TAX COURT OPINION

Case: Vincent Joseph Gillespie
Docket Number: 29996-11L
Judge: Gustafson
Opinion Type: bench
Filed: 02/20/2013
Pages: 13

UNITED STATES TAX COURT WASHINGTON, DC 20217 VINCENT JOSEPH GILLESPIE, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 29996-11 L. ) ) ) ) OR D 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 herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge David Gustafson at Boston, Massachusetts, on February 7, 2013, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) David Gustafson Judge Dated: Washington, D.C. February 20, 2013 Capital Reporting Company 3 1 2 Bench Opinion by Judge David Gustafson February 7, 2013 3 Vincent Joseph Gillespie v. Commissioner 4 5 6 7 8 9 Docket No. 29996-11L THE COURT: The Court has decided to render the following as its oral Findings of Fact and Opinion in this case, which shall not be relied on as precedent in any other case. This Bench Opinion is made pursuant to the authority granted by section 7459(b) 10 of the Internal Revenue Code, and Rule 152 of the Tax 11 Court Rules of Practice and Procedure. 12 13 14 This "collection due process" ("CDP") case is an appeal·by petitioner Vincent Joseph Gillespie pursuant to 26 U.S.C. section 6330(d), asking this 15 Court to review the IRS's determination to sustain a 16 17 18 19 20 21 22 23 notice of Federal tax lien to collect petitioner's unpaid income tax, penalties, and interest for the year 2006. By our prior order of April 2, 2012, we held that we have jurisdiction over the notice of lien but not jurisdiction over a notice of proposed levy nor jurisdiction to redetermine a deficiency of tax. The IRS later filed and served a motion for summary judgment as to the remainder of the case; the 24 Court's order of December 6, 2012, directed Mr. 25 Gillespie to file a response; he did not do so; and 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 the Court granted the IRS's motion in an Order and 2 Decision entered on January 9, 2013. However, on 3 January 25, 2013, the Court received from Mr. 4 Gillespie a motion to vacate and reconsider on the 5 6 grounds that he had not ·-- ulat ne nau not eceived respondent's motion for summary judgment nor the 7 Court's order of December 6, 2012, directing him to 8 file a response. The Court held a hearing on the 9 motion to vacate and reconsider at the calendar call 10 11 12 13 in Boston, Massachusetts, on February 4, 2013; and the Court granted Mr. Gillespie's motion. Trial was then held that same day. Mr. Gillespie represented himself, and Carlton King represented respondent. 14 Exhibits 1-R through 18-R from the administrative 15 16 17 18 19 20 21 22 record were received into evidence without objection, and Mr. Gillespie's Exhibits 19-P through 26-P were received into evidence over respondent's objection. As we held in our order of January 9, 2013, "Because of his prior opportunity in connection with a notice of proposed lev , Mr. Gillespie may not challenge his underlying liability in this suit, and we may not review it. See sec. 6330(c) (2) (B)." At trial Mr. 23 Gillespie did not challenge his underlying liability 24 25 but rather contended only that the IRS's Office of Appeals erred by declining to reinstate an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company Installment Agreement ("IA") that he alleges it previously entered into with him and then wrongfully terminated. We find no error in Appeals' handling of 5 the case. FINDINGS OF FACT Mr. Gillespie did not pay his self-reported 2006 income tax of roughly $10,000; and by 2009 he also owed interest and penalties of roughly $5,000, for a total liability of about $15,000. The IRS contacted him about this liability in June 2009 (Exhibit 21-P) and stated the total due as of that date to be $15,251.46. Sometime in about August 2009, Mr. 1 2 3 4 5 6 7 8 9 10 11 12 13 Gillespie had a telephone conversation with an IRS 14 15 16 employee named Ms. Hewitt. In that conversation he expressed his desire for an IA, and he was told that he could have an IA calling for payment of $260 per 17 month for each of 60 months -- which would yield a 18 19 20 21 22 23 24 25 total of $15,600. As a result of that conversation, Mr. Gillespie believed that Ms. Hewitt had agreed with him (on behalf of the IRS) if he made those payments, they would fully alleviate his 2006 liability and that no additional interest or penalties would accrue against him. We are convinced that this was his subjective belief about the conversation. However, Mr. