TAX COURT OPINION

Case: Ramon J. Jeanmarie & Sheila A. Jeanmarie
Docket Number: 25533-13L
Judge: Nega
Opinion Type: bench
Filed: 10/02/2014
Pages: 9

ALS UNITED STATES TAX COURT WASHINGTON, DC 20217 RAMON J. JEANMARIE & SHEILA A. JEANMARIE, Petitioner(s), v. ) ) ) ) ) ) Docket No. 25533-13 L. 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 respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph W. Nega at El Paso, Texas, on September 18, 2014, 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) Joseph W. Nega Judge Dated: Washington, D.C. October 2, 2014 SERVED Oct 03 2014 Capital Reporting Company 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Bench Opinion by Judge JOSEPH W. NEGA September 18, 2014 RAMON J. JEANMARIE & SHEILA A. JEANMARIE v. COMMISSIONER Docket No. 25533-13L 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. In this Bench Opinion all citations are to sections, unless otherwise noted, of the Internal Revenue Code (Code) for the year at issue, and citations to rules are to the Tax Court Rules of Practice and Procedure. This opinion is rendered pursuant to Section 7459(b) and Rule 152. Petitioners Ramon J. (Mr. Jeanmarie) and Sheila Jeanmarie (Mrs. Jeanmarie) appeared pro sese. 20 Daniel N. Price and Maria Cerina De Ramos 21 22 23 24 25 appeared on behalf of respondent. A brief review of petitioners' prior litigation in this Court is necessary to understand the present controversy. In Jeanmarie v. Commissioner, T.C. Memo. 2003-337 (Jeanmarie I), 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 petitioners challenged an income tax deficiency determined by the IRS for their 1999 taxable year. The principal issue arose from petitioners' contention that disability payments made to Mr. Jeanmarie under the Civil Service Retirement System (CSRS) were not subject to tax. We concluded that the payments were not excludable from income pursuant to section 104(a)(4) of the Code. Petitioners subsequently challenged the inclusion of disability payments in income for the 2005 tax year and we came to a similar conclusion. See Jeanmarie v. Commissioner, T.C. Memo. 2010-281 (Jeanmarie II). Now to the present matter. Respondent issued a notice of deficiency to petitioners on . December 5, 2011. The notice reflected that petitioners failed to report retirement distributions and requested more information on the type of investment generating Mr. Jeanmarie's retirement benefits. On March 12, 2012, this Court filed a petition for Ramon J. & Shelia Jeanmarie, docket no. 7138-12, relating to the December 5, 2011 notice. On March 21, 2012, the Court ordered petitioners to file a proper amended petition and pay the $60.00 filing fee on or before May 7, 2012. On June 12, 2012, the Court dismissed the case for lack 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 of jurisdiction after petitioners failed to respond to the March 21, 2012, order. On February 8, 2013, respondent mailed to petitioners a Final Notice of Intent to Levy and 5 Notice of Your Right to a Hearing for the 2009 tax 6 7 year. On February 25, 2013 petitioners timely mailed to respondent a completed Form 12153, Request for a 8 Collection Due Process or Equivalent He.aring. In 9 their request for a collection due process (CDP) 10 11 12 13 hearing, petitioners did not propose any collection alternatives to the proposed levy, and they stated that the distributions from Mr. Jeanmarie's pension funds were exempt from tax. 14 Specifically, petitioners argued that Mr. Jeanmarie's 15 disability payments from his pension fund were not 16 taxable and they asserted this claim was supported by 17 Congressional legislative history. 18 19 20 21 22 23 24 25 On May 14, 2013, a settlement officer--+9e+-- from the IRS Appeals office sent petitioners a letter scheduling a telephone CDP hearing for June 26, 2013, at 8:00 a.m. Pacific Standard Time. In that letter, the SO informed petitioners that they were eligible for an installment agreement and that in order for him to consider other collection alternatives, petitioners would need to provide him with a copy of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, with supporting financial information. On June 26, 2013, the SO called petitioners for the scheduled CDP hearing and left a message with his contact information since petitioners were not available at that time. That same day, the settlement officer issued a follow-up letter providing petitioners a second opportunity to respond 10 with the requested information by July 10, 2013. 