TAX COURT OPINION

Case: Michael E. & Jeffetta M. Washington
Docket Number: 1812-06L
Judge: Colvin
Opinion Type: bench
Filed: 01/06/2009
Pages: 12

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 MICHAEL E . AND JEFFETTA M . WASHINGTON, Petitioner v . COMMISSIONER OF INTERNAL REVENUE , Respondent ORDER Docket No . 1812-06L . L A RECORDED SERVIC E STAT . W - T- Jizc.E FILE S Pursuant to Rule 152 (b), Tax Count Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court hall transmit herewith to petitioners and to respondent a copy of t e pages of the transcript of the further trial in the above case before Judge Joseph Robert Goeke at Richmond, Virginia, on Novembe 18, 2008, containing his oral findings of fact and opinion render d at the conclusion of the further trial . In accordance with the oral findings of fact and opinion, decision will be entered for respondent . (Signed ) Joseph Robert Goeke Judge Dated : Washington, D .C . January 6, 2009 SERVED JAN 0 7 2009 9 0 1 Bench Opinion by Judge Joseph Robert Goeke 2 November 18, 200 8 3 Washington v . Commissioner Docket No . 1812-06L 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case, an d 6 the following represents the Court's oral findings of 7 fact and opinion . The oral findings of fact and 8 opinion shall not be relied up n as precedent in an y 9 other case . 10 This case is before he Court under Sectio n 11 6330, and the issue for a dec i ion is whethe r 12 Respondent may proceed with a roposed levy to collec t 13 Federal income taxes for the years 1991 through 1997 . 14 The delinquent tax liabilities excee d 15 $163,000 , and the underlying lability for the years 16 in question is not contested on the substantiv e 17 merits . 18 Petitioners resided in Virginia when the 19 Petition was filed . On June 1, 2005, the Interna l 20 Revenue Service Automated Collection Support Uni t 21 issued to each of the Petitioners a Notice of Intent 22 to Levy under Section 6330 with respect to the years 23 at issue . Petitioners timely fled a request for a 24 collection due-process hearingliForm 12153 . 25 On November 30, 2005 the Petitioners had a Heritage Reporting, Corporation (202) 628-4888 9 1 1 telephone conference with the settlement office r 2 assigned to their case . 3 On December 19, 2005, the Respondent issue d 4 to the Petitioners a Notice of Determinatio n 5 Concerning Collection Action under Section 6320 and/or 6 6330 . Following receipt of that Determination , 7 Petitioners timely filed a Pet tion in this case . 8 On April 10, 2007, the Court held a trial in 9 this case and a Stipulation oflliFacts was filed . 10 Testimony was also heard . 11 On July 8, 2007, Res ondent filed a Motio n 12 for Remand requesting that the Court remand this case 13 to the Appeals office for further consideration o f 14 Petitioners' Collection Due Process Request For A 15 Hearing . 16 Respondent's Motion for Remand stated in 17 Paragraphs 8, 9, and 10 as fo l lows : 18 "The transcript of t he Court's hearing on 19 the Motion for Summary Judgmen and the trial of the 20 case establishes that the reas n the Petitioner s 21 sought the collection due-proc ss hearing was to 22 contest the revocation of the December 2000 Offer i n 23 Compromise . 2 4 25 The Notice of Determination, dated December 19, 2005, and the Appeals Transmittal an d Heritage Reporting!Corporation (202) 628-4888 9 2 1 Case Memo-CDP establish that the settlement officer 2 sustained the Respondent's proposed levy actio n 3 because Petitioners failed to submit a curren t 4 collection information statement and failed to fil e 5 their delinquent income tax return for the taxabl e 6 year 2004 . As a result, no collection alternativ e 7 could be considered . 8 Neither the Notice of Determination nor the 9 Appeals Transmittal and Case Memo-CDP specificall y 10 address the issue raised by Petitioners that th e 11 Respondent improperly terminated the December 200 0 12 Offer in Compromise . The fail re to address the issue 13 raised by Petitioners constitutes an abuse o f 14 discretion on the part of Respondent's Appeals Office . 15 Respondent's motion goes on to request in 16 accord with the assertions in those paragraphs tha t 1 7 1 8 1 9 2 0 2 1 2 2 23 the case be remanded to the Appeals Office . Petitioner filed a r esponse to the motion on July 16, 2007, and on July 20, 2007, the Court granted Respondent's motion and issued an order requesting a status report from the parties on or befor e November 1, 2007 . Respondent submitted a status report to the 24 Court which was filed on November 2, 2007 . In that 25 status report, Respondent informed the Court tha t Heritage Reporting Corporation (202) 628-4888 9 3 1 Petitioners' case had been assigned to a settlemen t 2 officer in the Richmond, Virginia, Appeals Office and 3 that the settlement officer discussed and explaine d 4 the basis for Respondent's to ination of Petitioners' 5 prior offer in compromise and uggested th e 6 possibility of proposing an al ernative collectio n 7 method to the Petitioners . 