TAX COURT OPINION

Case: Carnell Specks & Cheryl Specks
Docket Number: 25236-11L
Judge: Goeke
Opinion Type: bench
Filed: 02/12/2014
Pages: 9

obaHed Goeke UNITED STATES TAX COURT WASHINGTON, DC 20217 CARNELL SPECKS & CHERYL SPECKS, ) Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) Docket No. 25236-11 L. ) ) ) ) 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 the 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 Houston, Texas, on January 15, 2014, 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, an order and decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. February 12, 2014 SERVED FEB 1 8 2014 Capital Reporting Company 3 1 2 Bench Opinion by Judge Joseph Robert Goeke January 15, 2014 Docket No. 25236-11L 3 Carnell Specks and Cheryl Specks 4 5 6 7 8 9 10 11 12 13 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. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. This opinion is rendered pursuant to Rule 152 of the Tax Court Rules of Practice and Procedure, and under the authority of section 7459(b) of the Internal Revenue Code. Hereinafter, rule references 14 will be to the Tax Court Rules of Practice and 15 16 17 18 19 20 21 22 23 24 25 Procedure, and section references will be to the Internal Revenue Code. Under Rule 152(b), this opinion will be recorded, and a transcript of this proceeding and the pages reflecting the opinion will be served upon the parties by the clerk of the Court. The present case is before the Court based upon our jurisdiction under section 6330(d)(1) to review determinations of the Internal Revenue Service relative to proposed collection action when a timely petition is filed after the Internal Revenue Service has issued a notice of determination sustaining 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 collection action after an administrative hearing. In the present case, the Petitioners filed a timely petition, and at the time they filed the petition, they were residents of Texas. Respondent issued a notice of determination to the Petitioners on October 6, 2011, and sustained proposed collection action relative to income tax liabilities for the year 2006. The notice of determination notes that additional penalties and interest also are accruing, and that the penalties and interest as of October 10, 2011, amounted to $22,963.22. The notice of determination notes that the taxpayers had originally requested a administrative hearing regarding the year 2004, but the income tax liability for 2004 has been paid in full. The notice of determination also notes that the taxpayers had requested a hearing for 2005, but their request was not timely, and they were provided a separate hearing 19 which was not subject to judicial review relative to 20 21 22 23 24 25 the year 2005 and the notice of proposed levy for the year 2005. The parties' positions in the present case were clearly set forth in their pretrial memorandums and in the positions taken at trial. The parties entered into a stipulation of facts and testimony was 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 elicited from Petitioners' representative at trial. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 The facts are not in dispute. However, the implication of those facts with respect to the issuance to the Petitioners of a notice of deficiency is the basis for the parties' respective legal positions. Petitioners maintain they did not receive the notice of deficiency, which included the year 2006, and they maintain that such notice of deficiency was not issued in accord with their rights, because they were never given the right to an administrative hearing with Appeals before the issuance of the notice of deficiency. Respondent's position is that the notice of deficiency was properly sent to Petitioners' address and that Respondent is not required to provide an administrative appeals hearing before the issuance of the notice of deficiency. Respondent also maintains that Petitioners' underlying liability for the year 2006 should not be in issue at the present time, because in the settlement hearing offered to the 22 Petitioners in the present matter, the Petitioners 23 24 25 were given the chance to provide information to challenge the underlying liability for 2006 and failed to provide any support for their position that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 they did not owe additional tax for 2006. Respondent states that the Petitioners were provided with an opportunity to challenge the underlying liability through audit reconsideration, and thus Respondent did not rely upon the restriction in section 6330 which does not permit a taxpayer to raise the underlying liability in a collection due process hearing after the issuance of a notice of deficiency. 10 Because of the question about whether the 11 Petitioners actually received the notice of 12 13 14 15 16 17 18 deficiency, Petitioners were permitted to submit evidence about the underlying liability, but Respondent maintains and Petitioners have not disputed that Petitioners failed to present any evidence concerning the underlying liability. Rather, the Petitioners argued that the assessment itself was invalid, because they were not provided 19 with an appeals hearing prior to the issuance of the 20 21 22 23 24 25 notice of deficiency, as previously explained. This Court has held that if a taxpayer has failed to properly raise an issue in the settlement hearing provided by section 6330, the Court will not review the issue de novo in the review proceeding provided by section 6330(d). Giamelli v. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 Commissioner, 129 T.C. 107, 113 (2007). We believe that case is applicable to the current situation, and that Petitioners' failure to provide any evidence about the underlying liability now precludes us to reinvestigate that. But in any event, Petitioners provided no evidence at the trial of this case regarding the underlying liability, so there is no basis to challenge the amounts Respondent determined in the notice of deficiency for 2006 and the liability which is currently the subject of collection action. The present case involves the issuance of a notice of intent to levy. A notice of intent to levy was issued to the Petitioners on November 2, 2009. The Petitioners filed a request for a collection due process and equivalency hearing on or about November 29, 2009. Petitioners did not request a collection alternative in request for a collection due process hearing, and they provided no information that would support a collection alternative during their appeals process. As stated previously, the settlement officer did permit the Petitioners to seek review of the underlying liabilities for 2006 during the settlement hearing provided by section 6330. 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.Capita1ReportingCompany.com Capital Reporting Company 8 1 Petitioners declined to provide any evidence to 2 3 4 5 support their challenge to the underlying liability and simply sought to discuss the fact that they were not offered an appeals hearing prior to the issuance of the notice of deficiency, which Petitioners 6 maintain causes the assessment following the issuance 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the notice of deficiency to be invalid. The question of the validity of the assessment is different than whether the Petitioners actually owed the underlying amount. That question concerns whether Respondent was required to provide administrative appeals hearing before the issuance of the notice of deficiency. There is significant case law relative to that question. In Caltaldo v. Commissioner, 60 T.C. 522 (1973), the Court stated specifically that providing an administrative hearing is not essential to the validity of a notice of deficiency. The Court cited several cases in support of this proposition, from the Tax Court as well as various Courts of Appeals, and this proposition has remained unchallenged to the present day. Petitioners offer no citations that would support their assertion that the notice of deficiency should be deemed invalid as a basis for assessment in 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 the present case, so regardless of whether the 2 Petitioners actually received the notice of 3 4 5 6 7 8 9 deficiency, we find that the assessment was valid since the notice was properly issued, and the Respondent made the assessment after a petition period to the United States Tax Court had expired. The fact that the Respondent did not provide an administrative hearing to the Petitioners before the issuance of the notice does not invalidate 10 the assessment for the reasons previously explained. 11 Given the fact that we find Petitioners' legal 12 13 14 15 16 17 18 19 20 21 22 argument to be flawed and that the Petitioners have not provided any factual information to the settlement officers involved, both with respect to the underlying liability and with respect to collection alternatives, we are left with no alternative but to sustain the findings of the collection officers. We also find that the collection officers did properly balance the need for collection with the inconvenience and the financial hardship that might be present based upon the collection from the 23 Petitioners, and that they have fulfilled the 24 25 requirements of section 6330. Given those circumstances, we sustain Respondent's collection 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company action in the present case, and a decision will be entered for the Respondent. This concludes the Court's oral findings of fact and opinion in this case. 10 (Whereupon, at 12:37 p.m., the above- enittled 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 2 4 25 866.488.DEPO www.CapitalReportingCompany.com