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6330 - Annotations - Hearing Procedures 5 Page 1 |
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Hearing Procedures 5 Page1 |
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6330
Annotations: Hearing Procedures- Levy Notice of Levy
and Right to Hearing: Hearing Procedures Part
5 [Dec. 55,604]
Robert Eugene Poindexter v. Commissioner. P
reported tax on his 1994 and 1996 Federal income tax returns but
did not remit those amounts. R assessed those amounts and demanded
payment thereof. After several years of continued nonpayment, R
issued to P a notice of intent to levy. P timely requested a
hearing pursuant to sec.
6330, I.R.C. At the hearing, P asserted that the
amounts of tax shown on his 1994 and 1996 returns are incorrect
but would not say whether he believed his correct income to be
higher or lower than the amounts reported. R subsequently issued
to P a notice of determination upholding the proposed collection
action. P timely petitioned the Court for review, and R moved for
summary judgment. 1.
Held: A taxpayer who reports an amount of tax on his tax
return is not precluded from challenging the accuracy of that
amount at a sec.
6330, I.R.C., hearing. Montgomery v. Commissioner
[Dec.
55,501] , 122 T.C. 1 (2004), followed. 2.
Held, further, summary judgment is appropriate since
P has averred no facts sufficient to show error in the taxes
assessed on the basis of his 1994 and 1996 returns or otherwise
with respect to the notice of determination. Elizabeth
A. Maresca and Katherine Scovin (specially recognized), for the
petitioner. Peggy Gartenbaum, for the respondent. OPINION HALPERN,
Judge: This case is before the Court to review a determination
made by one of respondent's Appeals officers (the determination)
that respondent may proceed to collect by levy unpaid income taxes
assessed by respondent against petitioner for 1994 and 1996 (the
assessments). We review such determinations pursuant to section
6330(d)(1).1
Petitioner has assigned error to the determination, and, as we
understand that assignment, it is principally that, in making the
determination, the Appeals officer failed to consider the accuracy
of the assessments, which petitioner claims do not reflect his
true income tax liabilities for the years in question. Respondent
denies that the Appeals officer erred, and he moves for a summary
disposition in his favor (the motion), that the determination be
sustained, on the following grounds: (1) Since petitioner reported
the unpaid taxes on returns he made, the Appeals officer properly
refused to consider the accuracy of the assessments; (2) even if
the Appeals officer erred in refusing to consider the accuracy of
the assessments, petitioner has failed to aver facts sufficient to
show error in the assessments; and (3) petitioner has failed to
aver facts showing any other error in the determination. Summary
judgment may be granted with respect to all or any part of the
legal issues in controversy "if the pleadings, answers to
interrogatories, depositions, admissions, and any other acceptable
materials, together with 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." Rule 121(b). We are satisfied
that there is no genuine issue as to any material fact and that a
decision may be rendered as a matter of law. For the reasons that
follow, we shall grant the motion on the basis of respondent's
second and third grounds and enter an appropriate order and
decision in respondent's favor. Background The
following facts are gathered from the pleadings, the parties'
trial memoranda, the motion and declaration of Peggy Gartenbaum,
one of respondent's counsel, submitted in support of the motion,
petitioner's opposition to the motion, and other items
constituting the record. There appears to be no disagreement as to
the following facts. Petitioner
filed his 1994 Federal income tax return (the 1994 return) on Petitioner
filed his 1996 Federal income tax return (the 1996 return) on Petitioner
did not make the payments demanded, and, on On
As
required by section
6330(c)(1), the Appeals officer verified that the
requirements of applicable laws and administrative procedures had
been met. He also made the determination required by section
6330(c)(3)(C) that the proposed collection action
(levy) balanced the need for efficient collection of taxes with
petitioner's legitimate concerns that any collection action be no
more intrusive than necessary. On In
the petition, petitioner states his disagreement with the
assessments, claiming that they are inaccurate because of (1)
false and fraudulent information stated on the returns, (2) errors
in the assessment procedures, (3) reliance on incorrect written
advice from the IRS, (4) error and failure of the IRS in following
its own procedures and advice, (5) improper execution of levies,
and (6) erroneous and inconsistent tax information contained in
the determination. Discussion
Section
6330 entitles a taxpayer to notice of the taxpayer's
right to request a hearing before certain lien and levy actions
are taken by the Commissioner in furtherance of the collection
from the taxpayer of unpaid Federal taxes. If a hearing is
requested, the Appeals officer conducting the hearing must verify
that the requirements of any applicable law or administrative
procedure have been met. Sec.
6330(c)(1). The taxpayer requesting the hearing may
raise "any relevant issue relating to the unpaid tax or the
proposed levy". Sec.
6330(c)(2)(A). The taxpayer may raise challenges
"to the existence or amount of the underlying tax
liability", however, only if he "did not receive any
statutory notice of deficiency for such tax liability or did not
otherwise have an opportunity to dispute such tax liability."
Sec.
6330(c)(2)(B). Following the hearing, the Appeals
officer must determine whether the collection action is to
proceed, taking into account the verification the Appeals officer
has made, the issues raised by the taxpayer at the hearing, and
"whether any proposed collection action balances the need for
the efficient collection of taxes with the legitimate concern of
the * * * [taxpayer] that any collection action be no more
intrusive than necessary." Sec.
6330(c)(3). We have jurisdiction to review such
determinations where we have jurisdiction of the underlying tax
liability. Sec.
6330(d)(1)(A). II.
Section 6330(c)(2)(B) Is Not Limited to Taxpayer Challenges to
Liabilities Asserted by the Commissioner That Differ in Amount
From Taxpayer-Determined Liabilities Respondent's
first ground for summary judgment is that, since petitioner
reported the unpaid taxes on returns he made, the Appeals officer
properly refused to consider the accuracy of the assessments.
Although respondent concedes that petitioner neither received a
statutory notice of deficiency for 1994 or 1996 nor otherwise had
an opportunity to dispute his liabilities as assessed for those
years, respondent argues that section
6330(c)(2)(B) allows a taxpayer to challenge the
underlying tax liability only when the taxpayer is challenging a
liability asserted by the Commissioner that differs in amount from
the taxpayer's self-determined liability (i.e., the amount set
forth on a return the taxpayer made). In Montgomery v.
Commissioner [Dec.
55,501], 122 T.C. 1 (2004), we rejected exactly that
argument, and that case governs here. We therefore reject
respondent's first ground for summary judgment.
Respondent's
second ground for summary judgment is that, even if the Appeals
officer erred in refusing to consider the accuracy of the
assessments, petitioner has failed to aver facts sufficient to
show error in the assessments. We have set forth the gist of
petitioner's averments under the heading Background, above,
and we agree with respondent that petitioner has failed to raise a
justiciable issue. Rule
331 addresses the commencement of a levy action under section
6330(d). Such an action is commenced by the filing of a
petition, Rule 331(a), and Rule 331(b) specifies the content of
the petition. Rule 331(b)(4) and (5) requires the petition to
contain: (4)
Clear and concise assignments of each and every error which the
petitioner alleges to have been committed in the notice of
determination. * * * (5)
Clear and concise lettered statements of the facts on which the
petitioner bases each assignment of error. Pursuant
to section
6330(c)(2)(B), petitioner was entitled to challenge at
his Appeals Office hearing the existence or amount of the
underlying tax liabilities for 1994 and 1996 giving rise to the
assessments. If the validity of those underlying tax liabilities
is properly at issue, we review the matter de novo. Sego v.
Commissioner [Dec.
