TAX COURT OPINION

Case: Marilyn Sampson
Docket Number: 17604-10L
Judge: Goeke
Opinion Type: bench
Filed: 10/03/2011
Pages: 11

UNITED STATES TAX COURT WASHINGTON, DC 20217 MARILYN SAMPSON, P titioner v. COMMISSIONER OF NTERNAL REVENUE, R spondent ) ) .) ) ) ) O R D. E R Docket No. 17604-1·0L. 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 petitioner and to rehpondent a copy of the pageé of . the transcript of the trial in t e above case befòre. Judge Joseph Robert Goeke at tts, on September 15, 2011, containing his oral Boston, Massachu findings of the trial. fact and opinion rendered at the conölusion of In accordanc with the óral findings of fact and opinion, a decision will be ntered for respondent. (Signed) Joseph Robert Goeke udge Dated: Washingto , D. C. 2011 October 3 . .SÉRVED OCT 5 2011 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 Bench O inion by Judge Joseph Robert Goeke Sampson v. Commissioner Docket No. 17604-10L Septemb r 15, 2011 THE COURT: The Court has decided to render oral f i dings of f act and opinion in this case and the followi g represents the Court's oral findings of fact and opi ion. The oral findings of fact and opinion shall not be elied upon as precedent in any other case . Section references after this are to the Internal Revenue Code. And rule references are to the Tax Court Rules of Practice and Procedure . This opinion is authorized by Section 7459 nd Rule 152 . We have isdiction over the present ase under Section 6330 . Our jurisdictio is to re iew Respondent' s determination to proceed with col ection action via levy for the 2004 income tax liab lities and additions to tax owed by the Petition r. Previously, in the present case, we denied the part:.es' respective motions for summary judgment and accepted the question whether Petitioner received a notice of deficiency for 2004 as a question of fact for litigation. In the present case, we do not reach the Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 4 questio of whether the Petitioner received the notice of defi iency because we determine that Petitioner is li ble or the underlying tax liability which she concede and that she is liable for the interest on the tax liability which she failed to.raise with the settlem nt officer in her hearing under Section 6330. Finally, we determined that the Petitioner is liab e for the additions to tax under Section 6651(A) (1), 6651(A) (2), and 6654 (A). Our determination on the merits that the Petitio er has failed to sustain her burden of proof of reaso able cause for her delinquent filing of Federal income tax returns causes us not to have to reach'Êh question whether she received the notice of deficien y because we determined (cid:0)541heis liable for 4&eëh the tax, the addition to tax and the interest for the year 2004. Petitioner has the burden of proof in the present atter to establish re s nable cause for the addition to tax under Rule 142 . We find that Section 7491 is not operable in the pres nt. case to shift the burden of proof to Responde t. We summarize the facts. as follows. Certain f the f cts was stipulated. And those stipulated Heritage Reporting Corporation (202) 628-4888 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5 facts a e incorporated by this reference. The Petitioner resided in Burlington, Massach set-ts when she filed the petition in this case. Respondent issued a notice of determination concern ng collection action which 'sustained collect on via levy. The notice of the determination was iss ed in July 2010 after Petitioner had requested the hea ing following Respondent's issuance of a final notice f intent to levy and notice of her right to a hearing for the taxable year. 2004 which was issued in December 2009. Petitioner timely filed a petition subseque to Respondent's notice of determination. And as s ated previously, we have jurisdiction to determin whether Respondent's notice of determin tion, and the related collection action should b sustained. . We first note that the Petitioner did not provide he settlement of f icer with collection informat on necessary to process a collection alternat ve. Petitioner failed to file a. Federal income t x return in a timely fashion. for the year 2004. A d she had a history of failing to timely file Federal ncome tax returns f or prior years . ! Heritage Reporting Corporation (202) 628-4888 In 2004, Petitioner received interest income which w s subject of forms 1099s issued to her by banks. The amount of the interest income, pursuant to the for s 1099s is $54,066 and $103,388. Petitioner also had a small amount of other interes income and income she received as a result of disabil ty payments from the Social Security Adminis ration. Respondent prepared a substitute for return for the Petitioner for 2004 pursuant to Section 6020 (B) . The forms 1099 issued to the Petitioner showed t at she received interest income from .tiëe US savings onds and contained an explanation wliiali relat-ive to the income she received, which explained that int rest on US savings bonds, treasury bills, treasury bonds and treasury notes may or may not be taxable. . The record reflects that the Petitioner owes $37,989 n Federal income tax for 2004. At trial, she contested interest on this liabilit after 2004 until 2007. But, she failed to raise th abatement of this interest as an issue before t e settlement officer. And we did not consider that issue at trial. Heritage Reporting Corporation . (202) 628-4888 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 She also raised the addition to tax amount previou ly referenced as a result of her delinquent filing f the 2004 return. And we entertained her testimo y and her attempt to show reasonable cause for her del nquent filing at trial. The Petitioner did file a 2004 Federal . income ax return, but not until 2010. She had previou ly had prepared, for the year 2000. and also for the year 2001, Federal income tax returns in January f .2006. However, she failed to file those returns ntil 2010 as well. The returns which were prepared for her in 2006 were prepared by a return preparer who was_-, provided to her, based upon .her testimony, t-hrough-the assistan e .of her on. She. tes ified at trial that she did not inquire f this return preparer in 2006 about her 2004 situatio even though she knew that she had not filed . a Federa tax income return for 2004 . She did not explain hy she had failed to file any of the returns for 2001 2002, 2003 and 2004 until 2010. Other than her expl nation that she was subject- to depression. Concerning Petitioner' s illness of depressi n, she stated that, in 2004, she was able to function And by her own testimony, was able to keep Heritage Reporting Corporation (202) 628-4888 4 5 6 . 