TAX COURT OPINION

Case: Larry J. Newsome & Bettye J. Newsome
Docket Number: 24404-12SL
Judge: Guy
Opinion Type: bench
Filed: 06/26/2013
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 LARRY J. & BETTYE J. NEWSOME, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent KVC ) ) ) ) ) Docket No. 24404-12SL. ) ) ) ) OR 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 abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at Tampa, Florida, on June 12, 2013, 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 order directing remand will be issued. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. June 26, 2013 SERVED Jun 27 2013 Capital Reporting Company Bench Opinion by Special Trial Judge Daniel A. Guy, 3 Jr. June 12, 2013 Larry J. & Bettye J. Newsome v. Commissioner Docket No. 24404-12SL 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 proceeding for the review of a collection action is a small tax case conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice and Procedure. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986, as amended, and Rule 152 of the Tax Court Rules of Practice and Procedure. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Hereinafter in this bench opinion, section references 23 24 25 are to the Internal Revenue Code of 1986, as amended, in effect for 2009, and Rule references are to the Tax Court Rules of Practice and Procedure. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 4 5 6 7 Petitioners resided in Florida at the time the petition was filed, and they appeared at trial pro se. William R. Brown, Jr., appeared on behalf of respondent. Petitioners filed joint Federal income tax returns for 2007, 2008, and 2009 (the years in issue). Petitioners resided at an address in 8 Gulfport, Florida, until September 2009 when they 9 moved to a new address in St. Petersburg, Florida. 10 11 12 13 14 15 16 17 18 The Internal Revenue Service (IRS) examined petitioners' returns for the years in issue. During the examination process, Mr. Newsome routinely responded to IRS requests for additional information. On March 24, 2011, and June 3, 2011, the IRS sent a revised examination report and a notice of deficiency for 2008 and 2009, respectively, to petitioners at the Gulfport address. The notice of deficiency was mailed to petit·ioners by certified 19 mail. Petitioners testified that they did not 20 21 22 23 24 25 receive any notice from the U.S. Postal Service that the notice of deficiency was available to be picked up and they did not receive either the examination report or the notice of deficiency. Respondent did not offer any evidence that petitioners declined to take delivery of the notice of deficiency or that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 they otherwise received the notice of deficiency. Petitioners did not file a petition for redetermination with the Court in respect of the notice of deficiency for 2008 and 2009. In due course, respondent assessed the taxes and penalties determined in the notice. The record does not clearly reflect the basis for various assessments entered in respect of petitioners' tax liability for 2007. 10 On or about March 22, 2012,AIRS sent a 11 Notice of Federal Tax Lien Filing and Your Right to a 12 Hearing Under IRC 6320 for the years in issue to 13 petitioners at their St. Petersburg address. 14 Petitioners timely submitted to the IRS Office of 15 Appeals (Appeals Office) a Form 12153, Request for a 16 Collection Due Process or Equivalent Hearing. They 17 18 19 20 21 22 23 24 did not check any of the boxes on the Form 12153 for a collection alternative and instead they checked the box for "Other" and stated on the form "Do not owe any of the Taxes assessed." Petitioners' case was assigned within the Appeals Office to Settlement Officer Denise Williams (SO Williams). On July 17, 2012, Mr. Newsome participated in a telephone conference with SO 25 Williams, and he informed her that he and his wife 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 disagreed with the amounts assessed for the years in issue. After the telephone conference, SO Williams determined that IRS records showed that a notice of . deficiency was issued to petitioners for the years in issue, and, therefore, she concluded that they were precluded from challenging the existence or amount of the tax liabilities that were the subject of the Federal tax lien. Because they failed to provide any financial information in support of a collection alternative, SO Williams issued to petitioners a notice of determination sustaining the decision to file the Federal tax lien. Section 6321 imposes a lien in favor of the 1 2 3 4 5 6 7 8 9 10 11 12 13. 14 United States on all property and rights to property 15 16 17 18 of a taxpayer liable for unpaid taxes after demand for payment. Within five business days after the day of filing a notice of lien as described in section 6323, the Secretary must notify the taxpayer, in 19 writing, that a tax lien was filed and inform the 20 21 22 23 24 taxpayer of his or her right to an administrative hearing in the Appeals Office before an impartial officer or employee. Sec. 6320(b). Section 6320 (c) provides that the Appeals Office hearing generally shall be conducted consistent with the procedures set 25 forth in section 6330(c), (d), and (e). 