53,938], 114 T.C. 604, 610 (2000). For the validity of
those underlying tax liabilities to be properly at issue, however,
petitioner must comply with Rule 331. His pleading must contain a
sufficient specificity of facts so that the Court can conduct a
meaningful hearing to determine whether respondent can proceed
with the collection of those liabilities. Petitioner's averments
make clear that he disagrees with his income tax liabilities as
shown on the returns. However, other than claiming that the
returns contain false and fraudulent information and may be based
on incorrect written advice from the IRS, petitioner fails to
specify the basis of his disagreement; i.e., he fails to identify
the items of income, deduction, or credit, or the computations,
that are incorrect. Without such specificity, how could respondent
possibly mount a defense, and what precisely is it that the Court
is to decide? Apparently,
the root of petitioner's disagreement with the returns is his
dispute with certain record companies over royalties. Petitioner
has tried to involve respondent in that dispute by asking
respondent to subpoena information from the record companies so
that he could make what he believes would be more accurate
returns. Respondent claims that neither section
6330 nor any other provision of the Internal Revenue
Code authorizes the IRS to aid petitioner as he has requested and
there is no evidence that Congress intended taxpayers to use section
6330 to redress grievances against third parties.
Respondent further claims that petitioner presented no evidence of
the proper amount of royalties due him, nor any evidence
supporting his claim that the record companies violated his
copyrights or that he even has copyrights to any songs.
Petitioner, in his opposition to the motion, does not contradict
any of those assertions. Petitioner
may well have a dispute with the record companies, and the returns
may or may not be accurate, but petitioner has placed nothing
before us regarding the underlying liabilities that we can
properly adjudicate. Like the taxpayers in Horn v. Commissioner
[Dec.
54,847(M)], T.C. Memo. 2002-207, and Smith v.
Commissioner [Dec.
54,669(M)], T.C. Memo. 2002-59, whose efforts to
dispute their "self-assessed" liabilities we rejected,
petitioner was not prepared to allege and prove the facts showing
his returns were incorrect. See also Montgomery v. Commissioner,
supra at 19 (Marvel, J., concurring). We conclude that
respondent's second ground (together with his third ground,
discussed next) justifies summary judgment. IV.
Petitioner Has Failed To Aver Facts Showing Any Other Error in
the Determination Although
petitioner avers errors in the assessment procedures and in other
procedures, and improper execution of levies, he sets forth no
factual basis for those claims. Indeed, respondent has yet to make
any levies with respect to the assessments. Except as we have
discussed with respect to the Appeals officer's refusal to
consider the accuracy of the assessments, we see no error in the
determination.
Petitioner
has failed to put before us grounds on which we could find that
the Appeals officer erred in the determination. On that basis,
respondent is entitled to summary disposition in his favor. To
reflect the foregoing, An
appropriate order and decision will be entered for respondent.
[2005-2 USTC ¶50,508]Robert Eugene Poindexter, Petitioner-Appellant v. Commissioner of
Internal Revenue, Respondent-Appellee. The
Tax Court's grant of summary judgment to the IRS upholding an
Appeals officer's decision in a Collection Due Process hearing
pursuant to Code
Sec. 6330, was proper where the taxpayer failed to
provide evidence that assessments of tax liability were erroneous.
The evidence introduced was irrelevant to the tax years in
question. The taxpayer's contention, on appeal, that he paid all
or a portion of the tax liabilities contradicted his previous
representations that he paid no taxes for the tax years because he
did not agree with the amounts of income listed by the IRS.
Further, the taxpayer provided no proof that the payments were, in
fact, made. Robert
Eugene Poindexter, pro se; Eileen J. O'Connor, Assistant
Attorney General, Curtis C. Pett and Bruce R. Ellisen, Department
of Justice, for respondent-appellee.
[Dec. 55,517(M)]
Ariel J. Dorra v. Commissioner. The
IRS was entitled to summary judgment on the issue of whether it
could proceed with collection of an individual's remaining tax
liabilities for three tax years. No genuine issue of material fact
remained with respect to the taxpayer's claim that he did not have
a "hearing" within the meaning of Code
Secs. 6320(b) or 6330(b).
The IRS Appeals officer heard and considered all of the taxpayer's
arguments via telephone conference, which satisfied Reg.
§301.6320-1(d)(2). The taxpayer also failed to show
entitlement to a release of a tax lien as a matter of law or right
and, thus, did not show an abuse of discretion. Ariel
J. Dorra, pro se. Leonard T. Provenzale, for the
respondent. MEMORANDUM
OPINION GERBER,
Judge: Respondent in a motion filed on Background
Petitioner
filed 1997, 1999, and 2000 Federal income tax returns, but failed
to pay all of the reported tax liabilities. The liabilities were
assessed by respondent and on On
On
Following
the telephone conference with petitioner and his representative,
the Appeals officer, on
Discussion
Respondent
seeks summary judgment with respect to whether he may proceed to
collect certain outstanding tax liabilities against petitioner.
Rule 121 provides for summary judgment for part or all of the
legal issues in controversy if there is no genuine issue as to any
material fact and a decision may be rendered as a matter of law. Sundstrand
Corp. v. Commissioner [Dec.
48,191], 98 T.C. 518, 520 (1992), affd. [94-1
USTC ¶50,092] 17 F.3d 965 (7th Cir. 1994). In that
regard, summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner [Dec.
44,689], 90 T.C. 678, 681 (1988). There
is no genuine issue as to any material fact in this case. The sole
issue raised in petitioner's pleading is that he did not have a
"hearing", and that question is susceptible to
resolution by means of summary judgment. Respondent, pursuant to
sections 6321 and 6323, seeks to maintain the Federal tax lien
filed with respect to petitioner's property. In accord with section
6320(a), respondent provided petitioner with a notice
of the filing of a Notice of Federal Tax Lien. The notice provided
to petitioner advised him of his right to an administrative appeal
of respondent's determination to collect the tax. In that regard,
the Commissioner, after filing a Notice of Federal Tax Lien, must
provide a taxpayer with the opportunity for an administrative
and/or judicial review of the determination to file the lien and
proceed with collection. See Under
section
6320(b), if a taxpayer "requests a hearing under
subsection (a)(3)(B)
[of section
6320], such hearing shall be held by the Internal
Revenue Service Office of Appeals." We have decided that,
under appropriate circumstances, the hearing envisioned in
sections 6320(b)
and 6330(b)
may be conducted telephonically. See Katz v. Commissioner [Dec.
54,081], 115 T.C. 329, 334-339 (2000). In that case we
concluded that the Appeals officer heard and considered all of
petitioner's arguments during a telephone conference. In
this case, we also conclude that the Appeals officer heard and
considered all of petitioner's arguments. In his response to
respondent's motion, petitioner stated that, if given another
hearing, there is nothing more that he would argue to the Appeals
officer. Petitioner and his representative communicated in writing
and by telephone with respondent's Appeals officer. In spite of
this, petitioner contends that there was no "hearing"
within the meaning of the statute. This contention is also
contrary to the regulations under section 301.6320-1(d)(2) A-D6 of
the Procedural and Administrative Regs., which provide that CDP
hearings * * * are informal in nature and do not require the
Appeals officer or employee and the taxpayer, or the taxpayer's
representative, to hold a face-to-face meeting. A CDP hearing may,
but is not required to, consist of a face-to-face meeting, one or
more written or oral communications between an Appeals officer or
employee and the taxpayer or the taxpayer's representative, or
some combination thereof. * * * Accordingly,
we hold that petitioner did have an opportunity for a
"hearing" within the meaning of section
6320(b) and case precedent and that the contention that
his telephone conference was not a "hearing" within the
meaning of section
6320(b) is of little moment since his representative,
with power of attorney, had authority to pursue or waive a
hearing. Based on the undisputed allegation of respondent,
petitioner's representative elected a telephonic conference in
lieu of one that was face-to-face. It also appears that
petitioner's representative aired the client's concerns with the
Appeals officer as petitioner testified that he would not have
raised any additional arguments to the Appeals officer if given
another hearing. In addition, it would be neither necessary nor
productive to remand for a hearing in any event. See Lunsford
v. Commissioner [Dec.
54,553], 117 T.C. 183, 189 (2001). In
connection with the appeals consideration that was afforded to
petitioner, a collection alternative was considered, and agreement
was reached on an installment payment plan for petitioner. The
Appeals officer, however, refused to release the Notice of Federal
Tax Lien without full payment or other arrangement to protect the
Government's priority creditor status with respect to petitioner's
real property. See sec.
6325; cf. sec.
