TAX COURT OPINION

Case: Bruce Edward Haddix & Rae Anne Haddix
Docket Number: 7385-16L
Judge: Goeke
Opinion Type: bench
Filed: 02/10/2017
Pages: 14

UNITED STATES TAX COURT WASHINGTON, DC 20217 BRUCE EDWARD HADDIX & RAE ANNE HADDIX, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent . ) ) ) ) ) ) Docket No. 7385-16 L. ) ) ) ) O R 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 above case before Judge Joseph Robert Goeke at Dallas, Texas on February 2, 2017, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. February 10, 2017 SERVED FEB 1 5 2017 Capital Reporting Company 3 Bench Opinion by Judge Joseph Robert Goeke February 2, 2017 Bruce Edward Haddix & Rae Anne Haddix v. Commissioner Docket No. 7385-16L 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 opinion is rendered pursuant to Rule 152 of the Tax Court Rules of Practice and Procedure and Internal Revenue Code Section 7459(b). Section references in the remainder of this opinion are to the Internal Revenue Code, and rule references are to the Tax Court Rules of Practice and Procedure. The Petitioner, Bruce Haddix, appeared at the trial of this case and testified. The parties also entered into a stipulation of facts, second supplemental stipulation of facts, and first supplemental stipulation of facts, with attached exhibits. Petitioner Rae Anne Haddix did not appear at trial, and the Court discussed with Mr. Haddix 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 whether she should be involved in the actual trial of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 this case earlier in the week of this trial session on January 30, 2017. Mr. Haddix represented that Mrs. Haddix could potentially have a health crisis if she attended the trial, and the Court indicated if she authorized Mr. Haddix tò appear on her behalf, it would not be necessary for her to appear. She did, however, execute the stipulations of fact which the parties have agreed to andnentered into the record in this case. This case is before the Court based upon our jurisdict'ion under Section 6330(d) to review proposed collection actions of the Internal Revenue Service after the issuance by the settlement officers of the Internal Revenue Service of notices of determination and the timely filing of a petition for such review, all of which has occurred in this case. At the time they filed their petition seeking review of the actions of the settlement officer assigned to their collection due process case, the Petitioners were residents of Texas. The notice of determination which is associated with our jurisdiction of this case was issued to the Petitioners, seeking collection of federal income tax liabilities for the years 2010, 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 5 6 7 8 9 2012, and 2013. The Petitioners filed Forms 1040, United States Individual Tax Returns, on a joint basis for each of the years which are before the Court. They did not pay their full tax liabilities for those three years when they filed the returns, and the returns for the years 2010 and 2012 were filed delinquently, in May and June of 2013, while the return for 2013 was timely failed, in April of 2014. 10 The parties have stipulated that the 11 Petitioners had total income in the years 2010, 2012, 12 13 14 15 16 and 2013, in the amounts as follows: $102,552, $71,882, and $96,174. Petitioners did report these amounts on the federal income tax returns which were filed. The parties have also stipulated that the 17 Petitioners had income in the year 2011 in the amount 18 19 of $111,688. That year is not before the Court regarding any proposed collection action, but it is . 20. relevant toplevel of income that Petitioners received 21 22 23 24 25 in that year. Petitioner Mr. Haddix testified that generally throughout the years before the Court, he was employed, and Mrs. Haddix was also employed. And the income on their returns is largely based upon the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 wages they received. Mrs. Haddix does have chronic medical problems which require hospital visits and monitoring by medical specialists. However, she generally remained employed from the period 2010 through the present. Petitioners offered no evidence that the cost of her medical condition was prohibitive, and 8 Mr. Haddix did testify that she had health insurance 9 through her employment. 10 11 12 13 14 15 The Internal Revenue Service mailed a notice of proposed levy to the Petitioners and suggested that the Petitioners would be able to seek a hearing for review of the proposed collection action, and the Petitioners sent a Form 12153, Request for a Collection Due Process or Equivalent 16 Hearing, in response to the proposed notice of levy. 17 18 19 This request was then assigned to a settlement officer at the Dallas Appeals Office, and the settlement officer mailed a letter to the 20 Petitioners, dated December 18, 2015, which scheduled 21 22 23 24 25 a hearing with the Petitioners on January 28, 2016. This hearing was conducted between the settlement officer and Mr. Haddix. During the hearing, Mr. Haddix sought abatement of penalties and interest for the years 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2010, 2012, and 2013. The settlement officer asked 2 Mr. Haddix to put the abatement request in writing, 3 4 5 6 7 8 9 10 11 12 13 14 15 but neither Mr. Haddix nor Mrs. Haddix ever did so. Also