TAX COURT OPINION

Case: Janet Ann Phillips
Docket Number: 20026-05L
Judge: Colvin
Opinion Type: bench
Filed: 07/31/2008
Pages: 11

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 JANET ANN PHILLIPS, ET AL . Petitioner, * * V. Docket No . 20026-05 COMMISSIONER OF INTERNAL REVENUE Respondent . * * ORDE R '2j3974-06-T-& . RE CORDED SERI: ICE CAL . STAT . .TWC,E TFILES _,_ Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above cases before Judge Joseph R . Goeke at Knoxville, Tennessee, on June 17, 2008, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, decisions will be entered for respondent . (Signed) Joseph Robert Goeke Judge DATED : Washington, D .C . July 31, 2008 SERVED AUG 12006 2 1 Bench Opinion by Judge Joseph R . Goeke June 17, 2008 2 Phillips v . Commissioner Docket No . 20026-05L , 3 23974-06 L 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion, and the following 6 represents the Court's oral findings of fact an d 7 opinion in this case . The oral findings of fact and 8 opinion shall not be relied upon as precedent in any 9 other case . 10 This bench opinion is rendered pursuant to 11 section 7459 of the Internal Revenue Code . 12 Hereinafter references to sections are to sections in 13 the Internal Revenue Code . 14 This case involves respondent's attempt t o 15 collect via levy a balance owed regarding income tax 16 for 2002 and the $500 penalty under section 6702 for 17 the year 2004 . 18 Respondent filed motions for summary 19 judgment in both of these dockets and also seeks the 20 section 6673 penalty in both dockets . The facts are 21 not disputed, except that the petitioner maintains she 22 did not receive the notice of deficiency for 2002 . 23 She, however, admits that it was mailed to her 24 parents' address which was the last address she 25 provided the respondent at the time the notice o f Heritage Reporting Corporation (202) 628-4888 3 1 deficiency was mailed . 2 We find that both these cases are subjec t 3 properly to the summary judgment procedures . We will 4 first address the year 2004 . 5 The petitioner filed a purported 2004 Form 6 1040, U .S . Individual Income Tax Return, listing all 7 zeroes for income, despite the fact that she earned 8 $52,327 in wages during 2004 . The underlyin g 9 deficiency related to the 2004 year was decided in 10 respondent's favor in a recent Tax Court opinion , 11 Phillips v . Commissioner , T .C . Memo . 2008-9 . In that 12 opinion, the Court admonished Ms . Phillips that the 13 continued argument of frivolous positions before the 14 Tax Court could result in the imposition of the 6773 15 penalty against her . 16 Petitioner attached two pages to her 17 purported 2004 income tax return which set fort h 18 arguments that have not only been rejected by the Tax 19 Court and other courts but have also served as th e 20 basis for the imposition of penalties pursuant to 21 section 6673 . 22 Because respondent was not required to and 23 did not issue a notice of deficiency relating to the 24 frivolous penalty for 2004, the Petitioner ma y 25 challenge the underlying liability in this case . We Heritage Reporting Corporatio n (202) 628-4888 4 1 agree with respondent's determination that the 200 4 2 Form 1040 was, in fact, frivolous . See U .S .v . Schiff , 3 379 F .3d 621 (9th Cir . 2004) . Accordingly, we fin d 4 that the frivolous return penalty was properly imposed 5 by respondent pursuant to section 6702 . 6 The collection actions that led to this case 7 for 2004 began when respondent sent petitioner a final 8 notice, notice of intent to levy, and Notice of You r 9 Right to Hearing, dated May 8, 2006 . The petitioner 10 timely filed Form 12153, Request for Collection Due 11 Process Hearing , on May 30, 2006 . Respondent' s 12 settlement officer sent a letter to the petitioner on 13 September 6, 2006, informing the petitioner that she 14 did not qualify for a face-to-face hearing because the 15 frivolous arguments asserted in her request for a CDP 16 hearing did not merit a face-to-face hearing . 17 The September 6, 2006, letter set a time for 18 a telephone conference to be held on September 27 , 19 2006 . Petitioner sent a letter to respondent, stating 20 that she intended to record this telephone conference . 