TAX COURT OPINION

Case: 2646 Atrium Realty Corp.
Docket Number: 13254-08L
Judge: Colvin
Opinion Type: bench
Filed: 07/16/2009
Pages: 8

UNITED STATES TAX COURT WASHINGTON , D.C. 2021 7 2646 ATRIUM REALTY CORP ., Petitioner , v. ) Docket No . 13254-0 COMMISSIONER OF INTERNAL REVENUE , Respondent . O R D E R r J DM . RECORDE D CAL . , STAT . T . JUDGE FILE S 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 proceedings of the above case before Judge . Diane L . Kroupa at Houston, Texas on June 26, 2009, containing her oral findings of fact and opinion . In accordance with the oral findings of fact and opinion, decision will be entered for petitioner . (Signed ) Diane L . Kroupa Judge Date : Washington, D .C . July 16, 2009 SERVED JUL 17 2009 3 1 Bench Opinion by Judge Diane L . Kroupa 2 June 26, 200 9 3 2646 ATRIUM REALTY CORP ., Docket No . 13254-08L 4 The Court has decided to render ora l 5 findings of fact and opinion in this case, and th e 6 following represents the Court's oral findings of fact 7 and opinion . These oral findings of fact and opinion 8 shall not be relied upon as precedent in any othe r 9 case . 10 This bench opinion is made pursuant to the 11 authority granted by Section 7459(b) and Rule 152 . 12 All section references are to the Internal Revenue 13 Code as amended and in effect for the year 2004, and 14 all rule references are to the Tax Court Rules o f 15 Practice and Procedure . 16 This is a collection review case involving 17 the filing of a notice of federal tax levy to collect 18 Petitioner's FICA and withholding taxes on Form 941 19 for the year 2004 . 20 Yigel Bosch, president, appeared on behalf 21 of Petitioner, and David Whitcomb appeared on behalf 22 of Respondent . 23 FINDINGS OF FAC T 24 Certain facts have been stipulated . Th e 25 stipulation of facts and the supplemental stipulation Heritage Reporting Corporatio n (202) 628-4888 4 1 of facts, with accompanying exhibits,,are incorporated 2 by this reference . The facts are so found . 3 Petitioner is a corporation that has been in 4 existence since 1994 . Petitioner had eight to te n 5 employees in 2004 and withheld FICA and other taxes 6 (reportable on Form 941) from its employees' wages . 7 Petitioner pays wages on the 1st and 16th of eac h 8 month and is a monthly depositor regarding the 9 withheld amounts . 10 Petitioner remitted the withheld amounts on 11 company checks made payable to the Internal Revenue 12 Service (Service) and sometimes made payable t o 13 Petitioner's bank, such as Frost Bank or Wells Fargo . 14 Respondent assessed a tax liability of $8,944 on July 15 24, 2006, with respect to Petitioner's 941 liability 16 for the period ended December 31, 2004 . A 17 disagreement arose about the proper crediting o f 18 payments or deposits to Petitioner's 941 liability for 19 2004 . 20 Petitioner timely requested a collection due 21 process hearing after Respondent issued a notice o f 22 intent to levy on June,, 2007 . The settlement 23 officer and Petitioner held a hearing in which 24 Petitioner claimed that Respondent had failed to 25 credit numerous deposits made with respect to its 941 Heritage Reporting Corporatio n (202) 628-4888 1 liabilities . 2 Petitioner subsequently provided copies of J'n 3 checks he thought had 'been credited to his account . no+ cI 5 4 None of the checks or deposits was designated to sho w 5 what taxable period the payment should be applied to . 6 for credit . The settlement officer found all payments 7 that Petitioner had submitted directly to the Service . 8 All direct subsequent payments made to the accoun t 9 were posted and found . 10 Petitioner requested Frost Bank to provide 11 additional checks and other deposits that were to be 12 applied to Petitioner's 941 liability . These checks 13 were made payable to the bank but were not deposited 14 or remitted to Petitioner's federal tax deposi t 15 account . 16 The settlement officer agreed to abate the 17 failure-to-file penalty assessed . Petitioner sought 18 to get credit for the payments made to Frost Bank and 19 did not offer any alternatives to collection , 20 asserting that all payments had been made for the 21 period ended December 31, 2004 . 