TAX COURT OPINION

Case: Chunlei Guo & Hao Yin
Docket Number: 1274-14SL
Judge: Goeke
Opinion Type: bench
Filed: 05/18/2015
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 CHUNLEI GUO & HAO YIN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 1274-14SL. ) ) ) ) ORDER 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at San Francisco, California, on May 1, 2015, containing his oral findings of fact and opinion rendered at the trial session at which the case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. May 18, 2015 S®WD MAY 2 Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph Robert Goeke May 1, 2015 3 Chunlei Guo & Hao Yin v. Commissioner 4 5 Docket No. 1274-14SL THE COURT: The Court has decided to render 6 Oral Findings of Fact and Opinion in this case, and 7 8 the following represents the Court's Oral Findings of Fact and Opinion. The Oral Findings of Fact and 9 Opinion shall not be relied upon as precedent in any 10 11 12 13 14 15 16 other case. This case was heard pursuant to the provisions of Internal Revenue Code section 7463 in effect when the petition was filed. Pursuant to section 7463(b), the decision to be entered is not reviewable by any other Court. The Court has jurisdiction over the present 17 matter based upon our authority to review notices of 18 19 20 determination made by the Respondent after timely request for a hearing of Respondent's proposed collection activity. In the present case, 21 Petitioners sought such review of a Notice of Intent to Levy. 22 23 At the time the petition was filed, the 24 Petitioners were residents of the state of 25 California. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 Petitioners received separate notices of determination regarding the taxable year 2010, in Respondent's attempt to collect federal income taxes for that year. Based upon the testimony of the 5 Petitioner and the facts as stipulated by the 6 parties, including various records, Petitioners 7 maintained that a refund which was reflected on the 8 9 federal income tax return they filed for 2010 was paid over by the Respondent to the Financial 10 Management Service for the payment of a non-tax debt 11 12 13 and Petitioners did not receive the refund. Subsequently, Respondent determined that there was a deficiency for the year 2010, and 14 Petitioners agreed to the assessment of that 15 16 17 18 19 20 21 22 23 24 25 deficiency amount by signing a form CP-2000. At trial, Petitioners maintained that it was inappropriate for Respondent to not seek the money back from the Financial Management Service after Respondent determined the deficiency, and that the $8861 should be applied against their deficiency. They also believed that Respondent should offset their deficiency by a refund in a subsequent year, which Respondent acknowledged Petitioners were entitled to, but then subsequently used as an offset of the employment tax liabilities of Petitioner wife. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 Section 6331(a) of the Internal Revenue Code, and all section references hereinafter are to the Internal Revenue Code, authorizes the IRS to levy upon property and property rights of a taxpayer liable for tax if the taxpayer fails to pay the tax 6 within 10 days of notice and demand for payment. See 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 section 6671(a). Section 6330(a) provides that no levy may be made unless the IRS notifies the taxpayer of the taxpayer's right to a hearing. That is what has happened in the present case, and the taxpayers timely requested a hearing, which was held before an impartial settlement officer, pursuant to section 6330(b)(3). The Petitioners at that hearing made arguments similar to the arguments made at the trial of this case, regarding Respondent's retention of the initial refund and use of that refund to pay a non-tax debt, as well as Petitioners' argument that the refund for a subsequent year should not have been used to pay the employment tax liabilities. Regarding the amount Respondent applied to a non-tax debt, we reference section 6402(d). And based upon that section, this Court simply does not have jurisdiction to revisit Respondent's allocation 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 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 of the $8861 to the Financial Management Service. The Treasury department's payment of this non-tax debt, pursuant to section 6402(d), is generally required when the Secretary of the Treasury receives notice of any federal agency that asserts that a named taxpayer owed past due, legally enforceable debt to such agency. Pursuant to section 6402(d), any overpayment to such person may be intercepted to pay the agency debt, and this interception takes precedence over a taxpayer's direction of the overpayment and how the taxpayer would like the overpayment to be credited. Section 6402(d)(2) and procedural and administrative regulation section 301.6402-6(g)(3). Pursuant to section 6402(f), the Court lacks jurisdiction to restrain or review any reduction made by the Secretary under section 6402(d). Therefore, we cannot address Petitioners' argument in this regard, and relative to that argument, we sustain Respondent's collection action. We next turn to Petitioners' argument that they should not be deemed to have waived their rights to review of the underlying liability by their execution of form CP-2000. Petitioners were given 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 the opportunity to contest the underlying liability, and having been given that opportunity and not contested the liability, they no longer may contest the liability in this collection due process action. See Aguirre v. Commissioner, 117 TC 324 (2001), and Perez v. Commissioner, TC Memo 2002-274. Finally, regarding Petitioners' argument that Respondent should not have applied a subsequent refund to resolve employment tax liabilities or trust 10 fund recovery penalty liabilities of the Petitioner 11 wife, we find Petitioners' argument to fail because 12 13 14 Respondent has the authority to direct such overpayment as Respondent chooses under the circumstances; that this is not a payment for which 15 Petitioners could direct the payment to be applied as 16 17 18 19 they direct it. We do not believe Respondent's use of the payment to satisfy an outstanding tax liability of one of the Petitioners is an abuse of discretion. We 20 must determine whether the appeals officer correctly 21 22 23 24 25 verified that the requirements of applicable law have been met, and that the taxpayers' concerns about the intrusiveness of the collection action were properly balanced against Respondent's need for collection pursuant to section 6330(c). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 We also must determine whether the settlement officer correctly determined that the claimed defenses of the Petitioner which we previously discussed were not applicable. We believe the settlement officer's determinations were correct, and accordingly we sustain the proposed collection action via levy. This concludes the Court's Oral Findings of Fact and Opinion in this case. (Whereupon, at 11:41 a.m., in the above- entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com