TAX COURT OPINION

Case: Craig Chang
Docket Number: 11234-07L
Judge: Colvin
Opinion Type: bench
Filed: 02/12/2009
Pages: 8

3 .c,B 77- Coe K€ UNITED STATES TAX COURT WASHINGTON , DC 2021 7 CRAIG CHANG, Petitione r V . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Docket No . 11234-07 L 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 in the above case before Judge Joseph Robert Goeke at New York, New York (at Westbury), on October 28, 2008, 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-responden t (Signed) Joseph Robert Goeke Judg e Dated : Washington, D .C . February 12, 200 9 SERVED Feb 13 2009 1 Bench Opinion by Judge Joseph R . Goeke October 28, 2008 2 Craig Chang v . Commissioner Docket No . 11234-07L 3 The Court has jurisdiction in this case unde r 4 Sections 6320(c) and 6330(d)(1)(A) . We .must determine 5 whether Respondent's appeals office was correct i n 6 sustaining Respondent's attempt to collect income ta x 7 liabilities from the Petitioner through the use of a federal 8 tax lien . 9 This case was tried today, and testimony and a 10 stipulation of facts were made part of the record . 11 Petitioner resided in Brooklyn, New York City, in 12 the State of New York when the petition was filed in this 13 case . 14 The underlying tax liabilities which Respondent 15 seeks to collect are based upon income taxes for the years 16 2001, 2002, and 2003 . Petitioner did not file income ta x 17 -returns in those years, despite receipt by his own admission 18 of wage and other income . 19 Respondent issued three separate notices o f 20 deficiency for each of the years, asserting deficiencies in 21 income tax and additions to tax under Section 6651(a)(1) . 22 Respondent also asserted the additions to tax unde r 23 Section 6654 for 2001 . 24 The three notices of deficiency issued to the 25 Petitioner for the years 2001, 2002, and 2003 were not Heritage Reporting Corporatio n (202) 628-4888 I 4 1 petitioned to the United States Tax Court, and Responden t 2 assessed the income tax liabilities and the additions to tax 3 under Section 6651(a)(2), in addition to the additions t o 4 tax reflected in the notices of deficiency . 5 Respondent now concedes that the additions to tax 6 under Section 6651(a)(2) should not be subject to collection 7 action in this case . 8 The amounts Respondent has conceded, associated 9 with Section 6651(a)(2), additions to tax, are $661 .13 for 10 2001, $87 .15 for 2002, $33 .70 for 2003 . 11 The amounts subject to collection which wer e 12 assessed based upon the notices of deficiency are $8,365 in 13 deficiency, $2,411 .18 addition to tax unde r 14 Section 6651(a)(1), $331 .02 addition to tax under 15 Section 6654(a), all for the taxable year 2001 . 16 The tax for year 2002, a deficiency in the amount 17 of $2,921, and an addition to tax under Section 6651(a)(1) 18 in the amount of $348 .60 . 19 For the taxable year 2003, a deficiency in the 20 amount of $775, and an addition to tax under Sectio n 21 6651(a)(1) in the amount of $185 .35 . 22 The amounts subject to collection are also 23 inclusive of interest . Respondent, in the notices of 24 deficiency, has also given Petitioner a credit fo r 25 withholding credits in the amount of $1,759 in 2002, and Heritage Reporting Corporatio n (202) 628-4888 6 5 1 $101 in 2003 . 2 Based upon several frivolous arguments, Petitioner 3 maintains he does not owe tax because the income he received 4 is not taxable to him . He also maintains that he did no t 5 receive the notices of deficiency . His receipt or 6 non-receipt of the notices of deficiency is important 7 because under Section 6330(c)(2)(B), a taxpayer may no t 8 challenge the underlying tax liability in a collection case 9 under Section 6330 if the taxpayer has received a notice of 10 deficiency with respect to the underlying tax liability . 11 Since Respondent maintains that notices of 12 deficiency were sent to the Petitioner regarding the 13 underlying tax liabilities in dispute in this case, we must 14 first address the question of whether the Petitioner should 15 be deemed to have received these notices of deficiency . 16 The record establishes that the Respondent did 17 mail the three separate notices of deficiency by certified 18 mail to Petitioner's address . The record includes th e 19 notices of deficiency and evidence of mailing . 20 Respondent also called a witness from th e 21 U .S . Post Office who testified that, based upon th e 22 procedures at the post office which served Petitioner's 23 address . Petitioner was left two notices of receipt o f 24 certified mail with respect to each of the distinct notices 25 of deficiency which were mailed to him . He maintains that Heritage Reporting Corporatio n (202) 628-4888 6 1 he did not receive the certified mail notices . 