TAX COURT OPINION

Case: Willie W. Walker
Docket Number: 8354-11L
Judge: Kroupa
Opinion Type: bench
Filed: 05/03/2012
Pages: 16

SEC UNITED STATES TAX COURT WASHINGTON, DC 20217 WILLIE W. WALKER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) Docket No. 8354-11L 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 to petitioner and to respondent a copy of the pages of the transcript of the proceedings in the above case before Judge Diane L. Kroupa at Las Vegas, Nevada on March 15, 2012, containing her oral findings of fact and opinion. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. April 30, 2012 (cid:16)042l SERVED May 03 2012 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 BENCH OPINION BY JUDGE DIANE L. KROUPA WILLIE W. WALKER V. COMMISSIONER DOCKET NO.: 8354-11L MARCH 15, 2012 3 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 Section 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the years 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 filing of a Notice of Federal Tax Lien to collect from Petitioner his unpaid tax liabilities for 2004, 2005, and 2006 (collectively the years at issue). Mr. Walker appeared Pro Se, and Suzanne Warren appeared on behalf of Respondent. FINDINGS OF FACT Certain facts :are stipulated. The stipulation of facts, with accompanying exhibits, 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 4 incorporated by this refèrence. The facts are so found. Petitioner resided in Nevada when he filed the collection review petition. Petitioner failed to file a Federal income tax return for any of the three years at issue. Indeed, he has not voluntarily filed a tax return since 1999. Respondent therefore prepared substitutes for returns for the three years at issue, and sent Petitioner deficiency notices for all the years at issue. The deficiency notices were sent by certified mail to Petitioner at his last known address at the time, but were returned to the IRS by the U.S. Postal Service as undeliverable. Petitioner did not petition this Court to dispute the deficiency notices. Respondent thereafter assessed the tax, penalties, and interest for the years at issue. Petitioner failed to pay the assessed liabilities, so Respondent sent Petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under Section 6320. The lien notice advised Petitioner that a Notice of Federal Tax Lien had been filed in Clark County, Nevada, with respect to Petitioner's unpaid taxes for the years at issue, and Heritage Repbrting 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 5 informed Petitioner that he could receive a CDP hearing. Petitioner timely filed a request for a hearing in response to the lien notice. Petitioner checked 21 of 22 items in a form CDP hearing request attachment letter, identifying various irrelevant assertions. For example, Petitioner checked the line next to the notice of intention for audio recording. Respondent's settlement officer scheduled a telephonic CDP hearing and notified Petitioner of the date and time. She gave Petitioner the opportunity to dispute the liabilities for the years at issue by asking Petitioner to provide the income tax returns for these years. She also requested a completed Collection Information Statement and informed Petitioner that he needed to file the required tax returns for 2007, 2008, and 2009, which were all delinquent as of the time of the hearing. Th'e settlement officer also informed Petitioner that he needed to.withdraw all frivolous arguments and issues to be entitled to a face-to-face CDP hearing. Petitioner wrote back that he would submit documents at a face-to-face hearing that he would audio record. The settlement officer again reminded 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 him that he did not qualify for a face-to-face CDP hearing because he had not provided the requested financial information and delinquent tax returns. She gave him an additional two weeks to provide the requested documents and asked him to call her for the scheduled tefephone conference. Petitioner responded with another letter demanding a face-to-face hearing, yet never called for the conference. He also'failed to provide the requested information. Without any additional information from Petitioner, Respondent iOsued the Determination Notice upholding Respondent's proposed collection action with respect to Petitioner's income tax liabilities for the years at issue. Respondent determined that Petitioner had failed to supply financial information for the settlement officer to consider any collection alternatives or other remedies. Nor did Petitioner provide any collection alternatives to the settlement officer. Petitioner timely filed a petition with this Court, alleging that Respondent erred in denying him a face-to-face CDP hearing, and not letting him contest the underlying tax liability. Petitioner asks that we Heritage Reporting Corporation (2021) 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 remand his case back to Appeals for a face-to-face hearing. Although Petitioner seeks to contest the underlying liabilities for the assessed amounts, he was given the opportunity to contest the underlying liabilities if he would have filed the returns to the settlement officer to consider. In addition, he failed to provide any financial information and failed to file tax returns for 2007, 2008, and 2009. Petitioner subsequently filed an amended petition, adding