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 In conducting the administrative hearing, the Appeals Office must verify that the requirements of any applicable law or administrative procedure have been met. Sec. 6330 (c) (1). The Appeals Office also must consider any issues raised by the person relating to the unpaid tax or proposed levy, including offers of collection alternatives, appropriate spousal defenses, and challenges to the appropriateness of the collection action. Sec. 6330 (c) (2) (A) . A person may challenge the existence or amount of his or her underlying tax liability if the person did not receive a notice of deficiency or did not otherwise have an opportunity to dispute such tax liability. Sec. 6330 (c) (2) (B). Finally, the Appeals Office must consider whether the collection action balances the need for efficient collection against the person' s concern that collection be no 18 more intrusive than necessary. Sec. 6330(c) (3) (C). 19 20 21 Once the Appeals Office has issued determination letter, the taxpayer may seek judicial review of the administrative determination by filing a petition 22 with the Tax Court. Sec. 6330(d). 23 24 25 Although the Appeals Office determined that petitioners were barred from challenging the existence or amount of the underlying tax liabilities 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 12 for the years in issue, that determination was based solely on the proposition that a notice of deficiency was mailed to petitioners' last known address. However, section 6330 (c) (2) (B) provides in relevant part that a person may challenge the existence or amount of his or her underlying tax liability if the person did not receive a notice of deficiency. In applying section 6330 (c) (2) (B), we have held that proof that a notice of deficiency was sent by certified mail to the taxpayer's last known address, through strict compliance with Postal Service Form 3877 mailing procedures, raises a presumption of 13 official regularity in favor of the Commissioner and 14 15 16 17 18 19 20 21 22 23 is sufficient, absent evidence to the contrary, to establish that the notice was properly mailed. See Hoyle v. Commissiory 131 T.C. 197, .203 (2008), citing Coleman v. Commissioner, ·94 T.C. 91 (1990). Although the record reflects that the notice of deficiency f-æo 2008 and 2009 was mailed by certified mail to petitioners' last known address, i.e., their Gulfport address, petitioners testified that they were no longer residing at the Gulfport address on the date erf notice of deficiency was 24 mailed, they did not receive any notice from the U.S. 25 Postal Service that the item was available for pick 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 20 21 up, and they never received the notice of deficiency. We find petitioners' testimony to be reliable and trustworthy. Moreover, we note that Mr. Newsome was actively engaged in the examination process, and it would have been inconsistent with his pattern of conduct to fail to act if he received the notice of deficiency. Equally important, respondent did not offer any evidence, such as U.S. Postal Service delivery records, to show that petitioners declined delivery of the notice of deficiency or that they received actual or constructive notice of the existence of the notice of deficiency in time to file a timely petition with the Court pursuant to section 6213(a). See Kuykendall v. Commissioner, 129 T.C. 77 (2007). In sum, we conclude that petitioners did not receive the notice of deficiency for 2008 and 2009, and, therefore, the Appeals Office erred in determining that they were barred from challenging the amount of their tax liabilities during the course of the administrative hearing. As previously 22 mentioned, the record does not clearly reflect the 23 24 25 basis for the tax assessments entered for 2007. Under the circumstances, we will remand this case to the Appeals Office for further proceedings consistent 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 with this opinion. This concluded the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:26 a.m., the above- entitled matter was concluded.) 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 11 CERTIFICATE OF TRANSCRIBER AND PROOFREADER CASE NAME: Larry J. & Bettye J. Newsome v. Commissioner DOCKET NO.: 24404-12SL We the undersigned, do hereby certify that the foregoing pages, numbers 1 through 11, inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Ron LeGrand, Sr., on June 12, 2013, before the United States Tax Court at its session in Tampa, Florida, in accordance with the applicable provisions of the current verbatim reporting contract of the Court, and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Lisa Peltenon (Transcriber) 6/17/13 (Date) . Nancy Smit'h (Proofreader) 6/17/13 (Date) o 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