6331(k), relating to levies. Petitioner has not shown
entitlement to a release as a matter of law or right, and,
accordingly, petitioner has not shown an abuse of discretion. We
also note that petitioner and his representative were offered
proof that respondent had complied with the prerequisites of
sections 6320 and 6330 preliminary to proceeding with the filing
of a Notice of Federal Tax Lien or other collection activity. Respondent's
Motion For Summary Judgment will be granted. To reflect the
foregoing, An
appropriate order and decision will be entered for respondent. 1
Section references are to the Internal Revenue Code in effect for
the period under consideration. Rule references are to the Tax
Court's Rules of Practice and Procedure. Dec. 55,527(M)]
Vicki S. Pless and Coy E. Pless, Jr. v. Commissioner. The
IRS did not abuse its discretion in issuing married taxpayers
notices of determination without conducting a Collection Due
Process hearing that they had requested. The taxpayers failed to
take advantage of several opportunities to properly request a
hearing and engaged in dilatory conduct to postpone collection.
Even if they had offered at a hearing the evidence they submitted
at trial, the determination would have been the same.
Consequently, the IRS did not abuse its discretion in denying the
wife's claim for relief from joint and several liability pursuant
to Code
Sec. 6015(f), where she presented no evidence that she
qualified for it and had failed to file tax returns for prior tax
years. The IRS properly determined that the proposed collection
action could proceed pursuant to the notice of federal tax lien
for one tax year. Vicki
S. Pless and Coy E. Pless, Jr., pro se. James R. Rich, for
the respondent. MEMORANDUM
FINDINGS OF FACT AND OPINION COHEN,
Judge: This case was commenced in response to a Notice of
Determination Concerning Collection Action(s) Under Section
6320 and/or 6330
and a Notice of Determination Concerning Your Request for Relief
from Joint and Several Liability Under Section
6015. The issue for decision is whether there was an
abuse of discretion in issuing the notices of determination
without conducting a hearing requested by petitioners under section
6330. Unless otherwise indicated, all section
references are to the Internal Revenue Code.
FINDINGS
OF FACT Some
of the facts have been stipulated, and the stipulated facts are
incorporated in our findings by this reference. Petitioners
resided in Petitioners
filed a joint Federal income tax return for 1998, reporting
taxable income of $91,261, taxes of $28,113, and an unpaid balance
of $16,058. The return described the occupation of petitioner Coy
E. Pless, Jr. (Mr. Pless), as chiropractor and the occupation of
petitioner Vicki S. Pless (Ms. Pless) as office manager. The
amount shown as due was not paid with the 1998 return. As of the
time of trial in October 2003, petitioners had not filed Federal
income tax returns for any years subsequent to 1998. On
On
Your
request for a Due Process Hearing will be scheduled after the
innocent spouse claim has been worked. The Due Process Hearing may
be in person or over the phone. Please let me know which you
prefer when you are contacted to schedule your Due Process
Hearing. *
* * * * * * If
you plan to propose collection alternatives, certain financial
information is needed in order to determine the merits of any
collection alternative proposal you make. In this regard, if you
plan to propose collection alternatives, please complete the
enclosed Form 433-A and Form 433-B (if applicable) and return them
to me as soon as possible. Since
interest continues to accrue while your case is being considered,
you may wish to pay as much as you can as soon as you can. If you
have questions or concerns, please contact me at the above
address, fax or telephone number. Also
on On
On
On
My
husband had an unexpected death in his family that resulted in his
being hospitalized for a stress related illness. Therefore it will
be necessary to schedule hearing date in November, preferably
November 9th or November 16th, 2002. This will also allow me to
meet my doctor's appointments in October. On
It
should be noted that In
the Since
Mr. and Ms. Pless have not scheduled a hearing, the determination
is made in this matter based on the information available to me. The
Appeals officer adopted the tax auditor's recommendation against section
6015(f) relief. The Appeals team manager approved the
Appeals officer's memorandum on On
This
letter is to inform you that I am recovering from the cancer
surgery that was performed on OPINION Section
6330(c) specifies
the issues to be considered at the hearing requested by
petitioners as follows: 6330(c).
Matters Considered at Hearing. --In the case of any hearing
conducted under this section -- *
* * * * * * (2)
Issues at hearing. -- (A)
In general. --The person may raise at the hearing any relevant
issue relating to the unpaid tax or the proposed levy, including
-- (i)
appropriate spousal defenses; (ii)
challenges to the appropriateness of collection actions; and (iii)
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)
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. Petitioners
have not suggested any challenge to the underlying liability that
they reported on their 1998 tax return. Respondent
objected to consideration of any testimony at trial or any
evidence as to whether Ms. Pless qualifies for relief under section
6015(f) that was not presented during the telephonic
hearing of Ms.
Pless failed to present evidence that she would qualify for relief
from joint and several liability or any evidence contradicting the
tax auditor's findings, which were adopted by the Appeals officer.
Her failure to file tax returns for years subsequent to 1998, as
well as the factors considered by the tax auditor, are factors
weighing against relief. See Rev.
Proc. 2000-15, sec. 4.03(2), 2000-1 C.B. 447, 449. On
consideration of the entire record, we conclude that petitioners
were provided several opportunities for a hearing contemplated by section
6330, they failed to take advantage of that
opportunity, and they engaged in dilatory conduct to postpone
collection. Moreover, we conclude that, even if the evidence that
they offered at trial of this case had been offered at a hearing,
the determination would have been the same. Thus, we conclude that
there was no abuse of discretion in denying Ms. Pless's claim for
relief under section
6015(f) or in determining that the proposed collection
action could proceed pursuant to the notice of Federal tax lien
with respect to petitioners' Federal income tax liability for
1998. Decision
will be entered for respondent. [Dec. 55,534(M)]
Stephen Mitchell Day v. Commissioner. An
IRS Appeals officer who denied an individual's request for a
further postponement of his Collection Due Process (CDP) hearing
did not abuse her discretion in determining that the IRS was
entitled to proceed with collection. The record established that
the Appeals officer was impartial because she had no involvement
in any previous CDP hearing concerning the tax liabilities at
issue in the present case. Moreover, because the taxpayer had been
granted two prior postponements and had failed to submit an offer
in compromise to the Appeals officer, he was deemed to have been
afforded a proper opportunity for a hearing. Stephen
Mitchell Day, pro se. William J. Gregg, for the respondent. MEMORANDUM
OPINION PANUTHOS,
Chief Special Trial Judge: This case was commenced in response to
a Notice of Determination Concerning Collection Action(s) Under Section
6320 and/or 63301 (notice
of determination). The issue for decision is whether respondent
abused his discretion in determining that the proposed levy action
should proceed against petitioner's unpaid Federal
income taxes and related liabilities for 1995 and 1996.2 Background
Some
of the facts have been stipulated, and they are so found.
Petitioner resided in Petitioner
filed Federal income tax returns for taxable years 1995 and 1996.
On Petitioner
filed a Form 12153, Request for a Collection Due Process Hearing,
which was received by respondent on In
a letter dated At
petitioner's request, the hearing originally scheduled for In
a letter dated Petitioner
did not submit to the Houston Appeals Office either an offer in
compromise or the requested tax return for 2001. He instead
objected to having his case transferred, because he wanted a face
to face hearing under section
6330. In
a letter dated Petitioner,
through a representative, requested in a letter dated In
a letter dated Respondent
issued petitioner a notice of determination dated Petitioner
timely filed with this Court a Petition for Lien or Levy Action
Under Code
Section 6330(d). The only relevant issue raised is
whether petitioner was denied an opportunity for a fair and
meaningful hearing under section
6330.3
Petitioner contends that Settlement Officer Craca was not
impartial, based upon her letter dated Discussion
This
Court has jurisdiction to review the Commissioner's administrative
determination under section
6330. Sec.
6330(d). Where, as here, the validity of the underlying
tax liability is not at issue, we review such determination for
abuse of discretion. Sego v. Commissioner [Dec.
53,938], 114 T.C. 604, 610 (2000); Goza v.
