TAX COURT OPINION

Case: Allan B. Marks & Rosalind J. Marks
Docket Number: 4864-16L
Judge: Goeke
Opinion Type: bench
Filed: 02/10/2017
Pages: 10

UNITED STATES TAX COURT .WASHINGTON, DC 20217 ALLAN B. MARKS & ROSALIND J. MARKS, Petitioner(s), v. ) ) ) ) ) Docket No. 4864-16 L. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) 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 Miami, Florida on January 13, 2017, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for petitioners. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. February 10, 2017 SERVED FEB 1 3 2017 Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph Robert Goeke January 13, 2017 3 Allan B. Marks & Rosalind J. Marks v. Commissioner 4 5 Docket No. 4864-16L 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 17 other case. This opinion is rendered pursuant to Internal Revenue Code section 7459(b) and Tax Court Rule 152 of the Tax Court Rules of Practice and Procedure. Hereinafter, section references are to the Internal Revenue Code and Rule references are to the Tax Court Rules of Practice and Procedure. The Court has jurisdiction over the present 18 matter based upon section 6330(d) which provides the 19 Court with jurisdiction to review Notices of 20 Determination issued by Respondent to impose 21 collection action on taxpayers who, after hearing 22 with the Internal Revenue Service appeals division, 23 24 25 file a timely request for review of the determination by the appeals division. These are the circumstances of the present case. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 4 1 2 At the time of the filing of the petition in this case, the Petitioners were residents of Coral 3 Gables, Florida. The relative facts concerning this 4 collection case begin before the issuance of .the . . . 5 Notice of Intent to Levy regarding income tax for the 6 year 2012 which was issued on August 27th, 2015. The 7 Petitioners, Mr. and Mrs. Marks, have had a series of 8 9 10 11 12 13 14 15 16 unconventional issues regarding the payment of their income tax liabilities. And for 2012, they had entered into an installment agreement to pay their delinquent liability. Because they breached a condition of that agreement it was terminated in the summer of 2015. They sought to reinstate a similar .. agreement and thereby obviate the levy proposed in the August 27th, 2015 notice. This began a confused series of misstarts 17 with IRS personnel where one IRS employee was working 18 with them on a compromise and almost simultaneously 19 20 21 22 23 24 their case was being processed as a collection hearing case under section 6330. Whether because of this confusion or some other IRS administrative failure, Petitioners Form 443F and related information which was sent on December 9th, 2015 to the settlement officer assigned to their case in 25 Memphis, Tennessee, was 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 not acknowledged as received by the settlement officer. As a result, the appeals officer in 3 Memphis, Tennessee issued a Notice of Determination 4 prematurely based upon the incorre_ct assertion that 5 Petitioners had not provided information which was 6 7 8 9 10 requested by the appeals office in Memphis, which information the appeals office asserted was necessary to support an installment agreement in a timely fashion. Following receipt of the Notice of 11 Determination Petitioners timely filed a petition 12 which results in the current matter before this 13 Court. Counsel for Respondent, to the credit of 14 15 counsel, upon realizing the circumstances of the issuance of the Notice of Determination conferred 16 with Petitioners and determined that the case should 17 18 19 be remanded to the appeals division for further negotiation. As a result, Respondent filed a motion seeking to remand which was unopposed by the 20 Petitioners. That motion was granted in an Order of 21 22 23 24 25 this Court on August 21st, 2016. Unfortunately, the remand to appeals of this case was again subject to miscommunication and administrative errors by the IRS appeals office. It is also apparent from the circumstances that the IRS 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 appeals office in Memphis, Tennessee had an obvious rush to issue a Supplemental Notice of Determination and did not take the time to carefully consider the 4. . circumstances of Petitioner'.s case.. . ._ 5 6 The timing of the events is revealing. On September 6th, 2016 the settlement officer called 7 Petitioner, Mr. Marks, and sent a letter in whichshe 8 9 10 11 12 13 stated Petitioners needed to submit a completed Form 433A and also make payments such that they were current on their 2015 and 2016 tax liabilities before an installment agreement could be reached. Her deadline for these complex actions was September 20th 2016, only two weeks from her communication to the 14 Petitioners. Petitioners, surprisingly, actually 15 16 17 18 19 20 complied with this very short timeframe, at least in large part. They sent a Form 433A which was received by the IRS on September 20th, 2016. This correspondence which Petitioner sent also included the copy of a check in the amount of $14,000 payable to the IRS, which was dated September 15th, 2016, 21 which Petitioners believed satisfied completely their 22 23 24 25 2015 tax liability. Petitioners admitted at trial that they had not completed all of their 2016 estimated tax payments by September 20th, 2016, but they had made one estimated tax payment for 2016. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 On September 19th, 2016 the settlement officer left a phone message with Mr. Marks stating she looked forward to receiving his information but not indicating...any_precipitous.events would. transpire following her receipt of the information or based upon the failure of Mr. and Mrs. Marks to provide the information. Despite the information and check 8 Petitioner sent on September 19th, 2016 which was 9 received on September 20th, 2016, the appeals office 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 issued a Supplemental Notice of Determination on September 23rd, 2016. It is noteworthy that in addition to the check and the Form 433A which was sent to the appeals office in Memphis, Petitioners on September 19th, 2016 also sent copies of their bank records. The Supplemental Notice of Determination issued by the appeals division on September 23rd, 2016 summarizes the rationale for the Notice as follows: "Since you did not provide signed Form 433A and make the appropriate estimated tax payments for the tax year 2016 by the deadline date of September 20, 2016, the proposed levy action is sustained. Our determination is based on our review of the available information in the administrative file." This statement in the Supplemental Notice of Determination 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 is false in that Petitioners had submitted a Form 433A by September 20th and it also overlooks the fact that Petitioners had made a significant payment on .4 ..their tax liabilities the .year .201Ý, as..noted 5 6 7 8 9 10 11 previously. We believe Petitioner's payment of the $14,000 and their submission of the information after such a short time was provided demonstrates good faith on their part in an effort to reach an agreement with the Internal Revenue Service about a renewed installment agreement. The question remaining in this case is 12 whether to sustain the appeal's Supplemental 13 Determination based solely on Petitioner's failure to 14 15 fully make the 2016 estimated tax payments, despite the failure of the appeals office to acknowledge -the 16. Form 433A Petitioner submitted and the failure of the 17 18 19 20 21 22 23 24 25 appeals office to enter into any negotiations with the Petitioners that might have resulted in an installment agreement. In support of Respondent's argument that the appeals officer's Supplemental Determination should be sustained, Respondent maintains that the settlement officer did not abuse her discretion in refusing the entertain collection alternatives. This is based upon Respondent's argument that the failure 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 to make the estimated tax payments obviated any need for the appeals office to enter into negotiations 3 with the Petitioners. Respondent cites Otto's E-Z 4 Clean.Enterprises v. Commissioner,.._T.C. Memo 2008-54 5 6 7 8 9 and McCorkle v. Commissioner,A2003-34. Respondent's counsel also asserts that although it was error or it may be considered error that the settlement officer overlooked the submissions Petitioners made on September 20th, 2016, this error was harmless because 10 Petitioners still had not made the estimated tax payment. 11 12 We have reviewed the case cited by 13 Respondent's counsel and we don't find them to be 14 15 16 applicable to the current situation. In those cases, the failure of the Petitioners to make payments were clear and there was no effort on the part of the 17 Petitioners to reach a compromise or make any 18 19 20 21 22 23 accommodations to the Internal Revenue Service. Those facts are certainly in opposite of the current situation. The problem here is that the appeals determination falsely claimed Petitioners did not submit the appropriate form and that they did not, in the appeals determination, acknowledge that 24 Petitioners had made a substantial payment of their 25 tax liabilities for the year 2015. These actions we 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 find to be arbitrary and inconsistent with a reasoned effort to balance the need of the efficient tax collection with Petitioner's legitimate efforts to . reach a less _intrusive._resolu.t_ion of their liabilities. We find the actions of the Memphis appeals office to be unreasonable under these facts and also to be an abuse of discretion. We find Petitioners have demonstrated good faith regarding the 2&rt 10 effort to reach an installment agreement in that the 11 12 13 abrupt actions of the appeals office were unwarranted given Petitioners prompt response to the request for information on September 6th, 2016. We realize that 14 Petitioners are chronically delinquent in their tax 15 16 17 liabilities but the year before us is 2012 and focusing on that year alone and the circumstances that relate to that year, we find that the 18 Petitioners have demonstrated good faith and that had 19 20 21 22 23 24 25 the Memphis appeals office negotiated in the same fashion with Petitioners, a resolution of this matter was likely to have been reached and there was no need for the litigation which has resulted. Accordingly, we do not sustain the proposed collection action and a decision will be entered for the Petitioners. This concludes the Court's Oral 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 11 Findings of Fact and Opinion in this case. (Whereupon, at 9:47 a.m., 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