TAX COURT OPINION

Case: Thomas D. Fitzmaurice & Dana M. Fitzmaurice
Docket Number: 1252-16SL
Judge: Carluzzo
Opinion Type: bench
Filed: 12/01/2016
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 THOMAS D. FITZMAURICE & DANA M. FITZMAURICE, Petitioners, v. ) ) ) ) ) Docket No. 1252-16SL COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the above case before Special Trial Judge Lewis R. Carluzzo at Dallas, Texas, 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 appropriate Decision will be entered. (Signed) Lewis R. Carluzzo Special Trial Judge Dated: Washington, D.C. December 1, 2016 SERVED Dec 02 2016 Capital Reporting Company 3 1 Bench Opinion by Special Trial Judge Lewis R. 2 Carluzzo 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 November 17, 2016 Fitzmaurice v. Commissioner Docket No. 1252-16SL 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 (bench opinion). Section references contained in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and Procedure. This section 6330(d) proceeding is subject to the Small Tax Case provisions of section 7463 and Rules 170 through 175. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Except as provided in Rule 152(c), this bench opinion shall not be cited as authority, and pursuant to section 7463(b), the decision entered in this case shall not be treated as precedent for any other case. This case was tried in Dallas, Texas, on November 14, 2016. Sharmeen Ladhani, specially 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 recognized, and Kimberly A. Kazda appeared on behalf of Respondent. Each Petitioner appeared on his or her own behalf. At the time the petition was filed, 4 Petitioners lived in Texas. Some, if not most of the 5 6 7 facts have been stipulated and are so found. Some of those facts are recited below. A Notice of Determination Concerning 8 Collection Action(s) Under Section 6320 and/or 6330, 9 dated December 15, 2015 (notice, or collectively 10 11 notices), in which Respondent determined that a levy is an appropriate collection action with respect to 12 Petitioners' 2013 Federal income tax liability (2013 13 14 15 16 17 18 19 20 21 22 23 24 25 tax liability) has been properly issued and mailed to each Petitioner, and the petition challenging that determination in the notices has been timely filed. Petitioners' 2013 tax liability was assessed in due course with reference to the Federal income tax reported on their 2013 joint Federal income tax return (2013 return). More specifically, the 2013 return shows Petitioners' 2013 tax liability as $15,739. Of that amount, the 2013 return further shows that $7,024 was paid by withholding credits and a payment made with an extension to file, leaving $8,715 remaining to be paid as of the date the 2013 return was filed. 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 Petitioners do not claim that the above- referenced amounts are in any way inaccurate or that the 2013 liability shown on the 2013 return is overstated, or that the credits shown on the 2013 return have not properly been taken into account. Instead, consistent with a letter included with the 2013, Petitioners take the position that the amount of tax not paid with the 2013 return should be paid 9 with income tax credits or refunds due to them for 10 11 other years. The issue to be decided is whether 12 Respondent's determination to proceed with the levy, 13 14 15 16 17 18 19 20 21 22 23 24 25 rather than to proceed as Petitioners propose, is an abuse of discretion. Having in mind the allegations contained in the petition, during Respondent's opening statement, the Court questioned whether abuse of discretion is the proper standard of review, as it appeared to the Court that Petitioners' challenge to the determination is, in fact, a challenge to the existence or the amount of the underlying liability. See Section 6330(c)(2)(B); Green-Thapedi v. Commissioner, 126 T.C. 1 (2006), subject to a de novo standard of review. See Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Upon further examination of the record, and 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 16 17 18 19 20 21 22 taking into account the evidence introduced at trial, the Court is satisfied that Petitioners' challenge to the determination is not so much a challenge to the existence or the amount of the underlying liability as it is an assertion that the underlying liability should be collected through the application of credits or refunds from other years rather than by levy. Viewed in that manner, Petitioners' challenge to the determination reduces to a challenge to Respondent's refusal to allow a collection alternative to the proposed collection action, and the review of that determination is appropriately for abuse of discretion. Set against that background, we consider the evidence introduced at trial, much of which relates to years not here in issue. Although we have no jurisdiction over years other than 2013 in this proceeding, we find it appropriate to discuss those other years as the circumstances in those years relate to the resolution of the dispute between the parties with respect to the issue now before us. See 23 Weber v. Commissioner, 138 T.C. 348 (2012); Frieze v. 24 25 Commissioner, 125 T.C. 14 (2005); Landry v. Commissioner, 116 T.C. 60 (2001). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 We first focus on 2004. According to 2 Petitioners, they are due a refund or credit for 3 4 5 6 7 8 9 overpaid income tax for 2004 that should be applied against their outstanding 2013 liability. After receiving a refund of overpaid income taxes upon the filing of the return, Petitioners' 2004 joint Federal income tax return apparently was examined by Respondent and, as a result, a deficiency was determined. 10 A notice of deficiency was issued to 11 Petitioners, and they did not challenge that 12 13 14 15 16 17 18 19 20 21 22 deficiency in a proceeding in this Court. See Section 6213(a). The deficiency was subsequently assessed, see Section 6213(c), and from time to time credits for overpayments of income taxes from other years were applied against that 2004 assessment. See Section 6402(a). Years later, and for reasons not fully set forth in the record in this case, a large portion of the assessment attributable to the 2004 deficiency was abated. A portion of the 2004 overpayment generated by the abatement was applied to 23 Petitioners' then outstanding tax liabilities for 24 25 other periods, a portion of the overpayment was refunded to Petitioners, and a credit or refund of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 the remaining portion of the overpayment was deemed barred by the period of limitations. See Section 6511. Other than finding that Respondent's records adequately show how the overpayment of Petitioners' 2004 Federal income tax resulting from the above- reference abatement has been treated, we make no finding on whether Petitioners are entitled to an additional refund or credit for that year, or if so, 9 whether that refund or credit is barred by the period 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of limitations. If Petitioners believe themselves entitled to an additional refund of an overpayment of their 2004 Federal income tax, they should pursue that remedy independent of this proceeding. Otherwise, the record shows that as of the date Petitioners' 2013 return was filed, there was no credit attributable to overpaid income tax from 2004 that could have been applied to the unpaid portion of the tax reported on Petitioners' 2013 return. Next we consider Petitioners' 2010 Federal income tax liability. As with 2004, Petitioners claim that an overpayment of that liability should be applied to 2013 as well. Long story short, 2010 is much the same as 2004, except that the situation is further complicated because the income tax liability 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 shown on Petitioners' 2010 joint Federal income tax return was not fully paid with the return. Like the situation in 2004, however, a deficiency was assessed, credits for overpayments from other years were applied, and a subsequent abatement gave rise to an overpayment for 2010. A portion of that 2010 overpayment was applied to Petitioners' outstanding 2012 income tax liability (Respondent's records show that the income tax liability reported on Petitioners' 2012 return was not fully paid with the filing of that return), and the remaining portion was refunded to them. Again, Petitioners disagree with the manner in which Respondent has applied the 2010 overpayment, and they seem to claim that they are due a refund or credit for that year as well as for 2012. As with 2004, other than to find that Respondent's records adequately show how the 2010 overpayment has been applied or credited, we make no finding on whether 20 Petitioners are entitled to an additional refund or 21 22 23 24 25 credit for 2010 or 2012, or for that matter, any other year referenced in the evidence admitted in this case other than the year before us. As with 2004, no portion for the 2010 overpayment of income tax was available at the time Petitioners' 2013 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 return was filed or is available to offset 2 Petitioners' outstanding 2013 income tax liability. 3 4 5 6 7 8 9 10 11 12 13 In closing, we note that even if credits attributable to income tax overpayments from other years were available to offset Petitioners' outstanding 2013 tax liability, Respondent would not have been compelled to apply those credits as directed by Petitioners, but was entitled to apply those credits as Respondent saw fit. See Section 6402; Weber V. Commissioner, 138 T.C. 348 (2012). Otherwise, and in all other respects, Respondent has shown that the procedural requirements imposed by Section 6330 have been satisfied, and 14 Petitioners do not suggest otherwise. 15 16 17 18 19 20 21 22 23 24 25 It follows that Respondent's determination to proceed with collection by levy rather than by application of credits from other years is not an abuse of discretion, and that determination made in each notice is sustained. To reflect the foregoing, an appropriate order and decision will be entered, allowing Respondent to proceed with collection as determined in each notice. This concludes the Court's oral findings of fact and opinion in this case. 866.488.DEPO www.CapitalReportingCompany.com