Commissioner [Dec.
53,803], 114 T.C. 176, 183 (2000). Under
section
6330, a taxpayer is entitled to notice and an
opportunity for a hearing before certain lien and levy actions are
taken by the Commissioner in the process of collecting unpaid
Federal taxes. Section
6330 provides that, upon request and in the
circumstances described therein, a taxpayer has a right to a
"fair hearing". Sec.
6330(b). A "fair hearing" consists of the
following four elements: (1) An impartial officer will conduct the
hearing; (2) certain issues may be heard such as an
offer-in-compromise; (3) the conducting officer will receive
verification from the Secretary that the requirements of
applicable law and administrative procedure have been met; and (4)
a challenge to the underlying tax liability may be raised only if
the taxpayer did not receive a statutory notice of deficiency or
receive an opportunity to dispute such liability. Sec.
6330(b) and (c);
see Lunsford v. Commissioner [Dec.
54,553], 117 T.C. 183, 183-184 (2001); Vossbrinck v.
Commissioner [Dec.
54,713(M)], T.C. Memo. 2002-96. In
the present case, the last two elements are not in dispute. With
respect to the first element, section
6330(b)(3) provides in relevant part: "The hearing
* * * shall be conducted by an officer or employee who has had no
prior involvement with respect to the unpaid tax * * * before the
first hearing under [section
6330]". Construing the language of section
6330(b)(3) and the regulation thereunder, we have held
that an Appeals officer is impartial if he or she "did not
participate in, and was not involved in, any previous Appeals
Office hearing" concerning the taxpayer's tax and tax periods
that are the subject of the current section
6330 proceeding. Harrell v. Commissioner [Dec.
55,298(M)], T.C. Memo. 2003-271; sec. 301.6330-1(d)(2),
Q&A-D4, Proced. & Admin. Regs. Based upon the record in
the present case, we conclude that Settlement Officer Craca was
impartial. With
respect to the second element, that certain issues be heard, in Neugebauer
v. Commissioner [Dec.
55,323(M)], T.C. Memo. 2003-292, the taxpayer requested
that he be allowed to satisfy his outstanding liability through an
offer-in-compromise. However, he failed to submit a properly
completed Form 656, Offer in Compromise, and the required
financial information for the consideration of his request.
Accordingly, in Neugebauer v. Commissioner, supra,
we granted the Commissioner's motion for summary judgment and
sustained the Commissioner's determination regarding the proposed
levy as a permissible exercise of discretion. In
Vossbrinck v. Commissioner, supra, the taxpayer
alleged that he was denied a "fair hearing" under section
6330 because the Commissioner declined to postpone the
hearing for a second time to allow taxpayer to seek a private
letter ruling. We found the taxpayer's allegation to be without
merit because the Commissioner had postponed the hearing once
before at taxpayer's request, and the taxpayer did not submit a
request for such a ruling until 8 days before trial and not before
issuance of the notice of determination in that case. Accordingly,
we held that the taxpayer in Vossbrinck was given a full
and fair opportunity to seek an alternative resolution of his tax
liabilities. The
hearing under section
6330 need not be conducted face to face. See Lunsford
v. Commissioner, supra at 183; Armstrong v.
Commissioner [Dec.
54,865(M)], T.C. Memo. 2002-224. But where a taxpayer
is not afforded a proper opportunity for an Appeals hearing, the
Court can remand the case to the Appeals Office to hold a hearing
if we "believe that it is either necessary or
productive". Lunsford v. Commissioner, supra at
189; Moore v. Commissioner [Dec.
55,002(M)], T.C. Memo. 2003-1; Bartschi v.
Commissioner [Dec.
54,916(M)], T.C. Memo. 2002-268. The
facts in the present case are similar to those in Neugebauer
and Vossbrinck. Petitioner's hearing under section
6330 was twice postponed at petitioner's request.
Respondent initially invited petitioner to submit an offer in
compromise as early as For
the reasons discussed above, respondent's determination to proceed
by levy with the collection of petitioner's outstanding
liabilities for 1995 and 1996 should be sustained, and we so hold.
We have considered all of petitioner's arguments and contentions
that are not discussed herein relating to whether respondent may
proceed with collection with respect to petitioner's outstanding
liabilities for 1995 and 1996, and we find those arguments and
contentions to be without merit and/or irrelevant. To
reflect the foregoing, Decision
will be entered for respondent.
[2004-1 USTC ¶50,161]Courtney E. Minion, Sr., Petitioner-Appellant v. Commissioner of Internal
Revenue, Respondent-Appellee. The
Tax Court properly granted summary judgment in favor of the IRS,
thus dismissing an individual's challenge to an adverse Collection
Due Process (CDP) determination. The taxpayer failed to establish
genuine issues of material fact concerning the validity of income
tax assessments, which arose from IRS substitute returns filed on
behalf of the taxpayer in three tax years. Moreover, the Appeals
officer followed the appropriate guidelines in verifying that all
legal and administrative procedures were followed. Finally, the
officer's decision to continue with the CDP hearing despite the
fact that the taxpayer had not received tax records he requested
from the IRS did not constitute an abuse of discretion. The
taxpayer did not ask for an extension of time in order to obtain
the records before the hearing.
ORDER
[2005-1 USTC ¶50,395] Living Care Alternatives of Utica, Inc., Plaintiff-Appellant v. Federal
district courts, which reviewed Collection Due Process (CDP)
determinations issued by IRS Appeals officers using an abuse of
discretion standard, were not required to use a de novo
standard because the taxpayer, a nursing home, did not challenge
the underlying tax liabilities in the CDP hearings. The nursing
home's argument that it was bad public policy to require it to pay
taxes when it lacked the financial ability to meet federal
regulatory standards governing the care of patients and its
request to "remove" the tax liability were not
challenges to the validity of the underlying liability. The
reports issued by the Appeals officers in connection with their
determinations included sufficient information to provide a basis
for an abuse of discretion review. Furthermore, the refusal of the
IRS to accept the nursing home's offers in compromise was not an
abuse of discretion for numerous reasons, including the apparent
failure to file the proper forms and financial information, its
financial difficulties, and a previous default on an installment
payment plan. It was also not necessary for the Appeals officers
to consider whether the IRS would receive any revenue from the
levy and sale of the nursing home's property due to existing liens
of superior creditors, or whether the nursing home would have to
close down due to the levy and sale. These considerations are
properly made after the determination of the Appeals officer in a
CDP hearing when the decision to actually levy upon the property
is made. Carla
I. Struble, for plaintiff-appellant. Robert J. Branman, Rachel I.
Wollitzer, Jonathan S. Cohen, Department of Justice, for
defendant-appellee.
OPINION
SUMMARY
OF FACTS
ANALYSIS I.
Judicial Review of Collection Due Process Proceedings
II.
Living Care's Claims
These
government mandated changes resulted in Living Care not being able
to pay all its withholding obligations. The government required
that Living Care meet the increased mandated care requirements and
staffing requirements. Living Care did this and when the decision
had to be made between paying for resident care and taxes, Living
Care paid for the food, utilities, medications, staffing etc [sic]
and delayed the payment of taxes --taxes were not simply refused
or neglected.
Appeals
Officer Rich was not required, during the [Collection Due Process]
Appeal process, to determine whether the equity in Medlock's
property was sufficient to yield net proceeds ... or investigate
the status of Medlock's property .... According to the plain
language of the relevant statutory sections, [6331(f) and 6331(j)]
these actions must be taken before a taxpayer's property may be
levied upon by the IRS but are prematurely raised at this stage of
the collection process. Appeals Officer Rich's alleged failure to
perform those actions therefore does not constitute a violation of
[the collection due process statutes].
Unlike
the court in Mesa Oil, this court has before it a report
from the collection due process hearing which sets forth the
issues raised by Living Care, as well as a discussion of those
issues. The [Appeals Officer's] report explains the collection
alternatives raised by Plaintiff and why those collection
alternatives were impracticable and unreasonable. In the instant
case the [Officer] enumerated specific reasons why the IRS's levy
action and lien filing balanced the [needs of both parties.]