22 Petitioner argued that the settlemen t 23 officer abused her discretion by failing to account 24 for payments that were made . The sustained proposed 25 collection action by levy was set forth in a Notice o f Heritage Reporting Corporation (202) 628-4888 6 1 Determination Concerning Collection Action(s) under 2 Section 6320 and/or 6330, dated May 15, 200 8 3 (determination notice) . 4 Petitioner timely filed a petitio n 5 contesting that it owed any unpaid 941 liability for 6 2004 . In fact, Petitioner asserts not only does i t 7 9 not owe any taxes but it has a credit balance of the amounts paid to its 941 account for 2004 . Respondent at trial explained that he ha d 10 traced all the checks that Petitioner made and that 11 Petitioner received credit for all payments made in 12 2004 except for a few checks . These checks include 13 (1) check number 1806, dated March 1, 2004, o f 14 $1,013 .88 made payable to Frost Bank ; (2) check number 15 1930, dated April 1, 2004, of $1,500 made payable to 16 Frost Bank ; (3) check number 1964, dated April 8 , 17 2004, of $466 .67 made payable to Frost Bank ; and (4) 18 check number 2636, dated October 15, 2004, of $1,426 . 19 Petitioner questions whether it is liable 20 for unpaid 941 liability for the year ended December 21 31, 2004, and whether Respondent may proceed with the 22 proposed levy action to collect unpaid 941 liabilities 23 for the year ended December 31, 2004 . 24 OPINION 25 We begin with whether we have jurisdiction Heritage Reporting Corporatio n (202) 628-4888 7 1 to review Petitioner's 941 liability for the year 2 ended 2004 . This Court lacked jurisdiction over , 3 employment tax liabilities before amendments made t o 4 Section 6330 gave the Tax Court exclusive jurisdiction 5 in all collection review matters regardless cf th e 6 type of underlying tax involved . Perkins v . 7 Commissioner , 129 T .C . 58, 63 n .7 (2007) ; Pensio n 8 Protection Act of 2006, Pub . L . 109-280, Sec . 855(b), 9 120 Stat . 1019 . This amendment is effective fo r 10 determinations made after October 16, 2006 . id . 11 Here, the determination notice was issued on May 15, 12 2008, which is after the .effective date . We therefore 13 have jurisdiction to decide this case . 14 Standard of Review . The Court will review 15 this collection review matter on a de novo basi s 16 where, as here, the validity of the underlying ta x 17 liability is properly at issue . Sego v . Commissioner , 18 114 T .C . 604, 610 (2000) . We therefore must determine 19 whether Petitioner is liable for any unpaid 94 1 20 liability for the taxable period ended December 31, 21 2004 . 22 The record here is unclear whether 23 Petitioner was credited with all payments tha t 24 Petitioner made regarding its 941 liability for 2004 . 25 During trial, it became evident that Respondent wa s Heritage Reporting Corporation (202) 628-4888 8 1 unable to show that all payments had been credited to 2 Petitioner's 941 account . This may have been due to 3 Petitioner's failure to designate the payments to its 4 941 account . 5 Notwithstanding this fact, the Court found 6 Petitioner credible that it had made payments to b e 7 credited to its 941 account and that not all payments 8 Petitioner made were credited to its 941 account . We 9 admonish Petitioner that it make payments only to th e 10 Service in the future and that it designate which tax 11 liability is being remitted with the payment . 12 We find that Petitioner's payments to Frost 13 Bank were for only one reason ; i .e ., payment o f 14 payroll taxes, as Petitioner asserts . We therefore 15 find that Petitioner has no unpaid 941 liability for 16 the taxable year ended December 31, 2004 . Because 17 Petitioner has no unpaid 941 liability for the taxable 18 year ended December 31, 2004, it follows that th e 19 proposed levy action is inappropriate . 20 To reflect the foregoing, decision will be 21 entered for Petitioner, and an appropriate order will 22 be issued denying the determinations set forth in the 23 Notice of Determination Concerning Collectio n 24 Action(s) under Section 6320 and/or 6330, dated May 25 15, 2008, upon which this case is based, regarding Heritage Reporting Corporatio n (202) 628-4888 1 Petitioner's 941 liability for the year 2004 . 2 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF 3 FACT AND OPINION IN THIS CASE . 4 (Whereupon, at 9 :28 a .m ., the bench opinion 5 was concluded . ) 9 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