8 The settlement officer, according t o 9 Respondent's status report, requested that Petitioners 10 file their income tax returns for the taxable year s 11 2004 and 2005 and submit a collection informatio n 12 statement and a Form 656 Offer in Compromise . Th e 13 settlement officer set deadlines for the Petitioners 14 to submit this information and subsequently extende d 15 those deadlines . 16 Respondent also repo ted that Petitioners by 17 a fax dated October 3, 2007, a, vised the settlemen t 18 officer that Petitioners would submit the requested 19 documentation within 10 days . (Respondent further 20 advised in the November 2, 2007, status report that 21 nothing was submitted between cctober 3 and the date 22 of the status report . 23 Following that status report, the court 24 ordered that the Petitioners would have a fina l 25 opportunity to furnish Respondent information no later Heritage Reporting Corporatio n (202) 628-4 1888 9 4 1 than December 13, 2007, and that Respondent was to 2 submit a status report by December 19, 2007 . 3 On December 20, 200 7 Respondent filed a 4 subsequent status report infor ding the Court that th e 5 settlement officer had received a package fro m 6 Petitioners containing the req ested documentation . 7 Respondent requested additiona time to consider tha t 8 documentation and the Offer in Compromise whic h 9 Petitioners had submitted . Accordingly, the Court 10 ordered an additional status report on or before 11 June 16, 2008, in an order dated January 16, 2008 . 12 On June 16, 2008, Re pondent submitted a 13 status report which had as an ttachment a 14 Supplemental Notice of Determination concerning 15 collection action under Sectio4l 6320 and/or 6330 . In 16 that status report, Respondent stated that n o 17 communications had taken place', with Petitioners sinc e 18 December 18, 2007, and as a re ult, Respondent issue d 19 the Supplemental Notice of Det rmination referred t o 20 above . 21 Following receipt of'that status report, the 22 Court ordered that this case b calendared for further 23 trial proceedings . Those furt er proceedings too k 24 place this date, November 18, 4008 . 25 Petitioners have maintained in both the Heritage Reporting Corporatio n (202) 628-4888 9 5 1 trial which took place today And in the earlier tria l 2 session in this case that Reso ondent erred in 3 terminating the prior Offer i Compromise becaus e 4 Petitioners had acted in acco d with instructions from 5 an IRS Revenue Officer at the time the earlier offer 6 in Compromise was defaulted b the Respondent . 7 Petitioners originally made t is argument before th e 8 Court in paragraph 5(B), Subsections 1 and 2 of thei r 9 Petition in this case . 10 In the Petition, Petitioners refer t o 11 correspondence they received f rom the Internal Revenue 12 Service dated April 5, 2004, c oncerning the 13 outstanding balance for their tax year 2002 . The y 14 stated that they immediately after receipt of tha t 15 correspondence contacted a revenue officer and tha t 16 they followed that revenue off icer's instruction s 17 concerning the outstanding balance . 18 The concern with th communications between 19 Respondent's Appeals Office and Petitioners concerning 20 the reasons for the termination of the Offer i n 21 Compromise which was in place in 2002 were the basi s 22 for Respondent's Motion for Re and and the Court's 23 order that the case be remande . 24 In accord with that concern, Respondent' s 25 Appeals Office and in particull a r the settlement Heritage Reporting Corporatio n (202) 628-4888 9 6 1 officer assigned on the remand'idid communicate with 2 the Petitioners concerning thel Petitioners ' 3 allegations that the prior Offer in Compromise wa s 4 improperly terminated . 5 An example of this c mmunication is a letter 6 dated September 19, 2007, to t e Petitioners from the 7 settlement officer assigned . n that letter, th e 8 settlement officer sets forth he facts related to the 9 Offer in Compromise which Petitioners reached wit h 10 Respondent in December of 200 0 11 That letter sets forth the numerou s 12 delinquencies and underpayment of subsequent yea r 13 taxes which led to the default of the December 200 0 14 Offer in Compromise, and the letter explains that 15 based upon the facts as outlined, the defaults wer e 16 the appropriate action . 