TAX COURT OPINION

Case: Earl H. Goshorn, Jr.
Docket Number: 3737-11L
Judge: Kroupa
Opinion Type: bench
Filed: 03/20/2012
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 EARL H. GOSHORN, JR., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. 3737-11 L ) ) ) ) ) ORD E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Judge Diane L. Kroupa at Seattle, Washington on February 29, 2012, containing her oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. March 20, 2012 BR 222012 3 1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Bench opinion by Judge Kroupa February 29,. 2012 Goshorn v. Commissioner Docket No. 3737-11L ,«THE COURT: The Court has decided to render oral findings of fact and opinion in this case, and the following represents the Court's oral findings of fact and opinion. These oral findings of fact and opinion shall not be relied upon as precedent in any other case. This bench.opinion is made pursuant to the authority granted by § 7459(b) and Rule 152. All . section references are to the Internal Revenue Code as amended and in effect for the taxable periods at issue as later defined, and all rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving the proposed collection by levy of the employer's portion of outstanding employment tax liabilities of Steamers Espresso for the first, second and third periods of 2002, 2003 and 2005, all four periods in 2004, the second and third quarter of 2006, the first and third periods of 2009 and the unemployment tax for 2009 (referred to in this opinion as the taxable periods at issue). Petitioner appeared pro se, and Bob Boeshaar appeared on behalf of Respondent. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23. 24 25 4 Findings of Fact. Certain facts are · stipulated. The stipulation of facts, with accompanying exhibits, is incorporated by this reference. The facts are so foun'd. Petitioner operated Steamers Espresso during the years at issue, having eight to 11 employees. Petitioner withheld FICA and other taxes (reportable on Form 941) from the employees' wages. Petitioner made payments each quarter, but failed to file quarterly employment tax returns. Petitioner's only son died in 2001 after a very lengthy illness. Petitioner and his wife failed to file individual tax returns for six years starting in 1997 and continuing through 2003. In addition, Respondent contacted Petitioner in 2005 to request various payroll tax forms that had not been previously filed. Petitioner mistakenly thought that he only needed to file Form 941 once a year and pay the taxes 'with the filing. Petitioner retained the services of Richard Toyer, CPA, in 2010 to help him with his tax issues. Respondent sent Petitioner on July 2, 2010, a Final Notice-Notice of Intent to Levy and Notice of Your Right to a Hearing regarding the delinquent unemployment and employment taxes for the taxable Heritage Reporting Corporation (202) 628-4888 . 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 periods at issue. Mr. Toyer prepared a timely request for a hearing. On the hearing request, Petitioner requested that the penalties and interest for failure to file, deposit and pay employment taxes be abated due to reasonable cause in light of Petitioner's sole son's illness and eventual death in 2001. Petitioner also asserted that he had not been given credit for the fourth quarter payments for 2002, 2003, 2006 and 2009. Once the payments had been properly allocated by Respondent as requested, Petitioner (through his CPA) proposed that an offer in compromise would need to be submitted. Petitioner also stated that the lien filings for other periods were hampering Petitioner's ability to obtain necessary financing. The revenue agent referred the case to Appeals for consideration. Petitioner filed delinquent returns, as well as financial information on Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. Petitioner's CPA and Appeals/Settlement Officer Martin held a telephonic hearing, and Settlement Officer Martin issued to Petitioner on January 11, 2011, a Notice of Determination Concerning Collection Action Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 lo 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Under § 6320 and/or 6330 (Determination Notice). The settlement officer sustained the proposed levy action regarding the taxable periods at issue and sustained the lien filings as to the other taxable periods. Settlement Officer Martin considered the issues Petitioner raised and reviewed the documentation submitted. She determined that Petitioner did not qualify for reasonable cause as the illness must be to such a degree to render the taxpayer physically or mentally incapable of preparing a return or conducting any business activity. SO Martin noted that Petitioner was able to conduct business during the entire period of the son's illness and was able to conduct business in the almost 10 year period since his son's death. SO Martin also explained how Petitioner's payments were applied. SO Martin also noted that during the hearing Petitioner would be making an offer in compromise based on doubt as to collectibility. SO Martin noted that no OIC had been submitted and that furthermore she would be unable to recommend an offer given that Petitioner had equity in assets and would have future income from his business exceeding the outstanding tax liabilities. No other collection alternative was presented. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7 Petitioner timely filed a petition contesting the determinations in the determination notice. Petitioner asserted he relied upon professional help for all the taxable periods at issue and that no professional brought the unpaid tax issues to his attention. He further stated that he obtained a CPA to help him with his tax problems, that he relied upon his CPA and that he. should not be liable for any penalties because his CPA was incompetent. Opinion. We begin with whether we have jurisdiction to review Petitioner's employment tax liabilities. This Court lacked jurisdiction over employment tax liabilities before amendments made to § 6330 gave the Tax Court exclusive jurisdiction in all collection review matters regardless of the type of underlying tax involved. Perkins v. Commissioner, 129 T.C. 58, 63 n.7 (2007); Pension Protection Act of 2006, Pub. L. 109-280, § 855(b), 120 Stat. 1019. This amendment is effective for determinations made after October 16, 2006. Id. Here, the determination notice was issued after the effective date so we therefore have jurisdiction to decide this case. We now address the standard of review. Where, as here, the underlying tax liabilities are not at issue the Court will review this collection review Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 matter on whether Respondent abused his discretion in sustaining the proposed levy action. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). We briefly explain collection procedures. If any person liable for federal tax liability neglects or refuses to make payment within 10 days of notice and demand the Commissioner is authorized to collect the tax by levy on that person's property. See § 6331(a). At least 30 days before enforcing collection by levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person. See § 6331(d). The person is entitled, upon request, o an administrative review hearing before Appeals. Sec. 6330(b) (1). If the taxpayer requests a hearing, he or she may raise at that hearing any relevant issues relating to the unpaid tax or.the proposed levy. Sec. 6330(c) (2). Relevant issues include any appropriate spousal defenses, challenges to the appropriateness of collection and possible alternative means of collection such as an installment agreement or an offer in compromise. Sec. 6330(c) (2) (A). After the hearing, the appeals officer is Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 required to make a determination that addresses issues the taxpayer raised, verifies that all requirements of applicable law and administrative procedures have been met and 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. Sec. 6330(c) (3) (C). The record reflects that the settlement officer properly verified that all the legal and procedural requirements have been met. The settlement officer confirmed, using a transcript of Petitioner's accounts, that assessments were properly made for each taxable period at issue, that appropriate and timely notices were sent regarding the assessments and that Petitioner was properly informed of his rights with respect to the proposed levy action. The record also reflects that the settlement officer addressed the only issues Petitioner raised such as the proper crediting of payments and whether reasonable cause existed. The record further reflects that the settlement officer properly balanced the need for efficient collection of taxes with Petitioner's legitimate concern that any collection be no more intrusive than necessary. Petitioner has not raised any other Heritage Reporting Corporation (202) 628-4888 10 challenges to the appropriateness of collection, did not assert any spousal defenses or otherwise offer any additional collection alternatives. See § 6330(c) (2). Accordingly, these issues are now deemed conceded. Rule 331(b) (4). At trial, Petitioner asked us to abate the penalty because he relied upon a professional regarding his taxes and returns. This we cannot do. Petitioner has failed to establish that the untimely payment of employment taxes and untimely filing were due to reasonable cause. Petitioner essentially makes two arguments. First, Petitioner argues that he relied unconditionally upon professionals he retained to file the returns and report the correct amounts. He also argues that the later retained CPA was incompetent and did not successfully make the settlement officer believe that Petitioner had reasonable cause and should not be held liable for the penalties. The Court recognizes that Petitioner was 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 .21 working with professionals. The Court also recognizes 22 23 24 25 that the Tax Code is complex. The duty to file accurate returns and to pay taxes timely, however, cannot be avoided by placing the responsibility on a return preparer. Loftus v. Commissioner, T.C. Memo Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 1992-266. Nor can Petitioner delegate his duty to file returns and make payments timely. See United States v. Boyle, 469 U.S. 241, 249-250 (1985). Moreover, a preparer's negligence does not constitute reasonable cause. See Baclit v. Commissioner, T.C. Memo 1989-576. Petitioner next argues that we should abate the penalties because of his son's illness and eventual death in 2001. The Court has found reasonable cause where the taxpayer or member of the taxpayer's family experiences an illness or incapacity that prevents the taxpayer from filing his or her tax return. See e.g. Tabbi v. Commission¢r, T.C. Memo 1995-463. On the other hand, the Court has not found reasonable cause where the taxpayer is able to continue his or her business affairs despite the illness or incapacity. See e.g. Judge v. Commissioner, 88 T.C. 1175, 1189-1191 (1987); Jordan v. Commissioner, T.C. Memo 2005-266. Here we find that Petitioner was able to continue his business affairs despite his son's illness and death. We find therefore that these sad circumstances do not constitute reasonable cause. See Judge v. Commissioner, supra at 1189-1191; Jordan v. Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 12 Commissioner, supra. We further note that the approximate 10-year period that Petitioner failed to file returns and pay the taxes undercuts his reasonable cause defense. See Judge v. Commissioner, supra at 1189-1191. In conclusion, we find that Petitioner has not presented any evidence or persuasive arguments to convince us that Respondent abused his discretion. We therefore conclude that Respondent did not abuse his discretion in upholding Respondent's proposed levy action. To reflect the foregoing, decision will be entered for Respondent andjan appropriate order will be issued sustaining the determinations set forth in the Notice of Determination Concerning Collection Actions Under § 6620 and/or 6630 dated January 11, 2011, upon which this case is based, regarding Petitioner's unpaid·employment tax liabilities for the taxable years at issue. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 1:26 p.m. the bench opinion in the above-entitled matter was concluded.) // // Heritage Reporting Corporation (202) 628-4888