TAX COURT OPINION

Case: James Scott Sparkman
Docket Number: 9278-08L
Judge: Goeke
Opinion Type: memo
Filed: 12/28/2009
Pages: 10

T .C . Memo . 2009-30 8 UNITED STATES TAX COUR T JAMES SCOTT SPARKMAN, Petitioner v . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket Nos . 9278-08L, 9279-08L . Filed December 28, 2009 . James Scott Sparkman , pro se . Jonathan J . Ono , for respondent . MEMORANDUM OPINIO N GOEKE,' Judge : These consolidated cases involve respondent's efforts to collect income taxes and section 6672' trust fun d recovery penalties through lien and levy . Jurisdiction is base d upon section 6330(d) . Petitioner's sole argument is that he doe s 'Unless otherwise indicated, all section references are to the Internal Revenue Code . SERVED DEC 2 8 2009 not owe 'the income tax liabilities . As we will explain, thi s argument is not available to petitioner in this collection case , and we uphold respondent's determinations . Backgroun d Petitioner was a resident of Hawaii'when the petitions wer e filed . Before trial, responden t filed motions to show cause wh y proposed facts in evidence should not be accepted as establishe d in these two consolidated dockets . After consideration of petitioner's reply to the motions, the facts proposed were accepted as established, and the exhibits attached to the motion s were deemed admitted into evidence . There is no othe r stipulation of facts, but petitioner testified at trial . Respondent's collection efforts involve these liabilities : Tax Period Type of Tax Assessed Amount Du e 1996 1997 1998, 1999 2000 200203 200303 200306 Income Income Income Income Income Sec . 6672 Sec . 6672 Sec . 6672 $51,962 .7 1 54,21 .0 .5 4 32,753 .0 4 117,933 .1 2 44,470 .5 1 298 .6 4 4 ;753 .3 5 2,933 .7 5 On October 5, 2006, respondent issued t petitioner a Notic e of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (NFTL) ._ . A notice of intent to levy was issued to petitioner - 3 - on August 12,2006, in response to which he :.submitted .a timel y request for a collection due process (CDP) hearing ., Petitione r timely submitted . his request for a CDP hearing to respondent in response to theNFTL . Petitioner's request for a CDP hearing contained the following statements : Several months ago 7-14-2006 I requested a payment plan no response . I"never,breached .any prior payment plan . .I have also requested a CDP hearing 4 times now . More importantly 1-do not owe the tax assessed . The case is in 9th Circuit Appeals . Your agent omitted evidence at trial . Your agent fabricated evidence at trial . I told your office-not to file a lien several times yet IRS did anyway . This has been noted and will be dealt with per code 7433 . Petitioner's delinquentincome(cid:127)tax .:liabilities for years 1996 through 2000 arose-fromassessments .that were made following the issuance of"a statutory notice of deficiency to him on March 28,,2003 .-,Petitioner timely filed a petition with this Court in response to the notice of deficiency . Sparkman v . .-Commissioner , docket No . 8400-03 . After a trial''was conducted-on June 22, 2004, the. Court filed a Memorandum Findings of Fact and opinion in docket No . 8400-03 on June 13, 2005 . Sparkman v . Commissioner , T .C . Memo . 2005-136 . A decision in docket No . . 8400-03 was entered on December 15, 2005, finding that petitione r was liable for the following : 4 - Tax Year Deficiency Sec . 6651(a)(1 ) Sec . 6662(a ) Additions to Ta x .1996 1997 1998 1999 2000 $22,364 $5,591 .00 $2,516 .0 0 23,665 15,290 61,028 29,490 5,916 .25 3,822 .50 2,753 .2 0 1,613 .2 0 9,154 .20 10,704 .8 0 --- 3,460 .6 0 .-Petitioner timely filed a notice of appeal in the case at docket No . 8400-03, and the case was appealed to the U .S . Court of Appeals for .the Ninth Circuit . The-Court of Appeals filed its opinion on December .10, 2007, and entered a judgment in that case on February 1, 2008, affirming the decision of this Court . Sparkman .. v . Commissioner , 509 F .3d 1149 (9th Cir .,2007) . No -petition for certiorari was timely filed,, in docket No . 8400-03 . Respondent assessed income tax deficiencies and additions to tax forsthe years 19.96 through 2000 in May and June 2006, pursuant to the .. decision of the Court in docket No . 8400-03 . The income tax liability for : 000 was assessed on July 3, 2006 . For the taxable quarterly periods,ending March 31 ., 2002, March 31, 2003, and June 30, 2003 ;(cid:127)-respondent determined that petitioner was liable for trust fund recovery 'penalties under section 6672 as a person required to collect,-account for, and pay over withheld employment taxes for a business entity known a s Mercury Solar .. . Respondent assessed the section 6672 penalties against petitioner, on August 16, 2004 . Before the assessment respondent sent petitioner by certified mai'1 a'-'Letter 11-53, Trus t .Funds Recovery Penalty Letter, dated May 10, 2004 , which provide d him -with 'an opportunity to 'appeal or-protest ' the '-proposed section . 