17 Petitioners do not ccpntest the facts as 18 stated in the September 19, 207, letter regarding 19 subsequent year delinquencies . When the Court say s 20 "subsequent years," the Court means years beginning in 21 2002 through 2004 . 22 Petitioners' argumen s as stated previously 23 are focused solely on the cony rsation with th e 24 revenue officer after Petitione rs first received the 25 information about their delinquency in 2002 . We find Heritage Reporting Corporatio n (202) 628-4888 9 7 1 that Petitioners' arguments that their conversatio n 2 with the revenue officer offsets their delinquency in 3 2002 and the other reasons cited by the appeal s 4 officer for the default of the 2000 Offer i n 5 Compromise to be inadequate . 6 Petitioners' relianc upon the conversation 7 with the 3ppe ~ officer to of set consistent B46 8 delinquencies and other reason Respondent relied upon 9 to default the original offer n Compromise are simpl y 10 inadequate and do not form a basis to reinstate the 11 Offer in Compromise . Morgan v . Commissioner, T .C . 12 Memo 2002-210 . 13 Even if the 2002 conversation somehow would 14 cause the Court to overlook Petitioners' 200 2 15 underpayment of income tax which would be the basi s 16 for a delinquency and therefor e the default of th e 17 Offer in Compromise reached in December 2000 , 18 subsequent year actions and failure to timely fil e 19 income tax returns provide morejthan sufficient basis 20 for a determination that it was, reasonable fo r 21 Respondent to default the Dece er 2000 Offer i n 22 Compromise . 23 In addition, we find espondent's action on 24 the remand in offering the Petitioners othe r 25 alternatives to pay the underlying liabilities in Heritage Reporting Corporatio n (202) 628-48'88 9 8 1 question to be very reasonable! . 2 In a letter dated J4nuary 23, 2008 , 3 Respondent's settlement officer provided Petitioner s 4 with a list of information they would need to provide 5 to support the Form 656 they submitted in response t o 6 the appeals officer's suggesti n that they attempt yet 7 again to reach an Offer in Com romise with th e 8 Internal Revenue Service for the underlying 9 liabilities . 10 Petitioners have admitted at trial that the y 11 did not respond to this corres ondence, nor did they 12 contact the settlement officeriand ask for a n 13 extension of time within whichto submit the 14 information . 15 Subsequently, they al so received a notice 16 from the Respondent's office reviewing the offer in 17 Compromise, which was not the same office as th e 18 settlement officer, which informed them that because 19 they had not paid the initial installment paymen t 20 their offer in Compromise could: not be processed . 21 This letter was in conformity with Code Section 7122 , 22 and we find Respondent had no alternative but to send 23 such a form letter in response o Petitioners' Offer 24 in Compromise . 25 The settlement officer did not realize Heritage Reporting Corporatio n (202) 628-488 9 9 1 Petitioners were in breach of Section 7122, but 2 Petitioners nevertheless failed to provide th e 3 underlying information he needed to support thei r 4 Offer in Compromise submitte d during the remand o f 5 this case . 6 Read together, we find the failure to mak e 7 the initial installment payme t and the failure to 8 produce the additional supporting documentatio n 9 requested in the January 23, 2008, letter to be mor e 10 than a sufficient basis for Rejspondent to not reach a n 11 alternative for the payment of the underlying 12 liabilities in dispute . 13 14 We agree with Respondent ' s determination that collection action should Proceed through levy fo r 15 the years 1991 through 1997 as outlined in the 16 Supplemental Notice of Determi ation issued to the 17 Petitioners while this case wa on remand, which led 18 to the second trial of this c a e . 19 We end by noting tha this is an unfortunate 20 situation and we hope that the Petitioners are able t o 21 ultimately resolve all of their tax problems and 22 financial problems, but the Court finds tha t 23 Respondent's actions in this case were reasonable and 24 finds no basis for an abuse of, Respondent's discretion 25 in determining to proceed with the collection actio n Heritage Reporting Corporation (202) 628 -4',888 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 19 20 2 1 22 23 24 25 10 0 at issue in this case . Accordingly, a decision will be entered fo r Respondent in this case . This concludes the Court's oral findings o f fact and opinion in this case . THE CLERK : All rise, please . (Whereupon, at 3 :00 .m ., the bench opinio n in the above-entitled matter as concluded . ) / / Heritage Reporting Corporation (202) 28-4888