The
two quarters preceding the current quarter are the 2nd and 3rd.
The taxpayer owes tax for the 2nd; consequently, the taxpayer will
not be eligible until the 1st quarter of 2003.... Therefore, as
of the date of this report, the taxpayer is not eligible for
an offer in compromise.
[Dec. 55,545(M)]
Leslie M. Hiltz v. Commissioner. The
Tax Court dismissed an individual's challenge to an adverse
Collection Due Process (CDP) determination. The taxpayer was
properly prohibited from addressing her underlying tax liability.
She received a notice of deficiency and, as a result, had a prior
opportunity to dispute the liability. The court rejected the
taxpayer's argument that the balance due under a proposed
installment agreement was excessive. The proposed agreement
properly accounted for taxes, penalties and interest. As such, the
IRS did not abuse its discretion in sustaining federal tax liens
imposed against the taxpayer. Leslie
M. Hiltz, pro se. Jennifer S. McGinty, for the respondent. MEMORANDUM
FINDINGS OF FACT AND OPINION THORNTON,
Judge: Pursuant to sections 6320(c) and 6330(d), petitioner seeks
review of respondent's determination sustaining the filing of a
Federal tax lien with respect to petitioner's 1987 income tax.1 FINDINGS
OF FACT The
parties have stipulated most of the facts, which we incorporate
herein by this reference. When petitioner filed his petition, he
resided in A.
1987 Notice of Deficiency Petitioner
and his wife, Carole E. Hiltz (Carole), timely filed a joint 1987
Federal income tax return. By notice of deficiency dated B.
Bankruptcy Proceedings On
On
On
On
E.
Notice of Determination In
a Notice of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330,
dated On
OPINION
Section
6321 imposes a lien in favor of the Section
6330(c)(2) prescribes the matters that a person may
raise at an Appeals Office hearing, including spousal defenses,
challenges to the appropriateness of the Commissioner's intended
collection action, and possible alternative means of collection.
The existence or amount of the underlying tax liability may be
contested at an Appeals Office hearing only if the taxpayer did
not receive a notice of deficiency or did not otherwise have an
opportunity to dispute that tax liability. Sec.
6330(c)(2)(B); see Sego v. Commissioner [Dec.
53,938], 114 T.C. 604, 609 (2000); Goza v.
Commissioner [Dec.
53,803], 114 T.C. 176, 180-181 (2000). If
the validity of the underlying tax liability is properly at issue,
we review that issue de novo. See Sego v. Commissioner, supra
at 609-610. Other issues we review for abuse of discretion. B.
Petitioner's Contentions 1.
Underlying Tax Liability In
his petition, petitioner challenges his underlying 1987 tax
liability. Because petitioner received a notice of deficiency for
the 1987 tax year, he is not entitled to challenge the existence
or amount of his 1987 tax liability in this collection proceeding.
See secs.
6320(c), 6330(c)(2)(B);
Sego v. Commissioner, supra at 609; Goza v.
Commissioner, supra at 180-181.4
2.
Installment Agreement AO
Szalkowski considered alternative means of collection and prepared
an installment agreement, which petitioner ultimately rejected on
the ground that he thought the total installment payments required
were excessive. The record provides no basis for concluding that
the balance due, as reflected in the installment agreement,
exceeded petitioner's then-current balance for the 1987 tax,
penalties, and interest. To the contrary, the limited evidence in
the record suggests that the difference between what petitioner
believed his 1987 tax liability to be and the amount shown on the
proposed installment agreement was attributable to the running of
interest (which is running yet, see section
6601(a)). On this record, we conclude that AO
Szalkowski did not abuse his discretion in determining that
collection action may proceed against petitioner. C.
Conclusion Petitioner
has raised no spousal defense and made no valid challenge to the
appropriateness of respondent's intended collection action. These
issues are now deemed conceded. See Rule 331(b)(4). We hold that
respondent did not abuse his discretion in sustaining the filing
of a Federal tax lien with respect to petitioner's 1987 income
tax. To
reflect the foregoing, Decision
will be entered for respondent.
[Dec. 55,559(M)]
Albert G. Cooper v. Commissioner. The
government was not entitled to a dismissal of an individual's
challenge to an adverse Collection Due Process (CDP)
determination. The taxpayer provided significant evidence that he
made attempts to negotiate collection alternatives to satisfy his
outstanding taxes. Correspondence admittedly received by the IRS
indicated that the taxpayer was willing to consider such
collection alternatives. Because the taxpayer was out of town,
however, his attorney indicated that he would need an extension of
time to consult with his client concerning any collection efforts.
A subsequent letter mailed by the taxpayer expressed his intent to
enter into an offer in compromise or other collection alternative.
The IRS claimed that it never received the taxpayer's subsequent
letter. Nevertheless, the court concluded that the parties
contemplated further negotiations, even though the taxpayer's
subsequent letter might not have been received by the IRS. --CCH. Joseph
P. Nigro, for the petitioner. Edward J. Laubach, Jr., for the
respondent. MEMORANDUM
OPINION WELLS,
Chief Judge: The instant case is before us on respondent's motion
for summary judgment pursuant to Rule 121. Pursuant to section
6330, respondent determined that the proposed
collection action, relating to petitioner's 1991 and 1995 taxable
years, was appropriate. Petitioner contends that respondent's
motion for summary judgment should be denied because respondent
did not consider a letter petitioner allegedly sent to respondent
declaring petitioner's intent to pursue a collection alternative
or an offer in compromise. All section references are to the
Internal Revenue Code, as amended, and all Rule references are to
the Tax Court Rules of Practice and Procedure. Background The
parties' moving papers contain certain statements of fact which
the parties do not dispute and are set forth as facts for the
purpose of deciding the instant motion. Petitioner resided in
McKees Rocks, On
On
On
This
is in response to our phone conversation on *
* * * * * * When
we last spoke the plan was for me to provide you with these
transcripts. You were to then study them and advise me if there
were any missing credits or, if any taxes have not yet been abated
according to the Bankruptcy Court discharge order. In
a letter dated A
review of the transcripts reveals several discrepancies: 1.
The amounts that have been paid that have not been credited to our
clients account. It appears that the amounts paid have been
credited on the statement, but the amounts have not been applied
to reduce the tax obligations of the Debtor; 2.
Failure to credit penalties discharged in bankruptcy. The Debtor
filed for Chapter 11 Bankruptcy in 1991. His case was subsequently
converted to a Chapter 7 in 1996. The Debtor did receive a
discharge in Chapter 7 of all his unsecured obligations. It is our
contention that all the penalties that have been assessed by the
Internal Revenue Service through 1996 should have been abated by
the Internal Revenue Service, since they were a general unsecured
obligation. The transcripts that you have provided do not reflect
any abatement of penalties that were assessed against the Debtor.
Consequently, all account balances shown for each year commencing
in 1989 through the year 1997 are incorrect. On
You
also stated that penalties discharged in bankruptcy were not
credited. I have consulted with one of the local Bankruptcy
Specialists who has advised me that the penalties in your client's
case were not dischargeable. Taxes will not be dischargeable if
the due date for a tax return is within 3 years of the bankruptcy
petition date. Also, when a case converts from Chapter 11 to
Chapter 7, it carries the same original petition date. Although,
according to the dates in your letter, your client's bankruptcy
converted to Chapter 7 in 1996, the petition date for purposes of
determining dischargeability goes back to the original filing in
1991. Accordingly,
my determination, at this time, would have to be that the balances
shown due are correct. If I have misstated or misunderstood either
the facts or the law relating to some aspect of this matter,
please correct me and provide a citation that supports your
position. I will certainly reconsider all of this if my analysis
is not consistent with the facts and law. If
you wish to explore payment options, I can assist you in that
matter. Options may include either an installment payment
agreement, an offer in compromise or, possibly, a suspension of
collection action pending an improvement in your client's
financial situation. Form
656 is enclosed for your use and information. In that booklet you
will also find financial statements (Forms 433-A&B). If
anything other than a short-term payment plan is sought, your
client will have to submit the appropriate financial statement in
support of the proposal they wish to make. I
am faxing this letter to you this morning. The original will be in
the mail along with the Form 656. If
you have questions or concerns, please give me a call. I would
like your reply by Petitioner
responded to the Appeals officer's letter, by letter sent by
petitioner's counsel to respondent on On
No
evidence has been presented to show that the amounts shown due are
incorrect. You have not demonstrated that any portion of these
liabilities was discharged in bankruptcy. You have not proposed a
collection alternative. The proposed collection action is
sustained. Attachment
3193, attached to the notice of determination, indicated that
petitioner "expressed concern for the fact that there are
missing credits and for the fact that bankruptcy should have
discharged a portion of what is due." The Appeals officer
indicated that petitioner did not question the appropriateness of
the collection action or raise any collection alternatives.