two issues to his prior petition. In particular, Petitioner objects to Respondent's alleged "levies" and argues that he did not have the opportunity to raise collection alternatives. At trial, Petitioner focused on his obligation to file tax returns and pay the tax. He raised protestor arguments, including.that private individuals are not required to file tax returns, and that no one has shown him why he is required to file. If someone does explain this requirement to him, which the Court did, then he agreed that he would start filing tax returns. OPINION We are asked whether to sustain Respondent's collection action set forth in the Determination Heritage Reporting Corporation (202) 628-4888 8 Notice. Where, as here, the validity of the underlying tax liability "is not properly placed at issue, the Court will review Respondent's determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). We must decide whether Respondent exercised his direction arbitrarily, capriciously, or without sound basis in fact or law. See Woodral v. Commissioner, 112 T.C. 19, 23 (1999). Petitioner seeks to contest the underlying tax liability Respondent assessed. This he cannot do here as he was given the opportunity to contest the underlying liability with the settlement officer. Moreover, Petitioner provides no financial information or other evidence, nor makes any specific allegations of error in the petition other than protestor arguments about private iindividuals not being required to file tax returns. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 . In other words, he raised no meritorious 21 22 23 24 25 arguments regarding the underlying tax. The petition must include clear and concise assignments of each and every error the taxpayer alleges to have been committed by the Commissioner, and issues not raised in the petition are deemed conceded. Rule 34(b) (4). 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 As Petitioner has raised no meritorious arguments and has conceded all nonfrivolous arguments, we hold that Petitioner is liable for the assessed tax for the years at issue. Next we turn to collection proceedings and begin with a brief overview. If any person liable for Federal tax liability neglects or refuses to make payment, a lien in favor of the United States is imposed on all property and rights to property of that taxpayer. See Sec. 6321. The lien arises when the assessment is made and continues until the tax liability is satisfied or the statute of limitations bars enforcement of the lien. Sec. 6322. If the taxpayer fails to pay, the Commissioner files a lien with the appropriate State office to validate the lien against any purchaser, holder of a security interest, or judgment lien creditor. Sec. 6323(a); Lindsay v. Commissioner, T.C. Memo. 2001-285. The Commissioner is required to furnish the taxpayer with written notice that a lien was filed. Sec. 6320. The person may then request administrative review of the matter in the form of an Appeals Office hearing similar to collection by levy. Sec. 6320(c). Heritage Repörting Corporation (202) 628-4888 10 If the taxpayer requests a hearing, he or she may raise at that hearing certain relevant issues. 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 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). Petitioner assérts that Respondent abused his discretion by denying Petitioner's request for a face to-face CDP hearing that he could audio record. Although this Court held in Keene v. Commissioner, 121 (cid:16)042 T.C. 8 (2003) that the settlement officer must make an audio recording of a CDP; hearing under Section 7521(a) (1), we have also held that it would not be productive to remand a collection case to Appeals so the taxpayer can tape record the CDP hearing if the 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 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 taxpayer has made only frivolous arguments. Kemper v. Commissioner, T.C. Memo..2003-195; see also Lunsford v. Commissioner, 117 T.C. 183, 189 (2001). We find the Kemper facts to be the same as here. Petitioner has only advanced contentions and arguments that the Court has found to be frivolous. In addition, we have consistently held that face-to-face CDP hearings are not required under Section 6330. Katz v. Commissioner, 115 T.C. 329 (2000) (taxpayer not entitled to face-to-face hearing; telephone conference procedurally proper); Leineweber v. Commissioner, T.C. Memo 2004-17 (face-to-face hearing not required; prior telephone conversations and correspondence constitutes CDP hearing). Moreover, although extensive correspondence has passed between Petitioner and the Appeals Office, Petitioner has continued throughout the process to insist on his right to an in-person hearing. We provided Petitioner an opportunity before the Court at the trial session in Las Vegas to identify any legitimate "issues he wished to raise that could warrant further consideration of the merits of his case by the Appeals Office or this Court. Petitioner merely continued to focus, however, on the denial of a hearing and offered no 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 substantive issues of merit. The record therefore does not indicate that any purpose would be served by remand or additional proceedings. The Court concludes that we can decide all pertinent issues relating to the propriety of the collection determination. We will not