TAX COURT OPINION

Case: Carroll Warren Harrison
Docket Number: 29559-08S
Judge: Colvin
Opinion Type: bench
Filed: 03/19/2010
Pages: 11

O t 4~VY .~ firm >e nJ UNITED STATES TAX COURT WASHINGTON, DC 2021 7 CARROLL WARREN HARRISON , Petitioner v . ) Docket No . 2 1 9559-08S . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R 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 hearing of the .above case before Special Trial Judge Robert N . Armen, Jr . at Detroit, Michigan, onlMarch 3, 2010, containing his oral findings of fact and opinion rendered at the conclusion of the hearing . In accordance with the oral findings of fact and opinion,, an Order and Decision will be entered . I (Signed ) Robert N . Armen, Jr. Special Trial Judg e Dated : Washington, D .C . March 19, 2010 VEX= :1 AR 2 2 2010 J 1 Bench'Opinion by Special'Trial Judge Robert N . Armen 2 March 3, 2010 3 ' Ha rrison v . Commissioner Docket No . 29559-08 S 4 5 THE COURT HAS DECIDED TO RENDER ORAL FINDINGS OF 6 FACT AND OPINION IN THIS CASE, AND THE FOLLOWIN G 7 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 . 10 I.I . 11 This-proceeding was .heard as a Small Tax Case 12 pursuant to the provisions of section 7463(f)(2) of 13 the Internal Revenue Code of 1986,°as amended, and 14 Rules 170 through 175 of the Tax Court Rules o f 15 Practice and Procedure . See and compare Rules 330 16 through 334 of the Tax Court Rules of Practice and 17 Procedure . 18 III, 19 This bench opinion is made pursuant to the . 20 authority granted by section 7459(b) of the,Internal 21 Revenue Code of 1986, as - amended, and Rule 152 of the 22 Tax Court Rules'of Practice and Procedure . 23 Hereinafter in this bench opinion, and unles s 24 otherwise indicated, all section numbers .refer to the 25 Internal Revenue Code of 1986, as amended, .and al l Heritage Reporting Corporation (202) 628-4888 1 Rule numbers refer to the Tax Court Rules of Practic e 3 2 and Procedure . IV . Rebecca M . Clark appeared on behalf o f respondent . There was no appearance by or on behalf of petitioner . V . This case-is before the Court on respondent' s Motion For Summary Judgment , filed February 2, 2010 , 7 8 10 pursuant to Rule 121 , and supplemented March 1, 2010 . 11 By Order dated and served February 12, ;2010, the 12 Court calendared respondent ' s motion for hearing on 13 March 1 , 2010, in Detroit , Michigan . ( The Court had 14 previously , by notice dated September 23, 2009 , 15 calendared petitioner ' s case for trial at the Court's 16 March 1 , 2010 Detroit , Michigan trial session . ) 17 VI . 18 The facts relevant to the disposition of 19 respondent ' s motion are as follows : 20 Petitioner resided in the State of Michigan at 21 the time that the petition was filed with the Court . 22 Petitioner did not file returns for 2000 and 23 2004 . Accordingly, pursuant to the deficienc y 24 procedures , respondent assessed income taxes , 25 applicable penalties , and statutory interest for those Heritage Reporting Corporatio n (202) 628-4888 4 1 2 years on May 14 , 2007 . On that same date , 2 respondent sent petitioner a statutory notice of 3 balance due, i . e ., notice and demand for payment 4 within the meaning of section 6303(a) . Petitioner did 5 not pay the amounts due . 6 For 2005 , petitioner filed a timely return an d 7 paid the liability reported thereon . However, on August 20, 2007, additional tax of $1, 084 wa s 9 assessed , together with statutory interest . (The 10 record is not crystal clear whether the assessment was 11 pursuant to agreement or pursuant to a defaulte d 12 notice of deficiency ; however , it would appear the 13 former .) On that same date , respondent sen t 14 petitioner a statutory notice of balance due . 15 Petitioner did not pay the amount due . 16 For 2006 , petitioner filed a timely return but 17 did not pay in full the 'liability reported thereon . 18 On July 2, 2007, respondent assessed the reported tax, 19 together with a failure to pay penalty and statutory .20 interest . On that same date , respondent sent 21 petitioner a statutory notice of balance due . 22 Petitioner did not pay the amount due . 23 In November 2007, respondent filed a notice of 24 Federal tax lien in respect of petitioner' s 25 outstanding liabilities for 2000 and 2004 through Heritage Reporting Corporatio n (202) 628-4888 5 1 2006 . Respondent provided notice to petitioner 2 pursuant to section 6320, and petitioner timel y 3 requested an administrative hearing . Ultimately, on 4 November 5, 20 .08, respondent's Appeals Office issued a, 5 Notice of Determination sustaining the filing of th e lien . Petitioner then timely appealed to this Court . Sec . 6330(d) . 8 VII . 9 Summary Judgment 10 Summary judgment is; intended to expedit e 11 litigation and avoid unnecessary and expensive trials . 12 Fla . Peach Corp . v . Commissioner , 90 T .C . 678, 68 1 13 (1988) ; Summary judgment may be granted with respect 14 to all or any part of the legal issues in controversy '15 "if the pleadings, answers to interrogatories , 16 depositions, admissions,- and any other acceptabl e 17 materials, together with the affidavits, if any, show 18 that there is no genuine, issue as to any material fact 19 and that a decision may be rendered as a matter o f 20 law ." Rule 121(a) and (b) . 