Moreover, Attachment 3193 stated: Taxpayer
has not demonstrated that there are any missing credits and has
not refuted the Service's claim that these liabilities were never
discharged in bankruptcy. A telephonic hearing was held with the
representative. A deadline for responding was set, and, later,
extended at the request of the representative. I have not received
a reply to my offer to consider other collection alternatives. Absent
a cooperative response from the taxpayer, I must sustain the
proposed levy action. On
2.
I have examined the purported letter from Attorney Nigro to me
dated 3.
To the best of my knowledge, I never received this letter, Exhibit
1. If I had received this letter, it would now be part of the
administrative file in this case. 4.
If I had received this letter before Appeals issued the Notice of
Determination to Mr. Cooper on 5.
On Discussion Petitioner
contends that respondent failed to consider his "Summary
judgment is intended to expedite litigation and avoid unnecessary
and expensive trials." Florida Peach Corp. v. Commissioner
[Dec.
44,689], 90 T.C. 678, 681 (1988). A motion for summary
judgment may be granted where there is no dispute as to a material
fact and a decision may be rendered as a matter of law. See Rule
121(a) and (b).1 The
moving party bears the burden of proving that there is no genuine
issue of material fact, and factual inferences are viewed in a
manner most favorable to the other party. See Craig v.
Commissioner [Dec.
54,933], 119 T.C. 252, 260 (2002) (citing Dahlstrom v.
Commissioner [Dec.
42,486], 85 T.C. 812, 821 (1985)). The party opposing
summary judgment must set forth specific facts which show that a
question of genuine material fact exists and may not rely merely
on allegations or denials in his pleadings. See Grant Creek Water
Works, Ltd. v. Commissioner [Dec.
44,996], 91 T.C. 322, 325 (1988); Casanova Co. v.
Commissioner [Dec.
43,204], 87 T.C. 214, 217 (1986). In
the instant case, the Appeals officer's The
attachment to the notice of determination refers to the Appeals
officer's Petitioner
contends that his counsel sent respondent a letter on Section
6330(c)(2)(A)(iii) requires the Commissioner's Appeals
officer to consider "offers of collection alternatives, which
may include posting of a bond, the substitution of other assets,
an installment agreement, or an offer-in-compromise." See Goza
v. Commissioner [Dec.
53,803], 114 T.C. 176, 180-182 (2000). We review the
Commissioner's determinations under section
6330(c)(2)(A)(iii) under an abuse of discretion
standard. Sego v. Commissioner [Dec.
53,938], 114 T.C. 604, 609-610 (2000); Goza v.
Commissioner, supra. The
correspondence between petitioner and the Appeals officer
indicates that respondent was aware that petitioner was interested
in seeking an offer in compromise. Respondent included the offer
in compromise materials in the We
view these facts in the light most favorable to petitioner as the
nonmoving party. See Naftel v. Commissioner [Dec. 42,414],
85 T.C. 527, 529 (1985). Upon review of the facts and allegations
contained in the parties' moving papers, we conclude that
petitioner has alleged specific facts which indicate that a
factual controversy exists. Our examination of the correspondence
between petitioner and respondent leads us to conclude that the
parties contemplated further negotiations toward an offer in
compromise and that the On
the basis of the foregoing, An
appropriate order will be issued. 1
Rule 121(b) provides: [Dec. 55,576(M)]
Phillip and Gladies Aaron v. Commissioner. The
IRS was entitled to proceed with the collection of a married
couple's unpaid taxes following a Collection Due Process hearing.
The assessment stemmed from the couple's failure to revoke their
wholly owned business's S corporation election. In the petition
and at trial, the taxpayers' only challenge to the underlying tax
liability was that they were entitled to a reasonable cause
exception on account of the husband's illness. However, such a
challenge was unavailable based on a stipulation entered into by
the couple that conceded there was no reasonable cause exception. Phillip
and Gladies Aaron, pro sese. Catherine L. Campbell, for the
respondent. MEMORANDUM
FINDINGS OF FACT AND OPINION VASQUEZ,
Judge: This case was commenced in response to a Notice of
Determination Concerning Collection Action(s) Under Sections 63201 and 6330.
The issue is whether respondent may proceed with collection of
petitioners' 1997 and 1998 income tax liabilities. FINDINGS
OF FACT Some
of the facts have been stipulated and are so found. The
stipulation of facts, stipulation of settled issues, and attached
exhibits are incorporated herein by this reference. At the time
they filed the petition, petitioners resided in At
the time of trial, Phillip Aaron (petitioner) and Gladies Aaron
had been married for 35 years. Mrs. Aaron works for the State of In
the latter part of 1996, petitioner's health declined. In the
beginning of 1997, petitioner was diagnosed with colon cancer and
underwent surgery immediately. After the surgery, petitioner
underwent chemotherapy treatment until approximately December
1997. On
Petitioner
and Bernie Foster formed BP Concessions, Inc. (BP Concessions), to
sell goods and duty-free items at the In
December 1996, petitioner and Mr. Foster agreed in a board meeting
to terminate BP Concessions' S corporation status by revoking the
S corporation election. They decided to revoke the S corporation
election on account of an anticipated and substantial distributive
share of income based on "a lowering of the cost of goods
which was going to result in an increase from prior years" to
the shareholders. Petitioner
was responsible for revoking the election. For the revocation to
be effective for 1997, petitioner had to revoke the S corporation
election by Keith
Meyers, the accountant who prepared BP Concessions' tax return for
1997, was unaware of the shareholders' desire to terminate the S
corporation election. On Petitioners'
Tax Returns On
their Form 1040, U.S. Individual Income Tax Return, for 1997,
petitioners reported a Schedule K-1 distributive share of $447,653
of nonpassive income from BP Concessions and a total tax of
$103,708.2 On their
Form 1040 for 1998, petitioners reported a distributive share of
$21,336 of nonpassive income from Schedule K-1 from BP Concessions
and a total tax of $35,909. They sought a refund of $5,825. On Petitioner
decided to report the distributive share of income from BP
Concessions on his Form 1040 for 1997 so that he would not be
viewed as underreporting his income. Petitioner intended to amend
his return and "correct the situation at a later date".
Petitioner did not believe that this course of action would result
in any problems. The
Internal Revenue Service (IRS) did not issue petitioners a
statutory notice of deficiency for 1997 or 1998.
The
IRS concluded that petitioners' individual tax return for 1997
contained multiple mathematical errors. On The
IRS concluded that petitioners' individual tax return for 1998
contained multiple mathematical errors. On Before
collection proceedings, petitioner and Revenue Officer Steve
Lerner corresponded regarding petitioners' unpaid taxes and refund
claims for 1997 and 1998. On
On
The
taxpayers are in the process of determining the correct amount of
their income tax liabilities for these years, and they anticipate
that their actual liability will be substantially less than as set
forth in the notice of Federal tax lien. While the taxpayers
acknowledge that the liability set forth in the notice was
assessed based on a 1997 return filed by the taxpayers, that
return as filed was incorrect, and the taxpayers had so advised
the Internal Revenue Service prior to the filing of the notice of
Federal tax lien. Second,
petitioners claimed that the "notice of Federal tax lien was
filed despite the taxpayers' cooperation with the IRS".
