TAX COURT OPINION

Case: David W. Lorentz
Docket Number: 16403-12SL
Judge: Holmes
Opinion Type: bench
Filed: 06/19/2013
Pages: 6

UNITED STATES TAX COURT WASHINGTON, DC 20217 SEC DAVID W. LORENTZ, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) O R D E R Docket No. 16403-12SL. 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 transcript of Holmes at St. Paul, Minnesota, containing his oral fact and opinion rendered at was heard. the trial in the above case before Judge Mark V. findings of the trial session at which the case the pages of the In accordance with the oral findings of fact and opinion, a decision will be entered for Respondent. (Signed) Mark V. Holmes Judge Dated: Washington, D.C. June 19, 2013 SERVED Jun 21 2013 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Bench Opinion by Judge Mark V. Holmes May 8, 2013 David W. Lorentz v. Commissioner Docket No. 16403-12SL THE COURT: IN THE CASE OF DAVID W. LORENTZ V. COMMISSIONER, DOCKET NUMBER 16403-12SL, THE COURT HAS DECIDED TO RENDER A BENCH OPINION, AND THE FOLLOWING AND IT'S THE COURT'S BENCH OPINION. This Bench Opinion is made pursuant to the authority granted by section 7459(b) and the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. Mr. Lorentz is a resident of Wisconsin and was when he filed his Petition. He's lived at the same home address since the '70s. He agreed to a stipulation with the government, and that, together 17 with his testimony, constitutes the record in this 18 19 20 21 22 23 24 25 case. The case is about a challenge to a Notice of Determination that Mr. Lorentz received that, in turn, sustained a Notice of Levy by the IRS to collect Mr. Lorentz' '05 and '06 tax bill. In both those years, the IRS had prepared and executed what are called Substitute Tax Returns under its authority in Internal Revenue Code, section 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 6020(b), and then issued Notices of Deficiency to Mr. Lorentz for both years because he had not timely filed the tax return for either 2005 or 2006. The Commissioner then entercd a Notice of 5 Deficiency for 2005 to Mr. Lorentz on July 28, 2008, 6 7 8 9 10 11 and one for 2006 on the same day. .In both, the Commissioner computed Mr. Lorentz's tax and asserted additions to tax, but in neither case did Mr. Lorentz claim the Notice of Deficiency or sign for the certified-mail letters that contained those notices. But he has lived at the same address in Eau Claire, 12 Wisconsin for many years, and he filed late tax 13 14 returns for 2005 and 2006, using the same address, receiving letters from the IRS before and after the 15 mailing of the Notices of Deficiency. 16 17 18 19 20 21 22 23 24 25 The IRS mailed two letters dated October 9, 2008 to Mr. Lorentz; one with a correction to his 2005, and one with a correction to his 2006plate- submitted returns. In both cases, the IRS warned Mr. Lorentz that, "The time involved in responding to your inquiry and in reconsidering the issues questioned on your income tàx return does not extend your time to file a petition with the US Tax Court." In other words, Mr. Lorentz knew, or clearly should have known, that the clock was ticking 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 on his ability to get into Tax Court. The citation there is page 1 of Exhibit 7-J, and similarly, page 1 of Exhibit 8-J. These letters were not sent by certified mail, but we know that he received them. Eventually, having not received anything from Mr. Lorentz in the form of a Petition for the Tax Court, the IRS assessed the deficiencies that it had noticed and finally issued Mr. Lorentz what's called a Final Notice of Intent to Levy and Your 10 Right to a Hearing Under IRC 6330. Now, this is the 11 12 13 14 15 formal notice by the IRS that it's going to start trying to collect the overdue tax bill involuntarily, which can be most unpleasant for the taxpayer involved. So Mr. Lorentz took advantage of his legal right to ask for a CDP or Collection Due Process 16 Hearing. 17 18 19 20 21 22 23 24 2.5 At that hearing, he indicated that he wanted to go through an audit reconsideration of his liabilities for 2005 and 2006 before he discussed collection alternatives. The Hearing Officer set a deadline of May 1st to provide documentation to be included for audit reconsideration, but that date passed without Mr. Lorentz submitting anything further. Section 6330 of the Code limits the issue 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 that I can look at in this kind of situation. It states -- this is section 6330 (c) (2) (b) that, "The person may also raise at the hearing [this means the CDP hearing] challenges to the existence or amount of the underlying tax liability for any taxpayer if the person did not receive any statutory Notice of 7 Deficiency for such tax liability or did not 8 9 10 otherwise have an opportunity to dispute such tax liability." I have to find that the IRS mailed the 11 Notice of Deficiency for both 2005 and 2006 to Mr. 12 13 14 15 16 17 Lorentz via certified mail. The record of the certified mail is in the record. A copy of the outer envelope, indeed, is in the record, and it's clear that Mr. Lorentz did not sign to receive either letter, but he did receive mail at the same address before and after the Notices of Deficiency were 18 mailed. That means that I have to find that he had 19 20 21 22 23 24 25 the opportunity to dispute the liabilities shown on those notices but failed to come to Tax Court. That means that Mr. Lorentz can't raise the underlying liability issues in Tax Court now. And indeed, it is only a challenge to the IRS'S refusal to allow various deductions for his 2005 and 2006 years that Mr. Lorentz wanted to raise this 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 afternoon in Tax Court. Trying to increase the amount of your deductions or reduce the tax in other ways is, indeed, a challenge to the underlying tax liability, and so I have to rule against Mr. Lorentz in this case. I have to conclude, in other words, that the Respondent may proceed with the collection of Mr. Lorentz' federal income tax liabilities for the tax years 2005 and 2006 as described in the Notice of 10 Determination concern1ng collection action under 6320 and/or 6330, dated May 25th, 2012. This concludes the Court's Bench Opinion in this case . Sorry, Mr. Lorentz. (Whereupon, at 4:55 p.m., the above- entitled matter was concluded.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com