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 Gillespie did not prove at trial, and we do not find 2 3 4 5 6 7 8 9 that Ms. Hewitt actually made such a commitment. On August 28, 2009, the IRS sent Mr. Gillespie a letter (Exhibit 20-P) stating the terms of his IA. The letter IA provided that "penalty and interest charges continue to accumulate until your account is paid in full." The IA also provided, "When someone doesn't meet the terms of their Installment Agreement, we cancel it." 10 Because the August 2009 IA differed from Mr. 11 Gillespie's understanding that penalty and interest 12 13 14 15 16 17 18 19 20 21 would stop accruing, he wrote letters disputing this term (Exhibits 22-P, 23-P), but he made a small number of monthly payments in the hope that the IRS would relent. However, the IRS responded to the effect that interest and penalties would continue to accrue (Exhibits 24-P to 26-P); so Mr. Gillespie stopped making the payments since he believed the IRS was reneging on the agreement and that his payments would not have the full-payment effect to which he had agreed. Because of his failure to make the 22 monthly payments, the IRS terminated the IA in 23 24 25 January 2010. (Exhibit 1-R at 6.) In March 2011 the IRS sent Mr. Gillespie a notice of Federal Tax lien filing (Exhibit 2-R). In 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 April 2011 he requested a CDP hearing before IRS 2 3 4 5 6 7 8 9 Appeals (Exhibit 3-R), which request was timely as to the notice of lien. His request asserted that "the IRS wrongly terminated my installment agreement which I had with the IRS." The IRS acknowledged his request by a form letter dated April 20, 2011 (Exhibit 4-R). By a letter of June 7, 2011 (Exhibit 8-R), Appeals explained, "For me to consider alternative collection methods such as an installment 10 agreement ..., you must provide ... {a) completed 11 Collection Information Statement (Form 433-A for 12 13 14 15 16 17 18 19 20 21 22 23 24 25 individuals including all supporting documentation.)" In August 2011 Mr. Gillespie provided some information, but he admits he did not submit a Form 433-A financial statement. By letter of October 17, 2011 (Exhibit 13-R), Appeals repeated the request for the Form 433-A; but in telephone conferences held November 3 and 11, 2011, and confirmed by letter of November 22, 2011 (Exhibit 14-R), Mr. Gillespie declined to submit the Form 433-A. He explained that he did not want a new IA but rather that he believed the IRS should reinstate the former IA with the understanding that the 60 payments of $260 would fully satisfy his liability without further accrual of penalties or interest. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 Appeals did not reinstate any IA. Rather, on November 23, 2011, Appeals issues its Notice of 3 Determination (Exhibit 1-R) sustaining the notice of 4 lien. On December 23, 2011, Mr. Gillespie timely 5 mailed his petition to this Court, commencing this 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 suit. At trial Mr. Gillespie's sole contention was that Appeals erred by failing to grant him, whether as a new agreement or as a reinstatement of the old agreement, an IA providing that 60 monthly payments of $260 per month would fully satisfy his 2006 liability, without further accrual of interest or penalties. I. Collection Due Process principles OPINION When a taxpayer fails to pay any Federal income tax liability after demand, section 6321 imposes a lien in favor of the United States on all the property of the delinquent taxpayer, and section 6323 authorizes the IRS to file notice of that lien. However, the IRS must provide a written notice of a tax lien filing to the taxpayer within five business days. After receiving such a notice, the taxpayer may request an administrative hearing before Appeals. Sec. 6320 (a) (3) (B), (b) (1). Administrative revlew 1s carried out by way of a hearing before Appeals 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 pursuant to section 6330(b) and (c); and, if the taxpayer is dissatisfied with the outcome there, he can appeal that determination to the Tax Court under section 6330(d), as Mr. Gillespie has done. For the agency-level CDP hearing before Appeals, the pertinent procedures are set forth in section 6330 (c). II. Burden of proof and standard of scope of review As petitioner, Mr. Gillespie bears the burden of proof. See Rule 142(a) (1). Mr. Gillespie makes no contention that the burden has shifted for any reason, and we see no basis in the record for such a contention. In considering Appeals' denial of a collection alternative, such as an IA, the Court reviews the administrative determination for an abuse of discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). The United States Court of Appeals for the First Circuit has adopted the record rule and has held that, in such a review, we are confined, with limited exceptions, to the administrative record developed in the CDP hearing before IRS Appeals. 