21 After receipt of that letter, the settlement officer 22 postponed the telephone conference . The settlemen t 23 officer then sent a letter to the petitioner on 24 October 3, 2006, stating that in accordance with 25 respondent's policy, a telephone hearing could not be Heritage Reporting Corporatio n (202) 628-4888 5 1 recorded . She offered the petitioner her choice of a 2 telephonic hearing without recording or a hearing by 3 correspondence and requested financial informatio n 4 from the petitioner . 5 The petitioner then sent a letter to the 6 settlement officer on October 10, 2006, seeking a 7 conference in person . The settlement officer sent 8 petitioner a letter on October 10, 2006, to clarify an 9 error in her October 3, 2006, letter and setting a new 10 telephone conference date of October 24, 2006 . Th e 11 settlement officer also requested that petitioner file 12 her delinquent 2005 income tax return and an y 13 financial statements to be considered prior to the 14 date of the telephone conference . 15 The October 10, 2006, letter also informed 16 the petitioner that collection alternatives could not 17 be considered unless the petitioner filed he r 18 delinquent 2005 income tax return . After the 19 petitioner failed to submit additional information and 20 did not call at the appointed time, the respondent 21 sent to petitioner a notice of determinatio n 22 concerning collection action under section 6320 and/or 23 6330, dated October 30, 2006, with respect t o 24 petitioner's frivolous return penalty liability for 25 2004 . Heritage Reporting Corporation (202) 628-4888 6 1 The petitioner argues in her petition that 2 the settlement officer erred in not allowing her a 3 face-to-face CDP hearing . Respondent asserts that 4 because petitioner did not make any nonfrivolou s 5 arguments in her request for a CDP hearing , a face-to- 6 face hearing would not have been productive . 7 Respondent cites Ball v . Commissioner , T .C . Memo . 8 2006 - 141 and Kozack v . Commissioner , T .C . Memo . 9 2005-246 . 10 We provided the petitioner the opportunity 11 at the hearing on the summary judgment motion in this 12 case to state what arguments or what position sh e 13 would have raised had she had a face-to-face hearing 14 with the appeals officer . We are convinced that she 15 would not have raised any nonfrivolous arguments in 16 such a hearing . 17 Accordingly, we find that respondent did not 18 abuse his discretion in denying petitioner a face-to- 19 face hearing , and we find that such a face - to-fac e 20 hearing is unnecessary under Lunsford v . Commissioner , 21 117 T .C . 183 , 189 (2001 ) . Finally , we determine that 22 there was no abuse of discretion regardin g 23 respondent ' s attempt at collection action relative to 24 the year 2004 frivolous return penalty . 25 We now move to 2002 . Petitioner's only Heritage Reporting Corporatio n (202) 628-4888 7 1 nonfrivolous argument in opposition to the motion for 2 summary judgment regarding 2002 is that she did no t 3 receive the notice of deficiency . The undisputed 4 facts in support of respondent's motion are that the 5 petitioner failed to file a 2002 Federal income tax 6 return and that respondent prepared a substitute for 7 return pursuant to section 6020(b) . 8 It is also undisputed that responden t 9 subsequently issued a statutory notice of deficiency 10 for the 2002 year on May 28, 2004, and the information 11 provided by respondent in support of the motion fo r 12 summary judgment establishes that this notice o f 13 deficiency was sent to petitioner's last known address 14 by certified mail . The information submitted b y 15 respondent in support of the motion for summary 16 judgment also establishes that the notice o f 17 deficiency was returned as unclaimed . 18 Petitioner admits that the address to which 19 the notice of deficiency was sent for 2002 was he r 20 parents' address and that she had previously provided 21 that address to respondent . She asserts, however , 22 that respondent should have known her address had 23 changed to a P .O . box, but she also admitted at the 24 hearing that she was uncertain when she advise d 25 respondent of the P .O . box address . Respondent's Heritage Reporting Corporation (202) 628-4888 8 1 records establish that she did not advise respondent 2 of the P .O . box until after the notice of deficiency 3 for 2002 was mailed . 