Third, petitioners claimed that the filing of the notice of
Federal tax lien would hinder the ability of the IRS to collect
the tax liabilities because potential investors would not invest
in BP Concessions if a Federal tax lien was filed. On
The
undersigned hereby agree that at the year-end meeting in December
of 1996, Phillip Aaron was charged by the Corporation with
converting BP CONCESSIONS, INC. from a Sub-Chapter S Corporation
to a C Corporation for the specific purpose, and in anticipation
of, BP CONCESSIONS, INC., receiving income and loaning part of
that income to Bernie Foster and Phillip Aaron during the year of
1997. Phillip Aaron was responsible for changing the Corporation
from a Sub-Chapter S to a C Corporation. Phillip Aaron developed
cancer and underwent chemotherapy during 1997 and, as a result,
the C Corporation election was not made. It is still the desire of
BP CONCESSIONS, INC., Phillip Aaron, and Bernie Foster that BP
CONCESSIONS, INC., be changed from a Sub-Chapter S Corporation to
a C Corporation and that the disbursement of proceeds for 1997 be
classified as a loan as they were intended to be at the time of
disbursement. Appeals
Settlement Officer Vander Linden prepared a detailed Appeals case
memo evaluating petitioners' appeal and recommending that it be
denied. On Litigation On
On
the morning of the trial in this case, petitioners mailed to the
IRS Ogden Service Center Forms 1040X, Amended U.S. Individual
Income Tax Return, for 1997 and 1998. The amended returns
eliminated the $447,653 distributive share of income from BP
Concessions for 1997 and indicated that the amount of tax owed for
each year was zero. At trial, petitioners presented no evidence
regarding any spousal defenses, any challenges to the
appropriateness of the collection actions, or any offers of
collection alternatives. On
1.
In their petition, petitioners requested that the Court determine,
inter alia, that the amounts of the assessments for
petitioners' 1997 and 1998 income taxes are incorrect and are
overstated because the petitioners were entitled to revoke the
subchapter S election for BP Concessions, Inc. for years 1997 and
1998. 2.
Petitioners concede that there is no reasonable cause exception
for their failure to timely revoke the subchapter S status of BP
Concessions, Inc. for years 1997 and 1998. OPINION
Section
6321 provides that, if any person liable to pay any tax
neglects or refuses to do so after demand, the amount shall be a
lien in favor of the United States upon all property and rights to
property, whether real or personal, belonging to such person.
Pursuant to section
6323, the Commissioner generally is required to file a
notice of Federal tax lien with the appropriate State office for
the lien to be valid against certain third parties. After
the Commissioner files a notice of lien, section
6320(a)(1) requires the Commissioner to provide notice
to the taxpayer of such filing. Additionally, under section
6320(a)(3)(B) and (b),
the Commissioner must provide the taxpayer with notice of and an
opportunity for an administrative review of the lien filing; i.e.,
a hearing. Section
6320(b)(1) requires that the Appeals Office conduct the
hearing. Section
6320(c) incorporates section
6330(c) and certain parts of section
6330(d), which describe the procedural rules that apply
to the hearing and the judicial review thereof. At
the hearing, the taxpayer may raise certain matters set forth in section
6330(c)(2), which provides, in pertinent part: SEC.
6330(c). Matters Considered at Hearing. --In the case
of any hearing conducted under this section -- *
* * * * * * (2)
Issues at hearing. -- (A)
In general. --The person may raise at the hearing any relevant
issue relating to the unpaid tax or proposed levy, including -- (i)
appropriate spousal defenses; (ii)
challenges to the appropriateness of collection actions; and (iii)
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)
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. Pursuant
to section
6330(d)(1), within 30 days of the issuance of the
notice of determination, the taxpayer may appeal that
determination to this Court if we have jurisdiction over the
underlying tax liability. Van Es v. Commissioner [Dec.
54,080], 115 T.C. 324, 328 (2000). Although
section
6330 does not prescribe the standard of review that the
Court is to apply in reviewing the Commissioner's administrative
determinations, we have stated that, where the validity of the
underlying tax liability is properly at issue, the Court will
review the matter de novo. Where the validity of the underlying
tax liability is not properly at issue, however, the Court will
review the Commissioner's administrative determination for abuse
of discretion. Sego v. Commissioner [Dec.
53,938], 114 T.C. 604, 610 (2000); Goza v.
Commissioner [Dec.
53,803], 114 T.C. 176, 181 (2000). In
Montgomery v. Commissioner [Dec.
55,501], 122 T.C. __, __ (2004) (slip op. at 2), we
recently held that section
6330(c)(2)(B) permits a taxpayer to challenge the
existence or amount of the tax liability reported on an original
tax return when the taxpayer has not received a notice of
deficiency and has not otherwise had an opportunity to dispute the
tax liability in question. Pursuant to section
6330(c)(2)(A), a taxpayer may raise at the section
6330 hearing any relevant issue with regard to the
Commissioner's collection activities, including spousal defenses,
challenges to the appropriateness of the Commissioner's intended
collection action, and alternative means of collection. Sego v.
Commissioner, supra at 609; Goza v. Commissioner,
supra at 180. 2.
Stipulation of Settled Issues After
trial but before the submission of petitioner's posttrial brief,
the parties filed a stipulation of settled issues that stated:
"there is no reasonable cause exception for * * *
[petitioners'] failure to timely revoke the subchapter S status of
BP Concessions, Inc. for years 1997 and 1998". On brief,
petitioner argues that his illness was a reasonable cause
exception for failing to timely terminate BP Concessions' S
corporation election. A
settlement stipulation is usually a compromise. "A settlement
stipulation is in all essential characteristics a mutual contract
by which each party grants to the other a concession of some
rights as a consideration for those secured and the settlement
stipulation is entitled to all of the sanctity of any other
contract." Saigh v. Commissioner [Dec.
21,694], 26 T.C. 171, 177 (1956). Absent wrongful
misleading conduct or mutual mistake, we will enforce a
stipulation of settled issues in accordance with our
interpretation of its written terms. See Stamm Intl. Corp. v.
Commissioner [Dec.
44,584], 90 T.C. 315, 322 (1988); Korangy v.
Commissioner [Dec.
45,403(M)], T.C. Memo. 1989-2, affd. [90-1
USTC ¶50,030] 893 F.2d 69 (4th Cir. 1990). The
stipulation was entered into fairly and freely by both parties.
The stipulation of settled issues was filed after petitioner wrote
a letter to the Clerk of the Court conceding respondent's position
that there is no reasonable cause exception for failing to revoke
BP Concessions' S corporation election. In that letter, petitioner
stated that he wished to discontinue the case. The stipulation of
settled issues was also filed after the Court held a telephone
conference with the parties discussing this issue. Petitioner has
not shown mutual mistake or misleading conduct or that he was
unaware of the consequences of the stipulation. In
the petition and at trial, petitioners' only challenge to the
underlying tax liability was that they were entitled to a
reasonable cause exception on account of petitioner's illness. On
the basis of the stipulation of settled issues, we find that
petitioner has conceded his challenge to the underlying tax
liability. Accordingly, we sustain respondent's determination. 3.
Additional Points Raised by Petitioner Nevertheless,
for the sake of completeness, we shall address additional points
raised by petitioner. A.
Termination of BP Concessions' S Corporation Election Petitioner
argues that "Although there is no reasonable cause exception
that directly excuses the petitioners' failure to timely revoke
the Subchapter S Election of BP Concessions, there is no specific
provision that directly indicates that a reasonable cause
exception does not apply." An election to be an S corporation
continues until terminated. Mourad v. Commissioner [Dec.
55,211], 121 T.C. 1, 4 (2003). An S corporation
election may be terminated: (1) By revocation of the election to
be treated as an S corporation; (2) by the corporation's ceasing
to be a small business corporation; or (3) where passive
investment income exceeds 25 percent of gross receipts and the
corporation has subchapter C earnings and profits. See sec.
1362(d); Mourad v. Commissioner, supra.