2 However, based upon the record that two notice s 3 were left with respect to each of the notices of deficiency, 4 we find his testimony that he failed to receive any of the 5 six notices left at his residence to lack credibility . 6 Accordingly, we find that Petitioner has failed to 7 demonstrate that he did not receive the notices o f 8 deficiency, or that his failure to receive the notices of 9 deficiency was not due to his unwillingness to go the post 10 office and sign for the notices of deficiency . Under such 11 circumstances, Petitioner is deemed to be in receipt of the 12 notices of deficiency for purposes of Section 6330(c)(2)(B), 13 and he may not raise the underlying tax liability in this 14 case . See Sego v . Commissioner, 114 T .C . 37 (2000) . 15 Although we have determined that Petitioner may 16 not protest the underlying tax liability in this case, we 17 did entertain testimony regarding certain of Petitioner's 18 arguments about the liability and, for sake of completeness, 19 we will address certain of his arguments herein . 20 Petitioner's principal argument, and the only 21 non-frivolous argument he articulated regarding the wag e 22 income he received is that he should not be taxable for this 23 wage income because there were not sufficient withholding 24 amounts taken out by his employers, and that his employer 25 should be liable for the liability, as opposed to he, the Heritage Reporting Corporatio n (202) 628-4888 7 1 taxpayer . 2 Let's go off the record, for a second . 3 (Whereupon, a brief recess was taken . ) 4 THE COURT : Petitioner's position relative to the 5 liability of his employers preempting his own persona l 6 liability is simply not in accord with the law . 7 As the 2nd Circuit Court of Appeals stated i n 8 Church v . Commissioner, 810 F 2d 19,20 (2nd Circuit, 1987), 9 "it is clear that the failure of an employer to meet it s 10 obligation to withhold income tax does not in any way lessen 11 the obligation of an employee to pay income tax ." See also 12 Byers v . Commissioner, T .C . Memo 2007-331, and Church Latos 13 v . Commissioner, T .C . Memo 2007-265 . 14 The remainder of Petitioner's arguments regarding 15 the underlying tax liability related to his assertions that 16 it is Respondent's obligation to establish his receipt of 17 the funds in question and that the amounts in question . 18 should not be taxed to him . He is not specific i n 19 articulating why these amounts were not taxable and he, to 20 his credit, admitted that the amounts were paid to hi m 21 largely as wages in his occupation as a musician . 22 Petitioner also argues the hearing provided to him 23 by Respondent's appeals officer was inadequate because h e 24 was not permitted to raise collection alternatives before 25 the appeals officer . However, he admitted at trial that he Heritage Reporting Corporation (202) 628-4888 8 1 did not specifically articulate to the appeals officer his I 2 desire to raise collection alternatives . 3 Under Giamelli v . Commissioner, 129 T .C . 10 7 4 (2007), "we will not entertain positions asserted befor e 5 this court which were not properly raised before the appeals 6 officer ." Therefore, Petitioner's failure to rais e 7 collection alternatives at the appeals office forecloses his 8 argument that he was not given an adequate hearing becaus e 9 he was not allowed to raise collection alternatives . 10 Petitioner, having failed to raise collection alternatives 11 with the appeals officer, may not now assert that he should 12 have been allowed to do so at the hearing . 13 Respondent seeks sanctions in this case because of 14 the frivolous arguments Petitioner has made . Unde r 15 Section 6673, the Court may sanction a party in an amount u p 16 to $25,000 for making arguments principally for delay . 17 this case, Petitioner was admonished several times in th e 18 administrative process that the arguments he was maintaining 19 could result in sanctions . However, because the Petitioner 20 has never been before a federal tribunal regarding hi s 21 underlying tax liabilities, we choose not to impos e 22 sanctions at this time . However, we admonish the Petitioner 23 that should he continue to make frivolous arguments such as 24 those he has made in this case, he is likely to be subject 25 to significant sanctions in the future . Heritage Reporting Corporation (202) 628-4888 9 1 In conclusion, we sustain Respondent's collectio n 2 action via lien with the exception of the concession 3 Respondent has made, as previously noted . 4 This concludes the Court's oral findings of fact 5 and opinion in this case . 6 (Whereupon, at 3 :15 p .m ., the bench opinion in the 7 above-entitled matter was concluded . ) 8 9 10 1 1 12 13 1 4 1 5 1 6 1 7 18 19 20 2 1 2 2 23 24 25 / / / / / / / / / / / / / / / / / / Heritage Reporting Corporation (202) 628-4888