23 Murphy v. Commissioner, 469 F.3d 27, 31 (1" Cir. 24 2006). However, in this case it is debatable 25 whether, in considering whether the IRS had reneged 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 on an Installment Agreement, we review simply Appeals' discretionary denial of a collection alternative or whether we also or in the alternative review other issues: If Appeals refuses to recognize an existing IA, perhaps Appeals' thereby fails to conduct the verification required by section 6330 (c) (1) that requirements of law and procedure have been met; or perhaps it errs in identifying unpaid tax (see sec. 6330 (c) (2) (A)) when that tax is ultimately owing but not yet due under the IA. We, therefore, cannot tell whether the First Circuit would apply the record rule in this circumstance; and we, therefore, overruled the IRS's objection and allowed Mr. Gillespie to present evidence outside the administrative record. III. Installment Agreement Appeals declined to enter into an IA on the terms that Mr. Gillespie proposed -- i.e., that 60 19 monthly payments of $260 would fully satisfy his 2006 20 21 income tax, penalties, and interest without further accrual of penalties and interest during those 60 22 months. We hold that Appeals was entitled to decline 23 24 25 this proposal whether it is considered a new IA or a reinstatement of an alleged old IA. A. New IA 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 Appeals treated Mr. Gillespie's position as the proposing of a new IA; and i herefore led him to fulfill the requirements for entering into a new IA -- i.e., including the submission of financial information about himself on Form 433-A. Mr. 6 Gillespie did not submit that information. At trial 7 Mr. Gillespie argued that in the CDP hearing, Appeals 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 cannot require financial information on Form 433-A because the form lacks an OMB control number and therefore violates the Paperwork Reduction Act. This contention has no merit. See Pitts v. Commissioner, T.C. Memo. 2010-101. As we have often held, it is not an abuse of discretion for Appeals to decline to accept a collection alternative when the taxpayer fails to provide financial information to support the alternative. See, e.g., Huntress v. Commissioner, T.C. Memo. 2009-161. Therefore, we hold that Appeals did not abuse its discretion by failing to consider and agree to a new IA. B. Reinstatement of old IA Mr. Gillespie contends, however, that he was not really proposing a new IA and that he should not have been required to produce new financial information. 25 Rather, he was, he contends, simply asking the IRS to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 7 8 9 adhere to a prior IA that he had already shown himself to be entitled to and that the IRS had accepted. However, for two main reasons, this contention is not availing. 1. No one at the IRS agreed to the alleged terms. The term critical to Mr. Gillespie and denied by the IRS was that, he asserts, penalties and interest were not to continue to accrue after the IA was 10 entered into, but rather his monthly payments of $260 11 12 13 14 15 16 17 18 19 for 60 months would fully satisfy his 2006 liability. He convinced us that he believed he had reached such an agreement with the IRS, but he did not convince us that, in fact, Ms. Hewitt of the IRS had the same understanding. Apart from Mr. Gillespie's testimony, there is no other evidence of such a deal. Every subsequent writing from the IRS included the standard IA terms that penalties and interest would continue to accrue. The likely fact is that Mr. Gillespie 20 misunderstood and/or that from his own assumptions he 21 22 23 24 25 filled in blanks in his conversation with Ms. Hewitt. 2. No one with authority agreed to those terms. Mr. Gillespie's position is that when Ms. Hewitt agreed to his critical term, he reached an oral 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 2 3 4 5 6 7 8 9 10 11 12 agreement that was binding on the IRS (and that was contradicted by the IRS's subsequent written IA). However, to establish the existence of such an agreement with the Government, Mr. Gillespie must show that "the Government representative who entered or ratified the agreement had actual authority to bind the United States." Martin v. United States, 102 Fed. Cl. 779, 785 (2012). He made no showing that Ms. Hewitt, nor anyone else in the IRS, was authorized to agree to his critical term in an IA by way of an oral agreement, and we are not aware of any such authority. The only possible IA between Mr. 13 Gillespie and the IRS is the written agreement marked 14 15 16 17 18 19 20 21 22 23 24 25 as Exhibit 20-P, which Mr. Gillespie ultimately rejected. The IRS was within its rights to cancel the old IA when Mr. Gillespie stopped making payments on it, and Mr. Gillespie did not fulfill the requirements for a new IA. Therefore, Appeals did not abuse its discretion, nor otherwise err, when it upheld the filing of the lien. Decision.will be entered for respondent. This concludes the Court's oral Findings of Fact and Opinion in this case THE CLERK: All rise. 866.488.DEPO www.CapitalReportingCompany.com 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Capital Reporting Company (Whereupon, at 8:42 a.m., the above- entitled matter was concluded.) 14 866.488.DEPO www.CapitalReportingCompany.com