The opinion of the court was delivered by: Gary L. Sharpe U.S. District Judge
Plaintiff James Sutton filed suit pursuant to 26 U.S.C. § 6630(d)(1)(B), seeking review of an administrative decision of the Internal Revenue Service (IRS), which upheld a levy on Sutton's property for unpaid federal employment taxes, interest, and penalties. Dkt. No. 1. Pending before the Court is the IRS's motion for summary judgment*fn1 and an order affirming the IRS's determination. Dkt. No. 6. For the reasons set forth below, the motion is granted.
In August 2004, the IRS made three separate assessments against Sutton for trust fund recovery penalties pursuant to the provisions of 26 U.S.C. § 6672,*fn2 in the amounts of $13,735.06, $4,575.41, and $356.39 respectively. Sutton's liability resulted from his failure, as a responsible person, to collect, truthfully account for, and pay over to the United States the federal taxes withheld by: (1) Crow & Sullivan and Associates for the tax period that ended September 30, 2002; and (2) Pine Valley Landscape Corporation for the tax period ending September 30, 2004 and December 31, 2002. Def. Mot. Summ. J., Ex. A, Dkt. No. 6.*fn3
On October 6, 2004, the IRS sent Sutton a notice of intent to levy and a notice of his right to a due process hearing for the liabilities set forth above. Id. at Ex. C. On this same date, Sutton responded to the IRS's intent to levy by letter, stating that he was prepared to make monthly payments of $1000, but that he had not done so because the IRS had not formally approved the arrangement. Id. at Ex. E. The IRS responded to Sutton's letter by stating that "installment payments are not a viable option...because he had ample equity in his assets to pay the full liability." Id. at Ex. F. The letter further noted that while Sutton had offered to make voluntary payments of $1000, no payments had been received by the IRS.
Id. In addition, the IRS also noted that: (1) Sutton had informed the IRS that he won a lawsuit and that they would receive $100,000, these funds were also never received; and (2) while Sutton has continually referred to incoming proceeds from the sale of his properties, the IRS has also not seen any monies from such a sale. Def. Mot. Summ. J., Ex. F, Dkt. No. 6. On October 12, Sutton responded that he believed that he was still legally entitled to an installment plan, and enclosed several $1,000 checks with his letter and a note which stated "the legal case we won is money still coming to you." Id. at Ex. G.
On February 22, 2005, a collection due process hearing via telephone
was held at Sutton's request. Def. Mot. Summ. J., Exs. B, C Dkt. No.
6. He did not contest the amount of his tax liabilities. Def. Mot.
Summ. J., Ex. B, Dkt. No. 6; Sutton Aff. ¶ 8, Dkt. 10.*fn4
During the hearing, Sutton again informed the IRS officer
that he wanted to pay $1000 per month until he could pay in full. Def.
Mot. Summ. J., Ex. B, Dkt. No. 6. The IRS officer advised Sutton that
an agreement could only be accepted if it would fully pay off his
liability within the statutory period of limitations. Id.
In response, Sutton expressed his desire to extend the enforcement of the levy until July 2005, so that he could sell his property and receive the proceeds from his pending lawsuit. Def. Mot. Summ. J., Ex. B, Dkt. No. 6. The settlement officer replied that the IRS would not refrain from enforcement until July and advised Sutton to submit an installment agreement proposal by February 25, 2005. Id.
On February 25, the IRS received copies of Sutton's pending lawsuit and a contract for sale of property, these papers, however, did not indicate whether any funds from either action were available to Sutton. Id. On March 14, the IRS received another proposal from Sutton to pay $5,000 per month until he received the proceeds from his pending actions. Def. Mot. Summ. J., Ex. B, Dkt. No. 6; Sutton Aff. ¶ 8, Dkt. No. 10.
As of March 14, 2005, Sutton was also not current with filing his 2003 Form 1040 for personal income taxes, or his Form 940 for Foxcraft Nurseries. Def. Mot. Summ. J., Ex. B, Dkt. No. 6.In May, the IRS issued a Notice of Determination, which found that Sutton's proposed installment agreement was unsubstantiated and that a levy on Sutton's property would serve the IRS's interest in efficient tax collection. Id. at Ex. C. At the time of this decision, Sutton's liability totaled over $460,000. Id. at Ex. B, C.
Following this determination, Sutton sought review by this court under 26 U.S.C. § 6330(d).
A. Standard of Review under 26 U.S.C. ...