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 . 8 up with things that had to be done . Based upon her testimony, she had a discuss on with her companion, who was an accountant, some ti e about the time her 2004 income tax return was due. And that, based upon that discussion, she determi ed that income from savings bonds was not reporta le for Federal income tax purposes. Given that discussion, she stated in testimo y, that she made a decision that, her Federal income tax return for 2004 was not essential, since she felt like any other income she had was not signific nt enough to require the payment .of signific nt .amount of tax. Therefore, she did not take any steps to file 004 Federal income tax return until 20 0. The question presented by her testimony, which we have before us as a legal matter here . is, whether er d pression and her discussion with her niale com anion, who is an accountant, . constitute reasonab e cause . Prior to reaching that question, we determin whether, as a legal proposition, she can raise an other issue in the present case concerning the abat ment of interest. Under Giamelli v. Commissioner 129 TC 107 (2007) , he only issue which a taxpayer may raise Heritage Reporting Corporation (202) 628-4888 1 2 7 8. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 under S ction 6330 (2) (A) , in a Tax. Court proceeding review1 g a settlement officer's hearing in the collect on case, is an issue which was properly raised pursuan to that subsection with the settlement officer A taxpayer, having failed to raise such an issue w th the settlement officer, may not raise the issue i the first instance before this Court. We find.that Petitioner's argument relative to the nderlying interest for her 2004 .tax liability is such an.issue. .And that. she did fail.to raise that issue b fore the settlement officer by her own, admission at trial. We also find that, even if the Petitioner could pr perly raise that issue, she has not shown a basis on which her tax liability for 2004 should be abated. She sought abatement up until 2007 . based upon her info mal conversation with her male companion that led her o believe she did not have to pay tax on the interes from her savings bonds. For the reasons we have explained here and this -- t his .conversation was not a reasonable cause for her ailure to file a Federal income tax return and for 1 er failure to timely pay the tax associated with t he interest on the savings bonds . Heritage Reporting Corporation (202) 628-4888 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 And theref re, abatement would not be appropr ate in any event . Concerning the question of whether either Petitio er's illness of depression or her discussion wfth he male companion about interest income should constit te reasonable cause for her delinquent filing of her ederal income tax return for 2004, we look to the qui ance provided in the context of reasonable cause i negligence cases in the case law. In Freytag v.. Commissioner, 89 TC 849 (1987), affirmed 904F 2nd 1011 (Fifth. Circuit, 1990), af f irme d on another is sue, 501 US 8 68 (1991) , the Court ex lained that, reliance upon an advisor must reflect onversations with an engaged expert with knowledg of the. pertinent facts who provided informed advice o the subject matt.er. Such an expert must be an indep ndent party, LaVerne v. Commissioner 94 TC 637 (199 ), affirmed 956F 2nd 274 (Ninth Circuit, 1992) . nfort(cid:0)540unatelyfor the Petitioner, her informal discussions with her male companion does not meet the standard for advice by a professional. Her male com anion was not engaged to . provide her with legal ad ice . He was not provided all of the informat on that was pertinent. And he was not an Heritage Reporting Corporation (202) 628-4888 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 11 indepen ent party. Petitioner failed to show her male companion fo 109 . Although Petitioner had access to an indepen ent and qualified expert in her return prepare , who prepared the earlier returns in 2006, which s e failed to file until 2010, she- never consult d with that return preparer relative to the questi s underlying the 2004 tax liability. We are left with no other possible cohclusi n other than that the Petitioner fàiled to carry he burden of proof and demonstrate a reasonable cost for her delinquent»filing in 2010. . And that therefor , the underlying liability for the addition to tax a d the associated-interest is sustained. Petitioner' s decision to deem the tax return as non e sentÁal is the core issue. And we find no reasonáb e cause for this intentional decision because Petition r has failed to show that her depression was sufficie t to provide reasonable cause. And she has åls fai ed to show that her reliance upon her __ on w th her male companion meets the requirem nts of the advice of independent experts -- of an in pendent expert . For the reasons explained herein, a decision win be entered for the Respondent. Heritage Reporting Corporation (202) 628-4888 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 This concludes the Court's oral findings of fact an opinion in this case. (Whereupon, at 9:54 a.m., the bench opinion in the bove-entitled matter was concluded.) 12 / . Heritage Reporting Corporation (202) 628-4888