4 On the facts of this case, we find no abuse 5 of discretion by respondent disallowing petitioner's 6 request to contest the underlying liability in he r 7 2002 hearing . We find respondent correctly applied 8 section 6330( c)(2)(B), because the statutory notice 9 was sent to petitioner's last known address and 10 voluntarily returned . Therefore, we agree with 11 respondent's determination that petitioner may not 12 contest the 2002 liability in this section 633 0 13 proceeding . 14 The facts of the 2002 collection activity 15 are as follows : Respondent sent to petitioner a final 16 notice, notice of intent to levy, and Notice of Your 17 Right to a Hearing (the collection due process notice) 18 dated May 23, 2005, advising petitioner tha t 19 respondent intended to levy to collect unpai d 20 liabilities for 2002 and that the petitioner coul d 21 receive a hearing with respondent's Office of Appeals . 22 The petitioner timely filed Form 12153, Request for a 23 Collection Due Process Hearing, on June 22, 2005 . 24 The settlement officer sent a letter to the 25 petitioner on September 1, 2005, informing the Heritage Reporting Corporation (202) 628-4888 9 1 petitioner that the petitioner did not qualify for a 2 face-to-face hearing because of the frivolou s 3 arguments asserted in petitioner's request for a 4 collection due process hearing . The September 1, 5 2005, letter also set a time for a telephon e 6 conference to be held on September 19, 2005 . The 7 petitioner did not call on that date and did no t 8 provide a telephone number to which respondent could 9 call her . 10 The settlement officer issued a letter on 11 September 19, 2005, allowing the petitioner 1 4 12 additional days to contact the settlement office r 13 prior to the issuance of a notice of determination for 14 2002 . The petitioner contacted the settlement officer 15 on September 21, 2005, and the settlement officer held 16 a hearing over the telephone with the petitioner a t 17 that time . Petitioner ended that telephone hearing 18 abruptly . Subsequently , respondent sent a notice of 19 determination concerning collection action date d 20 September 28, 2005, with respect to the 2002 tax 21 liability . 22 We are not persuaded by petitioner' s 23 arguments that the case should be remanded for a-tfpce- 24 to-face hearing with Appeals . Once again, we asks the 25 petitioner at the hearing on the motion for summar y Heritage Reporting Corporation (202) 628-4888 1 0 1 judgment what arguments she would make in tha t 2 context , and we are not persuaded that she would make 3 any nonfrivolous arguments to the appeals officer, and 4 therefore , we find Lunsford is applicable to the 2002 5 year as well . 6 We also find no abuse of discretion b y 7 respondent regarding the issuance of the notice of 8 determination for the 2002 year having found tha t 9 petitioner could not raise the underlying liability 10 for that year and that petitioner's other assertions 11 relative to the 2002 year are frivolous . 12 Finally , in both the motions for summar y 13 judgment , respondent argues that petitioner should be 14 subject to the section 6673 penalty because thes e 15 actions were brought for delay and because petitioner 16 was advised in Phillips v . Commissioner , T .C . Memo . 17 2008 - 9, that she could be subject to the addition to 18 tax under section 6673 if she continued to mak e 19 frivolous arguments primarily for delay . 20 Based upon the facts of this case and the 21 petitioner ' s arguments at the hearing, we ar e 22 concerned that respondent ' s position is correct i n 23 this regard , and we find that the petitioner should be 24 subject to the additional penalty under section 6673 25 in the amount of $ 500 in each of the docket s Heritage Reporting Corporation (202) 628-4888 1 1 respectively . An appropriate order and decision will be ordered in each of the dockets in conformity with thi s opinion . This ends the Court's oral opinion in thes e dockets . (Whereupon, at 9 :51 a .m ., the bench opinio n in the above-entitled matter was concluded . ) /1 I/ 1 2 3- 4 5 6 7 8 10 11 1/ II 1 2 13 14 15 16 17 I I 18 19 20 / I 21 /1 22 /1 2 3 24 25 Heritage Reporting Corporation (202) 628-4888