remand. Petitioner next asserts, in his amended petition, that he did no$ have an opportunity to address collection alternatives. It is not an abuse of discretion for Appeals to reject collection alternatives and sustain the proposed collection if the taxpayer fails to submit the requested financial information. Prater v. Commissioner, T.C. Memo. 2007- 241; Chandler v. Commissioner, T.C. Memo. 2005-99. In doing so, Appeals simply followed the requirements of Section 301.6320-1(e) (1), Proced. & Admin. Regs., and Rev. Proc. 2003-71, 2003:2 C.B. 517. Next, no abuse of discretion occurs if Appeals fails to consider whatever collection alternatives a taxpayer may submit if the taxpayer has a history of noncompliance with the tax laws, and was not in compliance with current tax obligations as Petitioner here. In doing so, Appeals followed the requirements of the regulations. See Sec. 301.6320- 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 13 1(d) (2), Q&A-D8, Proced. & Admin Regs. (the IRS does ont consider offers in compromise from taxpayers who .have not filed required returns or have not made certain required deposits of tax); see also Internal Revenue Manual, pt. 5.8.3.4.1 (Sept 1, 2005); 5.19.1.6.2(3) (June 27, 2005). Here, Petitioner failed to provide any collection alternatives, resorting instead to making frivolous arguments. The Court frowns upon Petitioner's failure to provide collection alternatives and his refusal to provide financial information and to participate in a telephonic CDP hearing. In this regard, issues not raised to Appeals cannot later be raised to the Court. Giamelli v. Commissioner, 129 T.C. 107 (2007). Finally, Petitioner asks us to review Respondent's alleged levy of his assets. We cannot. The Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The Tax Court's jurisdiction is contingent upon the issuance of a valid determination notice and the filing of a timely petition. Offiler v. Commissioner, 114 T.C. 492, 498 (2000). Heritage Reporting Corporation (202) 628-4888 1 2 3 The Determination Notice, dated March 8, 2011, upon which this case is based, relates to the Notice of Federal Tax Lien, and does not address any 4 . levy actions. Accordingliy, we do not have 14 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 jurisdiction to hear Petitioner's arguments regarding Respondent's alleged levy. The record refliects 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 year 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 lien filing. The record also 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. We find theGefore that Respondent did not abuse any discretion in sustaining the collection action. Petitioner has not raised any valid challenges to the appropriateness of collection, did not assert any spousal defenses, or otherwise offer 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 15 any collection alternatives. See Sec. 6330 (c) (2). Accordingly, these issues are now deemed conceded. Rule 331(b) (4). Petitioner's continued refusal to file voluntarily any Federal income tax returns as far back as 1999 dictates that the Court consider imposing a penalty under Section 6673, which authorizes the Tax Court to require a taxpayer to pay to the United States a penalty up to $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay, or that the taxpayer's position in such proceedings is frivolous or groundless. Petitioner's tactics have consumed valuable Government resources. These tactics should not be condoned. They damage the integrity of the Federal tax litigation system because the time and attention the Court and Respondent must devote to these frivolous arguments deprives other taxpayers with genuine controversies. See Abrams v. Commissioner, 82 T.C. 403, 412 (1984). When the Court has been faced with groundless arguments that waste the Court's and Respondent's limited time and resources, we have consistently found that;the taxpayer deserves a 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 16 penalty under Section 6673(a) (1), and that penalty should be substantial if iit is to have the desired deterrent effect. The purpose of Section 6673 is to compel taxpayers to think and to conform their conduct to settled tax principles. Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); see also Grasselli v. Commissioner, T.C. Memo. 1994-581. We note that Petitioner appears to have come around on his tax reporting and payment obligations. We will take him at his word that he will file tax returns, and he acknowledges that he has a filing and payment requirement. We also are thankful that Petitioner was polite and not belligerent as other protestors. We therefore reluctantly do not impose a penalty against Petitioner at this time. We strongly caution him, however, that should he bring similar arguments before this Court in the future, the Court is likely to impose such a penalty, ¿p to $25,000, against him. To reflect the foregoing, decision will be entered for Respondent and an appropriate order will be issued sustaining the determinations set forth in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, dated March Heritage Rep*orting 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 17 8, 2011, upon which this case is based, regarding the unpaid liabilities for 2004, 2005, and 2006. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 4:57 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888