during the conference on January 28, 2016, Mr. Haddix indicated he was interested in filing an amended federal income tax return for the years in question, in order to claim additional dependency exemptions. When the settlement officer indicated that he should file an amended return reporting revised tax liabilities for each of the years before her, Mr. Haddix made a decision not to do so, because he did not want to be in conflict with the income tax returns his son might file for the same periods. Throughout the process with the settlement 16 officer and during this case, Mr. Haddix has 17 18 19 20 21 22 23 24 continued to seek discussion of alleged misconduct of county law enforcement officials in Johnson County, Texas, as well as private and government attorneys, judges, supervisors at his employer, and others, all of which are the focus of his arguments that the actions of these individuals are the basis for his delinquent federal tax liabilities. When the settlement officer was confronted 25 with these arguments, she indicated that they were 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 involving years prior to the actual underpayments of tax before her. And when this Court was faced with these arguments and requests to subpoena various individuals involved in these allegations, the Court determined that this information was not relevant to the collection action, and Mr. Haddix was repeatedly told this before the case was called for trial and at various other procedural stages of the case before the Tax Court. The basis for Mr. Haddix's assertions arise from a criminal arrest and conviction of his son, Jeremy Ryan Haddix, who was involved in an arrest that resulted in allegations against him for having an illegal weapon in 2009, which was eventually resolved with a nolo contendere plea in the year 2010. Because of Mr. Haddix's insistence that this information is somehow relevant to the current collection action, we entertained his stipulation of various records involving these matters. We've reviewed these matters, and we've also heard his testimony about why they are relevant. We find his testimony to be unconvincing, and we find no evidence that the matters he's concerned about had 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 9 1 2 3 4 5 6 any impact on his failure to timely pay his federal income tax returns, as he has not demonstrated any specific connection between those matters and his failure to timely file federal income tax returns and pay the tax liabilities reflected on those returns. Indeed, similar arguments were made by the 7 Petitioner son, Jeremy Ryan Haddix, in matters filed 8 in the United States District Court for the Northern 9 District of Texas, which ultimately were appealed to 10 the United States Court of Appeals for the Fifth 11 Circuit, in a case captioned Jeremy Ryan Haddix v. 12 State of Texas, et al, Number 11-10538, United States 13 Court of Appeals for the Fifth Circuit. 14 15 16 17 18 The Fifth Circuit filed an opinion per curiam in this matter on March 15, 2012. And the following represents a portion of the discussion in that per curiam opinion. "Consistent with his filings in the 19 District Court, Haddix's brief to this court contains 20 21 22 23 24 25 little law and many conclusional allegations. All of his contentions are centered on his thesis that his arrest, prosecution, and conviction are invalid. "He insists that the initial traffic stop that led to officers' discovery of the weapon in his vehicle was flawed and that the subsequent criminal 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 proceedings are the result of both deliberate and negligent misdeeds by various state officials. "Under Haddix's view, he raised meritorious claims against the prosecutors, his appointed attorneys, the judge, police officers, lawmakers, and law enforcement personnel. These claims are not, he avers, barred by Heck v. Humphrey, 512 US 477 (1994). "Further he asserts his case was not amenable to preliminary screening, that certain parties conspired to wrong him and that he is entitled to relief under Brady v. Maryland, 373 US 83 (1963). Finally he argues that the District Court's conclusions concerning prosecutorial, judicial and sovereign immunity were incorrect." "Our review of Haddix's filings and pertinent authority shows that his appeal is without arguable merit, and thus is not taken in good faith." This Court could basically say the same things about the arguments Mr. Haddix raised involving events that are peripheral to his actual tax liability and his failure to pay his tax liability. Those arguments have little or no bearing upon the merits of the present case, because Mr. Haddix has failed to make any connection between 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 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 those events and his failure to pay taxes. He did insist that he incurred some expenses for his son,as a result of these activities, but there was little evidence of these expenses, and they apparently were incurred before he filed the delinquent federal income tax returns for the first two years before the Court and the timely federal income tax return for 2013. We find no basis for a determination that any of these allegations are relevant to our determination whether to sustain the proposed collection action via levy in the present case. When the underlying liability is properly at issue in a collection due process case, the Court decides the issue of liability de novo, Sego v. Commissioner, 114 TC 604, 610 (2000). However, when the determination made by the settlement officer regarding the proposed collection action does not involve the underlying liability, the 20 Court reviews that determination for an abuse of 21 22 23 24 25 discretion. Goza v. Commissioner, 114 TC 176 (2000). Under Section 6330, a taxpayer is permitted to challenge the propriety of a levy to verify the proposed collection action against him and to offer alternative to the proposed collection action. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 Tucker v. Commissioner, 676 F.3d 1129, 1131 (D.C. 2 Cir.)(2012). 3 4 5 A taxpayer·may also, in certain circumstances, challenge the underlying tax liability; however, in order to do so, the taxpayer 6 must provide evidence to the settlement officer to 7 8 9 10 support the assertions that the liability asserted for collection is improper. Giamelli v. Commissioner, 129 TC 107, 115 (2007). In the present case it is clear that the 11 Petitioners did not provide any support for an 12 13 14 assertion that the liability was incorrect and made a conscious decision to not pursue the underlying liability. Therefore, it is not properly before the 15 Court in our review of the proposed collection 16 17 18 19 action. Hearings under Section 6330 are generally informal and may comprise informal oral and written communication. Dalton v. Commissioner, 682 F.3d 149, 20 .155 (First Circuit, 2012). 21 At the end of the process of the hearing 22 with the settlement officer, the settlement officer 23 must decide whether it is reasonable to proceed with 24 25 the intended collection action and must balance the need for the efficient collection of taxes with the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 2 3 4 5 6 7 8 legitimate concerns of the taxpayer that any collection be no more intrusive than necessary. Section 6330(c)(3). When, as here, the underlying tax liability is not at issue, the determination of the settlement officer is reviewed by this Court for abuse of discretion. Kindred v. Commissioner, 454 E.3d 688, 694 (Seventh Circuit, 2006) and Living Care 9 Alternatives of Utica v. United States, 411 F.3d 621, 10 11 625 (Sixth Circuit, 2005). Under the deferential standard of review 12 which takes into account both the informal nature of 13 14 15 16 17 18 19 20 21 22 23 24 25 the hearing process and the limited scope of our review, the settlement officer's determination will be set aside only if it is unreasonable in light of the record compiled by the agency. Dalton v. Commissioner, 682 F.3d 149, 154-55 (First Circuit, 2012). As we stated previously, both in appeals and before this Court, Petitioners have focused on collateral matters, as opposed to f the actual issues about their ability to pay the underlying tax liability. We will discuss no further these collateral arguments. As stated previously, we find them to be irrelevant. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 14 1 2 3 4 5 6 7 8 As stated previously, Petitioners did not provide any information that would support a reasonable inquiry into the underlying tax liability, nor did they offer any basis to abate the penalties pending before the settlement officer. Mr. Haddix has maintained that the collection of the proposed liabilities would result in hardship to the Petitioners. The Internal Revenue 9 Manual Section 5.16.1.2.1 defines hardship, "if a 10 11 12 13 14 taxpayer is unable to pay reasonably basic living expenses." The settlement officer reasonably reviewed the Form 433-A, Collection Information Statement, submitted by the Petitioners on April 23, 2015, in 15 making a determination about whether Petitioners 16 would suffer hardship. 17 18 Her analysis, based upon the information submitted by the Petitioners, was that the 19 Petitioners could, at a minimum, enter into a monthly 20 21 22 23 24 installment agreement to pay a significant portion of the tax liability. Mr. Haddix indicated to the settlement officer he did not wish to pursue an installment agreement or an offer in compromise. We believe in this regard the settlement 25 officer's determination that the Petitioners are able 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 15 1 2 3 4 5 6 7 8 9 to enter into an agrèement to pay a portion of their tax liabilities was correct. We believe if the Petitioners had devoted the energy which they devoted to pursuing these collateral matters to pursuing a reasonable installment agreement with the settlement officer, this case very well may have been resolved. However, Petitioners did not choose to do so, and we are left to review this case based upon 10 the positions taken by the Petitioners, both in this 11 Court and before the settlement officer, during which 12 Petitioners have failed to demonstrate any reasonable 13 14 15 16 17 basis why the proposed levy action should not be sustained. We find that the settlement officer properly balanced the needs to timely collect the taxes with the hardship on the Petitioners, and therefore we sustain Respondent's position in this 18 matter. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 4:38 p.m., the above- entitled matter was concluded.) . (cid:16)042 19 20 21 22 23 24 25 866.488.DEPO www.Capita1ReportingCompany.com