TAX COURT OPINION

Case: James B. Wheeler, Jr. & Dolores J. Wheeler
Docket Number: 1775-10S
Judge: Colvin
Opinion Type: bench
Filed: 02/04/2011
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 20217 , Docket No. 1775-10S. JAMES B. WHEELER, JR. AND DOLORES J. WHEELER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) ) ) ) O R 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 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 Philadelphia, Pennsylvania, on January 25, 2011, 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, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. February 4, 2011 $£RVED FEB - 7 2011 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 3 Bench Opinion by Judge Joseph Robert Goeke January 25, 2011 Wheeler v. Commissioner Docket No. 1775-10S 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 bench opinion is rendered pursuant to IRC Section 7459(b) and the Tax Court Rules of Practice and Procedure Rule 152(a) and will be served upon the parties pursuant to Subsection B of Rule 152. Hereinafter, section references are to the Internal Revenue Code and rule references are to the Tax Court Rules of Practice and Procedure. This case was heard pursuant to the provisions of Section 7463 in effect at the time the petition was filed. Pursuant to Section 7463(b), the decision to be entered is not reviewable by any other court, and as stated previously the opinion shall not be treated as precedent for any other case. This case is before the Court based upon the Court's jurisdiction to review Respondent's collection action if the Petitioners timely file a petition subsequent Heritage Reporting Corporation (202) 628-4888 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 4 to a notice of determination by Respondent. At the time the petition was filed the Petitioners resided in Pennsylvania. The Petitioners did not timely file a 2005 Federal income tax return. The return was received by Respondent in November of 2006 and at that time Respondent assessed the taxes shown on the return. The self determined income tax liability pursuant to the 2005 return was $39,069.50. That liability was not paid and interest and additions to tax have also accrued on the liability since the due date of the return April 15, 2006. A The Petitioners did have $12,401 of withholding for 2005 which was credited against the liability. They have not made any additional payments. In October of 2008 Respondent sent Petitioners a notice of Federal tax lien filing and your right to a hearing under IRC Section 6320. This notice advised Petitioners that a notice of Federal tax lien had been filed for their unpaid liabilities for 2005. After receipt of the notice Petitioners timely requested a hearing. In their request for a hearing they did not contest the underlying tax liability but proposed an installment agreement as an alternative to collection. The settlement officer subsequently Heritage Reporting Corporation (202) 628-4888 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 5 requested proof of filing of income tax returns and the submission of the Form 433-A. The 433-A Eorm is a collection information statement for wage earners and self employed individuals. When the collection officer met with the Petitioners they had not submitted this Form, nor had they filed their 2008 Federal income tax return even though it was long overdue. The settlement officer had a telephone conference with Petitioners in 2009 and the Petitioners requested the installment agreement based upon $1,000 per month. In April of 2010 the Petitioners submitted the Form 433-A with the supporting documentation. They did not submit a copy of an income tax return for 2008. Based upon his analysis of the financial information the settlement officer had another telephone conference with the Petitioners in June of 2009. In that settlement conference the settlement officer proposed an installment agreement of $6,000 per month to be paid on Petitioners' delinquent income taxes. On December 15, 2009, the settlement officer issued to Petitioners a notice of determination concerning collection action which precipitated the present case after the Petitioners timely filed their Heritage Reporting Corporation (202) 628-4888 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 6 petition in this Court. The parties have stipulated that the Petitioners did file their 2008 Federal income tax returns on September 27, 2010, and that that return reported an income tax liability of $28,285. The only payments made on that liability were $19,360 in withholding, leaving the liability of $12,657 in January of 2010. The Petitioners did timely file their 2009 Federal income tax return which reported an income tax liability of $23,161. Once again their only payments were their withholdings which in 2009 were $18,043, leaving the liability of $5,382 as of January 20 10 . The liabilities the Petitioners owe, including the 2005 liability, total over $175,000 to date. After an initial hearing in this case in the fall of 2010 the Petitioners provided a new request for an installment agreement and a Form 433-A on January 5, 2010. The parties have stipulated that the Petitioners have $5,940 of income in excess of their expenses each month currently. Petitioners' proposed installment agreement in their most recent request for an installment agreement proposes a monthly payment of $1,500 per month. In this collection due process case Heritage Reporting Corporation (202) 628-4888 7 Respondent seeks to sustain the notice of Federal tax lien which was previously filed concerning the Petitioners' 2005 Federal income tax liabilities. Since there is no dispute that Petitioners owe the underlying tax, the Court's review of Respondent's determination to proceed with the collection action is based upon an abuse of discretion standard. Sego v. Commissioner, 114 T.C. 605, 610 (2000). It is not an abuse of discretion for the Respondent to require taxpayers with sufficient assets to satisfy their liabilities more rapidly than would be accomplished by a proposed installment agreement. Castillo v. Commissioner, T.C. Memo 2004-238, citing McCorkal v. Commissioner, T.C. Memo 2003-634. That is the situation in the present case, and the Petitioners also fail to meet the requirements of an installment agreement because they are not current on subsequent tax liabilities and unfortunately have demonstrated a propensity to file Federal income tax returns with withholdings that are less than the tax liabilities shown on their returns. This has continued through 2009 and apparently continues to be a problem based upon the statements of the Petitioners even for the year 2010. Given these circumstances, we find that there was no 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 | Heritage Reporting Corporation (202) 628-4888 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 8 abuse of discretion by Respondent's settlement officer in upholding the notice of Federal tax lien filed regarding Petitioners' 2005 Federal income tax liabilities. Therefore in accord with this opinion, decision will be entered for the Respondent. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:35 a.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888