6672 penalties : Petitioner - received the -Letter 1153- 6 May 12 , 2004', but submitted no,' timely app-eal -or protest . Forms '=4340,m Certificate of Assessments, 'Paym'ents,' and Other Specifie d Matters, were issued, to petitioner -wi'th 'respect to -,the assesse d section 6672 penaltie s After considering petitioner'~s request for a CDPhearing, o n March 20, 2009, respondent' s Appeal s Office issued-,a Notice o f uet.erm i and/or 6330 ' (notice -o f determination) determination stated in We have discussed the taxpayer's appeal with .him ;on 'several occasions . In each'of these discussions, and in written correspondence, . the taxpayer has-steadfastly held to' the,position'that he .doesnot owe the individual income tax-amounts assessed against-him . Most recently,-he states thispositionin aletter dated .Marche 2, 21008 .,_ ,He has also stated on''a number .of occasions that he feels that theproposed .levy action is not" legal .since- he ha_d appealed-the decision by the United States 'Tax"Court .to the'Ninth Circuit'Court o f Appeals ; ' We. have, advised the, taxpayer-that IRC § 6330 ;(c) (2) (b ) 'does :not allow'°a taxpayer to challenge the existence or .the amount' of'the liability if the taxpayer had .a prior opportunity to~'dispute -the, liability . 'WeMhave noted -that' the taxpayer's"=assessments we're made-based - onm a '' decision' by' the" United States Tax Court . This clearl y gave'the taxpayer an opportunity .to dispute the' amount of the l'iability . We . also advised the taxpayer that he could"have-forestalled-assessment andreollection of the tax . as determined by the Tax Court by ' filing an appeal bond . Since he did not do so, assessment and subsequent proposed collection action was appropriate . We also advised the taxpayer that based .on documentation we received from the . administrative case file relating to assertion of the Trust Fund Recovery Penalty, : the postal records indicate he received Letter 1153 but he did not make a timely appeal of the proposed assertion of the Trust Fund Recovery Penalty . Accordingly, IRC § 6330(c) (2) (b) does not . allow a taxpayer to challengethe existence or the amount of the liability whet he had a prior opportunity to dispute the liability . We have also given the taxpayer a reasonable period of time to discuss a collection alternative for payment of his accounts . Consideration of a collectio n alternative has been difficult since the taxpayer continues to take the position that the income tax assessed against him is not correct . He made it clea r in his letter of March 2, 2008, that he expects Appeals will process his amended tax returns and allow the ,depreciation he claimed on his amended returns . He completely ignores the decisions by the courts . In fact, he states that the Ninth Circuit Court of Appeals merely "rubber stamped" the decision by the Tax Court . However, even'-'if the taxpayer acknowledged liability for the amounts assessed against him, we are unable to determine the taxpayer's ability to pay his delinquent accounts . The financial information provided by the taxpayer does not lead to a collection alternative . The taxpayer provided a Collection Informatio n .. Statement for . Individuals , Form 433-A dated : May 30, The primary concern with the information on Form 2007 . 433-A is that the taxpayer indicates he has living expenses of $10,500 but listed income of only $1,,600 per month . Included in his living expenses are mortgage-payments on'two properties totaling $8,100 per month and a car payment of $850 per month . Since these . payments cannot be made on income of $1,600 . per month, we believe that,we have an incomplete picture of the taxpayer's, .actual financial condition . Incomplete financial information does not, . enable us to determine an appropriate, collection alternative .., . :We .. have determined that the * * * [filing - of ;the notice of Federal -tax lien] '; was appropriate under the circumstance "s'>'pr:esented " 'in this- case .', " . We' "have given the taxpayer a reasonable period of time to . discuss the issues he raised inhis appeal . 