11 12 13 14 15 16 17 18 19 On July 10, 2013, Mr. Jeanmarie faxed a letter to the settlement officer reiterating petitioners' claim that distributions from the pension funds were exempt from tax and stating that petitioners requested a face-to-face hearing. On July 12, 2013, the settlement officer spoke to Mr. Jeanmarie and informed him that petitioners already had a prior opportunity to contest their underlying tax liability. The settlement officer also informed 20 Mr. Jeanmarie that petitioners needed to submit a 21 22 23 24 25 Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, in order to obtain a face-to-face hearing. Mr. Jeanmarie stated that he would not submit the requested form and the settlement officer advised Mr. Jeanmarie that the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 case would be closed on July 17, 2013, if petitioners did not submit the form. On September 24, 2013, the IRS issued to petitioners a Notice of Determination Concerning 5 Collection Action(s) under Section 6320 and/or 6330, 6 7 8 sustaining the proposed levy for petitioners' 2009 taxable year. Petitioners timely sought review in this Court. Petitioners resided in Texas when their 9 petition was filed. 10 11 12 13 Section 6330(d)(1) does not prescribe the standard of review that this Court shall apply in reviewing an IRS administrative determination in a CDP case. The general parameters for such review are 14 marked out by our precedents. Where the validity of 15 16 17 18 19 20 21 22 23 24 25 the underlying tax liability is properly at issue, the Court will review the Commissioner's determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where there is no dispute concerning the underlying tax liability, the Court reviews the IRS decision for abuse of discretion. Id. at 182. An abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). 866.488.DEPO www.CapitalReportingCompany.com 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 Capital Reporting Company 8 Petitioners had the opportunity to dispute their underlying tax liability for 2009. A notice of deficiency was mailed to them for that year; they do not dispute that they received it; and by failing to pay the $60 filing fee, petitioners did not properly seek review in this Court. Having forfeited their opportunity to contest the deficiency, petitioners could not contest their underlying tax liability for 2009 in their CDP hearing and cannot do so before this Court now. See sec. 6330(c)(2) (B); sec. 301.6330-1(e)(3), Q&A-E2,(f)(2), Q&A-F3, Proced. & Admin. Regs. Because petitioners' underlying tax liability for 2009 is not properly at issue, the only question we consider is whether respondent abused his discretion in sustaining a levy to collect the liability. We review the record to determine whether the Appeals officer (1) verified that the requirements of applicable law and administrative procedure have been met; (2) considered whether the issues raised by the taxpayer have merit; and (3) considered whether "any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." Sec. 633 0(c)(3). At A the CDP hearing the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 taxpayer may raise any relevant issue relating to the unpaid tax or levy, including "challenges to the appropriateness of collection actions" and "offers of collection alternatives." Sec. 6330(c)(2) (A)(ii) and (iii). It is clear from our review of the record that the Appeals officer verified that the requirements of applicable law and administrative procedure were followed; that petitioners' claims lack merit; and that, in sustaining the levy, the Appeals officer properly balanced "the need for the efficient collection of taxes with the legitimate concern of [petitioners] that any collection action be no more intrusive than necessary." See sec. 6330(c)(3). Petitioners have not advanced any argument or introduced any evidence that would allow us to conclude that the determination to sustain the levy was arbitrary, capricious, or without sound basis in fact or law. Furthermore, petitioners are estopped from litigating whether Mr. Jeanmarie's 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 disability payments are subject to tax because they 23 24 25 litigated the same issue in Jeanmarie I and Jeanmarie II for different tax years. As a result, we sustain respondent's collection action with 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 respect to petitioners' outstanding income tax liability for the 2009 tax year. This concludes the Court's oral findings of fact and opinion in this case. In reaching our holdings herein, we have considered all arguments 6 made, and, to the extent not mentioned above, we 7 conclude they are moot, irrelevant, or without 8 merit. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, at 2:15 p.m., the above- entitled matter was concluded.) 866.488.DEPO www.CapitalReportingCompany.com