The Code provides no other manner in which to terminate an S
corporation election. Mourad v. Commissioner, supra. While
section
1362(b)(5) authorizes the Secretary to treat late S
corporation elections as timely if the Secretary determines that
there was "reasonable cause for the failure to timely make
such election", this section applies only to the election to
become an S corporation. See sec.
1362(a) and (b)(5)(A).
Congress provided no reasonable cause exception for termination of
an S corporation election by revocation. See sec.
1362(d)(1). The regulations provide no reasonable cause
exception for termination of an S corporation election by
revocation. Petitioner
failed to revoke BP Concessions' S corporation election by Furthermore,
the Because
the S corporation election was in effect for 1997 and 1998,
petitioners were required to report their distributive share of
income from BP Concessions. Petitioners reported this distributive
share of income. The IRS assessment was proper. B.
Allegations of Loan to Petitioner From BP Concessions At
trial, petitioner testified that even if the S corporation
election remained in effect, the distribution of $447,653 from BP
Concessions was actually a loan to him from the corporation.
Generally, proceeds of a loan do not constitute income to a
borrower because the benefit is offset by an obligation to repay. United
States v. Rochelle [67-2
USTC ¶9694], 384 F.2d 748, 751 (5th Cir. 1967); Arlen
v. Commissioner [Dec.
28,559], 48 T.C. 640, 648 (1967). Whether a particular
transaction actually constitutes a loan, however, is to be
determined upon consideration of all the facts. Fisher v.
Commissioner [Dec.
30,084], 54 T.C. 905, 909 (1970). For
a payment to constitute a loan, at the time the payments are
received the recipient must intend to repay the amounts and the
transferor must intend to enforce payment. Haag v. Commissioner
[Dec.
43,766], 88 T.C. 604, 615 (1987), affd. without
published opinion 855 F.2d 855 (8th Cir. 1988); Beaver v.
Commissioner [Dec.
30,380], 55 T.C. 85, 91 (1970). Further, the obligation
to repay must be unconditional and not contingent on a future
event. United States v. Henderson [67-1
USTC ¶9330], 375 F.2d 36, 39 (5th Cir. 1967); Bouchard
v. Commissioner [56-1
USTC ¶9256], 229 F.2d 703 (7th Cir. 1956), affg. [Dec.
20,799(M)] T.C. Memo. 1954-243; Haag v. Commissioner,
supra at 615. Petitioner
offered no convincing proof that the funds were actually lent to
him. The "Agreement to Change BP Concessions to a C
Corporation" signed by petitioner and Mr. Foster mentions the
shareholders' intentions to treat the distribution as a loan.
However, this document was prepared more than 4-1/2 years after
the board meeting occurred and was drafted in support of an
attempt to settle the issues of this case. No other documents were
submitted regarding the alleged loan. The Court is not required
to, and in this case we do not, accept petitioner's
unsubstantiated testimony regarding this issue. See Wood v.
Commissioner [64-2 USTC ¶9852], 338 F.2d 602, 605 (9th Cir.
1965), affg. [Dec.
26,628] 41 T.C. 593 (1964). C.
Issues Raised Initially in Petitioners' Posttrial Briefs In
their posttrial briefs, petitioners raised for the first time the
issues of abatement of interest and penalties, an entitlement to
spousal defenses, a request for an installment agreement, and a
request for other reasonable alternatives to collection. These
issues were not raised in the petition to the Court or at trial.
Nor were they raised at the collection due process hearing.
Generally, in a section
6330 proceeding the Court is not obligated to consider
requests for abatement of penalties or proposals of collection
alternatives if they were not raised by the taxpayer at the section
6330 hearing or otherwise brought to the attention of
the Appeals Office. Magana v. Commissioner [Dec.
54,765], 118 T.C. 488, 493 (2002); Miller v.
Commissioner [Dec.
54,164], 115 T.C. 582, 589 n.2 (2000); Sego v.
Commissioner [Dec.
53,938], 114 T.C. at 612. Generally, we do not consider
issues that are raised for the first time at trial or on brief,
and we decline to do so in this case. Foil v. Commissioner [Dec.
45,496], 92 T.C. 376, 418 (1989), affd. [91-1
USTC ¶50,016] 920 F.2d 1196 (5th Cir. 1990); Markwardt
v. Commissioner [Dec.
33,403], 64 T.C. 989, 997 (1975). Petitioner has failed
to raise a spousal defense, make a valid challenge to the
appropriateness of respondent's intended collection action, or
offer alternative means of collection. These issues are now deemed
conceded. See Rule 331(b)(4). In
reaching all of our holdings herein, we have considered all
arguments made by the parties, and to the extent not mentioned
above, we find them to be irrelevant or without merit. To
reflect the foregoing, Decision
will be entered for respondent.
[Dec. 55,600(M)]
Thomas J. and Bonnie F. Ratke v. Commissioner. The
IRS was limited to an assessment amount indicated in a settlement
agreement it entered into with married taxpayers in connection
with one tax year. The settlement agreement was validated by the
Tax Court and represented a final and binding resolution. --CCH Jack
B. Schiffman, for the petitioners. Anne W. Durning, for the
respondent. MEMORANDUM
FINDINGS OF FACT AND OPINION FOLEY,
Judge : The issue for decision is whether respondent abused his
discretion in determining to proceed with collection. FINDINGS
OF FACT On
Petitioners,
in the petition, disputed the entire amount of the deficiency and
penalty as follows: The
Commissioner has asserted deficiencies in income taxes and
additions to taxes for the Petitioners taxable year 1993, all of
which are in dispute, as follows:
Deficiency: Increase in Tax $20,710
Penalties: Section 6662(a) $ 4,142 The
petition also stated that "The Petitioners have correctly
reported the sale of the business property on their amended 1993
individual income tax return, form 1040X".2 On
ORDERED
AND DECIDED: That there is a deficiency in income tax due from the
petitioners for the taxable year 1993 in the amount of $2,931.00;
and That
there is no addition to tax due from the petitioners for the
taxable year 1993, under the provisions of i.R.C. §6662(a). On
On
On
OPINION Respondent
contends that the The
petition clearly reflects petitioners' decision to contest the
entire deficiency determined by respondent. Thus, the Court had
jurisdiction to determine petitioners' correct tax liability
relating to 1993. See Naftel V. Commissioner [Dec.
42,414], 85 T.C. 527, 533 (1985). On Contentions
we have not addressed are irrelevant, moot, or meritless. Decision
will be entered for petitioners.
[Dec. 55,731(M)]
James G. Gilligan v. Commissioner. Summary
judgment was granted and sanctions were imposed with respect to an
individual taxpayer's challenge of his Collection Due Process
(CDP) hearing determination. For two tax years at issue, the tax
assessments were based on the tax shown as due on returns filed
under penalty of perjury, and the taxpayer's only challenge was to
the law taxing earnings, which had no merit. As to the remaining
two years, the taxpayer did not request redetermination after
receiving the deficiency notices; therefore, he could not contest
the underlying tax deficiencies. No abuse of discretion by the
Appeals officer was found. Reliance on Forms 4340, Certificate of
Assessments, Payments and Other Specified Matters, to satisfy the
verification requirement of Code
Sec. 6330(c)(1) was proper, and the Appeals officer's
refusal to allow the taxpayer to tape the hearing was not a
material error. A penalty was imposed pursuant to Code
Sec. 6673(a) because the taxpayer presented only
frivolous and meritless arguments contrary to established law,
primarily for the purpose of delay. James
G. Gilligan, pro se; Matthew A. Mendizabal, for respondent. MEMORANDUM
OPINION VASQUEZ,
Judge: This case is before the Court on respondent's motion for
summary judgment and to impose a penalty under section
66731 (motion
for summary judgment). Background Petitioner
was born in For
1992, petitioner initially filed a Form 1040, U.S. Individual
Income Tax Return, and reported a tax liability of $4,412.2
Petitioner did not remit payment with his return. On For
1993, petitioner initially filed a Form 1040 and reported a tax
liability of $2,254. Petitioner did not remit payment with his
return. On On
or about On
or about |