 1; Complaint (Dkt. No. 1) at 4.
The CDP hearing was held on September 9, 2003. Complaint (Dkt.
No. 1) at 3. Negron claims that at the close of this hearing, the
IRS agent said, "I will evaluate your new offer, I will at least
like to recover the original debt, but I would not be able to get
back to you probable [sic] until next month." Id.
Negron has been unemployed since November 2002, and his
employment benefits ceased in October 2003. Id. After the
termination of his unemployment benefits, he started a business
providing accounting services, including tax preparation. Id.
At the end of October, Negron called the IRS about the status of
his case, and was told by an IRS agent that "I am in the middle
of finishing another case, your case is next." Id.
Negron was previously authorized to participate in the IRS'
electronic tax filing program, but had to be readmitted into the
program. Id. He borrowed and invested approximately $2,500 and
began the process for readmission. Id. On February 2, 2004,
Negron was denied authorization to participate in the program because, although he was trying to
rectify the issue, he still had a balance due to the IRS. Program
Denial Letter (Dkt. No. 1) at 10. Negron wrote a letter to appeal
that denial, explaining that his case was still being decided by
the IRS Appeals Office. Program Appeal (Dkt. No. 1) at 12. On
February 17, 2004, his appeal of the February 2 decision was
denied because, regardless of his situation, his civil penalty
issue remained unresolved and his balance was still unpaid.
Program Appeal Denial (Dkt. No. 1) at 13. He was suspended from
participation in the program until January 1, 2006. Id. This
denial stated that Negron had a right to appeal that decision.
Id. Negron contends that between February 1 and April 15, 2004,
he had 123 inquiries regarding tax preparation services, but he
was only able to prepare seven tax returns because the other 116
people wanted electronic filing. Complaint (Dkt. No. 1) at 3.
On April 14, 2004, the IRS Appeals Office issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330, which stated that the collection action proposed by
the IRS could resume and that the OIC submitted by Negron was
denied. Determination (Dkt. No. 1) at 7-8. Negron timely
commenced this proceeding on May 13, 2004, seeking judicial
review of this determination. Complaint (Dkt. No. 1). Negron also
seeks $2,500 in damages for his business investment and for a
reduction in his suspension from the electronic tax filing
program. Id. at 4.
A. Motion to Affirm IRS Determination
This Court has jurisdiction to review an IRS determination
pursuant to 26 U.S.C. § 6330(d)(1)(B), which states in pertinent
part that a "person may, within 30 days of a determination under
this section, appeal such determination . . . (B) to a district
court of the United States" when, as in this case, the Tax Court does not have jurisdiction.
26 U.S.C. § 6330(d)(1)(B); see Pelliccio v. United States,
253 F. Supp. 2d 258, 262 (D. Conn. 2003); see also Anderson v.
Comm'r of Internal Revenue, 80 T.C.M. (CCH) 461 (2000) (Because
the Tax Court's jurisdiction is generally limited to income,
estate, gift, and certain excise taxes, it does not have
jurisdiction to review an employment tax liability determination
under § 6330.). When the underlying tax liability is not at
issue, as is true in this case, the court reviews the
determination for abuse of discretion. Pelliccio,
253 F. Supp. at 262. For judicial review of administrative appeals, a
decision "would be an abuse of discretion if it were made without a
rational explanation, inexplicably departed from established
policies, or rested on an impermissible basis, or . . . on other
considerations that Congress could not have intended to make
relevant." MCRA Info. Servs. v. United States,
145 F. Supp. 2d 194, 199 (D.Conn. 2000) (citing Wong Wing Hang v. I.N.S.,
360 F.2d 715, 719 (2d Cir. 1966)) (internal quotations omitted).
Pursuant to § 6330(c)(3), in making a determination, the IRS
officer must take into consideration (1) the verification that
"the requirements of any applicable law or administrative
procedure have been met"; (2) the issues raised by the taxpayer,
which may include spousal defenses, challenges to the
appropriateness of collection actions, and offers of collection
alternatives; and (3) "whether any proposed collection action
balances the need for efficient collection of taxes with the
legitimate concern of the person that any collection action be no
more intrusive than necessary." 26 U.S.C. § 6330(c).
The IRS officer considered each of the three criteria prior to
issuing the determination. The Summary and Recommendation
included with the Notice of Determination explains how the
requirements of applicable laws and administrative procedures
were met and how the levy balanced the need for efficient
collection with taxpayer concern that the collection action be no
more intrusive than necessary. Determination (Dkt. No. 1) at 7-8. Negron did not
raise anything relating to these issues at the hearing, nor does
he challenge these conclusions in his complaint.
At the hearing, Negron did propose an OIC to reduce his overall
liability to $8,000, the acceptance of which he also requests in
his complaint. Id.; Complaint (Dkt. No. 1) at 3-4. The IRS has
the authority to compromise any civil liability pursuant to
26 U.S.C. § 7122(a). Regulations promulgated under that section give
broad discretion to the IRS to determine whether an OIC will be
accepted. 26 C.F.R. § 301.7122-1(a)(1). There are three grounds
that make an OIC eligible for acceptance, namely (1) doubt as to
liability; (2) doubt as to collectibility; and (3) promotion of
effective tax administration ("ETA") when collection of the tax
liability would cause the taxpayer economic hardship.
26 C.F.R. § 301.7122-1(b)(1)-(3)(i).
The IRS officer determined that Negron did not question the
liability, and that he had the income and/or assets available to
pay it in full. Determination (Dkt. No. 1) at 7-8. Further, the
officer found that collection of the full liability would not
cause economic hardship. Id. The IRS officer analyzed Negron's
current financial circumstances, as well as his ability to obtain
employment based upon his education, experience, and overall good
health. Id. He concluded that his unemployment did not appear
to be permanent, and that it would not be an economic hardship
considering that his spouse was employed, his at-home adult
children assist him ...