'The'"fact 'that the taxpayer has'not * * * [presented any basis for 'withdrawing - the ' Lien ] and has not' provided complete financial" information leave's Li s - unable to determine an appropriate' # collectio nr°alternative -We are "left with no alternative to sustaining ,* **[ the filing of the notice t'of °.Fede'rah"h tax l' ien] - ;* (cid:127)*- * .' m A similar notice of determination°' was''-issu ed""regardin g 6320-(c) or 6330(d), petitioner continued to,contest his assesse d income 'tax deficiencies' and alleged -, in 'part : This°was-not--justice° but . alegate stunt, or at best ;-an error which .I ..sought' to correct with a due proces s 'hearing - The' LTEN and aLEVY are unjust and not ii correct they were obtained by"illegal, negligent and fraudulent IRS -collectionmaneuvering . IRS Collection due process ... agent did not take a new objective view ofd the cas e T3 . .e t . ' f .. y Discussio n Section 6320 (a) requires the Secretary to notify th e taxpayer ' administrative hearing on the matter .. Section-6330 provides a similar hearing opportunity before a proposed'levy . Section 6320°(b) affords the taxpayer the right t o fair hearing with respect to an NFTL .before an impartia l .hearing officer . Section 6320'(c) requires that th e administrative hearing be conducted pursuant to section 6330(c At the hearing a taxpayer may raise any relevant issues, including appropriate spousal defenses, challenges to the appropriateness of :,the . : collection action, and possible collection alternatives . Sec . . 6330(c)(2)(A) .. A-taxpayer is precluded, however, from contesting the existence or amount of the underlying tax liability unless the taxpayer did not receive a notice of deficiency for the,tax liability,in question,or did not otherwise have an opportunity to dispute the . tax liability . Se e sec . 6330(c)(2)'(B) ;,. Sego v . Commissioner, 114 T .C . 604, 60 9 (2000) On the basis of petitioner's request for a CDP hearing, th e petition filed, and :his position at trial, petitioner is attempting to contest his assessed income tax liabilities . As a statutory matter he is precluded under section 6330(c) .(2)(B) from doing so in this proceeding since a notice of deficiency was issued to him . Furthermore, not only did petitioner receive a notice of deficiency for his delinquent income tax liabilities for the years 1996 through 2000 ; he also litigated the liabilities in this Court and appealed the adverse decision to the Court of Appeals for the Ninth Circuit, which affirmed this Court's holding . Petitioner's arguments regarding his income tax 'liabilities are precluded ; im these: co'llection cases .' See Stroube V . Commissioner , 130 T .C : . 257 (2008 ) Such-a' challeng e in these case6 is . .also' precludedby res"4 j"udicata . Following a hearing, the-Appeals ,% Officer -must-issue LL a notic e of '=determination regarding the'validity'of the filed Federal tax lien.'-or proposed levy . If the taxpayer disagrees with the . Appeals -Office's 'determination, the_ .taxpayer-ma .y seek judicial, reviewbbyappealing to this'Court .Sec ._6330(d) . .Where the validity of .:the , uhdera'ying °tax =liability is ':properly .-at Tissue , the-Court reviews the .determiriation regarding the underlying tax liability de novo . Sego v ." Commissi.oner ,' supra at -610 ;- Goza v . Commissioner , 114 1 .C . 176, 181-182 (,2000) 'Where the validit y of the underlying tax liability is not properly at issue, th e Court reviews-the determination of the Appeals Office for abus e of discretion . Sego v . Commissioner , supra at 610 ; Goza v . Commissioner , supra at 182 . Section 6672(a) imposes a penalty (commonly known as a trus t fund recovery"penalty) on any person required to collect, truthfully account for, and-pay, over tax who willfully fails to do so or who willfully attempts to evade or defeat any such tax . At trial petitioner did not contest his section 6672 trus t fund recovery penalty assessments . Nevertheless, he may not do 2Petitioner, in conjunction with these cases , also filed a .motion for leave 'to fi l e .a motion to vacate the decision in docket No .. 8400-03 .' This motion was denied on Sept .'10, ;2009 .' - 10 - so'in any event because he previously received by certified mail from-respondent a,Letter 1153, which proposed the assessment of the subject penalties and provided him with an opportunity to appeal or protest said assessments . For purposes of section 6330(c)(2) .(B),, petitioner has previously had an opportunity to dispute the underlying, section 6672 penalties See Mason v . Commissioner ,,132 T .C . (2009) (slip op . at 30) . In conclusion, respondent di'd not abuse his discretion regarding the proposed collection actions-and may proceed by means .of the NFTL and,the proposed levy'to collect-petitioner's tax liabilitiesifor the years«in issue . ,To reflect-the-foregoing, Decisions will be entered fo r respondent .