TAX COURT OPINION

Case: Frank Timothy & Kim Stolarczyk
Docket Number: 5012-12L
Judge: Buch
Opinion Type: bench
Filed: 05/07/2013
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 FRANK TIMOTHY & KIM STOLARCZYK, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R D E R Docket No. 5012-12L. Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit with this Order to both petitioners and respondent a copy of the transcript of findings of session at St. Paul, Minnesota. fact and opinion that was rendered at the trial in this case that contain the oral the pages of the trial In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Ronald L. Buch Judge Dated: Washington, D.C. May 7, 2013 SERVED MAY - 8 2013 Capital Reporting Company 3 1 Bench Opinion by Judge Ronald L. Buch 2 April 25, 2013 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Frank Timothy & Kim Stolarczyk v. Commissioner Docket No. 5012-12L 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 may not be relied upon as precedent in any other case. This opinion is in conformity with Internal Revenue Code section 7459(b) and rule 152(a) of the Taxf Court Rules of Practice and Procedure. Any section references that follow refer to the Internal Revenue Code in effect during the years at issue, and rule references are to the Tax Court Rules of Practice and Procedure. Background On August 1, 2011, the IRS issued to Mr. Stolarczyk a Notice of Intent to Levy and Notice Of Your Right to a Hearing. The account summary accompanying that letter showed a balance due for 2006 through 2009 inclusive of $14,829.77. Mr. and 25 Mrs. Stolarczyk completed the enclosed Form 12153, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 Request for a Collection Due Process or Equivalent 2 Hearing. On that form, they did not request lien 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 subordination, discharge, or withdrawal. The only issue raised was: "We are requesting to follow the IRS audit reconsideration process per your IRS letter dated July 14, 2011 from your Fresno, California office by Mary Brisban." The Case Activity Record is consistent with this view. The Appeals Officer noted "taxpayer offered no collection alternative." On January 18, 2012, the IRS sent to Mr. and Mrs. Stolarczyk separate notices of determination. A timely petition followed. That notice of determination included an attachment with an explanation. For 2006 and 2007, the additional tax was as a result of adjustments made through an examination. According to the administrative record, the adjustments were agreed to during the examination, and there is no testimony disputing that. In an apparent inconsistency with that, in their Reply to the Answer in this case, petitioners state that they chose not to petition the Tax Court concerning the liability. It is unclear whether this refers to their underlying liability, but to the extent there is a conflict in the record, it does not 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 change the outcome. See section 6330 (c) (2) (B). For 2008, the tax was self-assessed with the filing of a return with insufficient withholding credits to satisfy the liability. For 2009, the liability is a result of the reversal by the IRS of a refundable credit. 1 2 3 4 5 6 7 8 Underlying liability 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Where the underlying tax liability is properly at issue, we review the Commissioner's determination de novo; where the validity of the underlying tax liability is not properly at issue, we review the Commissioner's administrative determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). If raised at a hearing by the taxpayer, a taxpayer's underlying liability is properly at issue if the taxpayer did not receive a notice of deficiency for the liability or otherwise have an opportunity to /2 dispute that tax liability. Se ec. 6330(c) (2) (B). Here, there is a conflict in the record, but that conflict is of no consequence. If the record is correct that the Stolarczyks agreed to the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 tax liability in 2006 and 2007, then they may not now dispute that liability. If the Stolarczyks received a notice of deficiency and chose not to petition the tax court, then again, they may not dispute that liability now. Either way, the Stolarczyks had the opportunity to dispute their underlying liability and we review the collection determination for abuse of discretion. As already noted, the Stolarczyks did not propose any collection alternatives. It is not an abuse of discretion for the office of Appeals to reject collection alternatives when none are proposed. See Hunteress v. Commissioner, T.C. Memo. 2009-161; see also, Kendricks v. Commsioner, 124 T.C. 69, 79 (2005). As an aside, the Court notes that Mr. & 16 Mrs. Stolarczyk appeared in Court and presented their 17 18 19 20 position well. They appeared to be sincere, and they presented legitimate arguments, even if those arguments were ultimately unsuccessful. In contrast, the Court also notes that their response to the 21 motion for summary judgment and their reply to the 22 23 24 25 answer filed in this case touched on what would best be characterized as frivolous arguments, for example, arguing that the Constitution does not apply to them. As presented in the response to the motion, however, 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 those arguments appear not to ha.ve been their own, but they appear to have been prompted in that instance by an advisor in a call to Ms. Cook. This is consistent with the Appeals Case Activity Report, which notes that on January 5, '2012, the Stolarczyks had a call with Appeals with an unnamed power of attorney on the line. That power of attorney apparently presented frivolous arguments at that time. The Court cannot help but wonder if the frivolous arguments presented in the reply to the answer were prompted by some advisor, as well. It may be that someone's zeal to present frivolous arguments may have ultimately worked to the detriment of the Stolarczyks, here. Had they focused on collection alternatives and not been distracted by frivolous arguments, they may have been able to reach another result. But the Court cannot undo what has been done. The Court can only caution the Stolarczyks against making frivolous arguments in the future. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Conclusion 23 24 25 In this proceeding, the Court is limited in its review. The Court may not review the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 Stolarczyks' underlying tax liability. As a result, 8 the IRS's determination that it could proceed with collection is sustained. That ends this bench opinion. (Whereupon, at 9:15 a.m., the above- entitled matter was concluded.) 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