21 After carefully reviewing the record, we are 22 satisfied that there is no genuine issue as to any 23 material fact, and a decision may be rendered as a 24 matter of law . Accordingly, we shall gran t 25 respondent's Motion For Summary Judgment, a s Heritage Reporting corporation (202) 628-4888 r 1 supplemented . 2 VIII . 3 Section 6321 imposes a lien in favor of the 4 United States on all property and rights to property 5 of a person when demand for payment of that person' s liability for taxes has been made and the person fail s 7 to pay those taxes . The lien arises when th e 8 assessment is made . Sec . 6322 . Section 6323(a) 9 requires the Secretary to file notice of Federal tax 10 lien if such lien is to be valid against an y 11 purchaser, holder of a security interest, mechanic's 12 lienor, or judgment lien; creditor . Behling'v . 13 Commissioner , 118 T .C . 572, 575 (2002) . 14 Thus, a lien is a security device that assures 15 the Government of its priority over other possible 16 creditors . Elliott, Federal Tax Collections, Liens , 17 and Levies, par . 9 .05 (2d ed . 2005) . Unlike a levy, a 18 lien does not deprive a taxpayer of property . Id . ; 19 see also United States v . Whiting Pools . Inc . , 462 .20 U .S . 198, 210-211 (1983)'. 21 Section 6320 provides that the Secretary shall 22 furnish the person described in section 6321 wit h 23 written notice of the filing of a notice of lien under 24 section 6323 . Section 6320 further provides that the 25 person may request administrative review of the matter Heritage Reporting Corporatio n (202): 628-4888 1 in the form of an Appeal's office hearing . Section 2 6320 ( c) provides . that the Appeals Office hearin g 3 generally shall be conducted consistent with the procedures set forth in section 6330 ( c), (d), and (e) . Section 6330 ( c) provides for review with respec t 6 to collection issues , the appropriateness of the 7 'Commissioner's intended 'collection action, and 8 possible alternative means of collection . Section 6330 ( c)(2)(B) provides that the existence or the- 10 amount of the underlying tax liability may b e 11 contested at an Appeals Office hearing , but only if 12 the person did not receive a notice of deficiency or 13 did not otherwise have an earlier opportunity t o 14 dispute such tax liability . Goza v . Commissioner , 114 15 T .C . 176, 180-181 (2000 ) ; see Sego v . Commissioner , 16 114 T .C . 604 , 609 (2000) . Section .6330 ( d) provides 17 for judicial review of the administrative 18 determination in the Tax Court . 19 IX . 20 Petitioner did not seriously challenge either the ' 21 existence or amount of any of the underlying 22 liabilities during the administrative hearing, and he 23 has not done so in the instant proceeding . 24 Accordingly,-that matter is not before us . .25 Petitioner did not' provide a complete Collection Heritage Reporting Corporation, , (202) 628-4888 1 Information Statement during the administrativ e 2 hearing . For that reason, and for the additiona l 3 reason that petitioner was not current with all of his 4 Federal tax filings, respondent's settlement officer 5 declined to consider any collection alternative . This 6 declination was not an abuse of discretion . E .g . , 7 Olsen v . United States , 414 F .3d 144, 154 (1st Cir . 2005 ), holding that the Commissioner 's Appeals office did not abuse its discretion in rejecting a propose d 10 offer-in-compromise based, inter alia, on the 11 taxpayers' failure to provide the information deemed 12 necessary to evaluate the offer (and .in particular, 13 the taxpayers' claimed inability to pay) ; Orum v . 14 Commissioner , 412 F .3d 819 (7th Cir . 2005), affg . 12 3 15 T .C . 1 (2004), holding that the Commissioner's Appeals 16 Office did not abuse its, discretion in rejecting a 17 proposed installment payment agreement because, inter 18 alia, the taxpayers failed to furnish current 19 financial information and that judicial review of the 20 Commissioner's decision not to accept a collectio n 21 alternative is deferential ; Moorhous v . Commissioner , 22 T .C . Memo . 2003-183 ; Rodriguez v . Commissioner , T .C . 23 Memo . 2003-153 ; Londono v . Commissioner , T .C . Memo . 24 2003-99 . 25 Petitioner appears to rely on the fact that he Heritage Reporting Corporatio n (202) 628-4888 9 1 filed a petition in bankruptcy under Chapter 7 of the 2 Bankruptcy Code in December 2008 and was granted a 3 discharge by the Bankruptcy Court in March 2009 . 4 However, petitioner did not file an income ta x return for 2000 or 20 .04 . Accordingly, petitioner's tax liabilities for those years were not discharged in bankruptcy . See 11 U .S .C . sec . 523(a) (1) (B) (i) , barring discharge when ajrequired return has not been filed ; Swanson v . Commissioner , 121 T .C . 11.1, 120.-12 5 1 0 11 (2003) . Petitioner timely filed his ' returns . for 2005 an d 12 2006 in April 20 .06 and April 2007, respectively . 13 Those tax filings were within 3 years of December 18 ., 14 2008, the date on which petitioner filed his petition 15 in bankruptcy . Accordingly, petitioner's tax 16 liabilities for those years were not discharged in 17 bankruptcy . See 11 U .S .C . secs . 523(a)(1)(A) , 18 507(a)(8)(A)(i) ; Young v . United States , 535 U .S . 43 19 (2002) . 20 The foregoing should be dispositive o f 21- petitioner's bankruptcy contentions . But we migh t 22 also make-note of the fact that a Federal tax lien i s 23 not extinguished by personal discharge in bankruptcy . 24 11 U . S .C . sec . 522(c)( 2) ;(B) (2000 ) ; see also Johnson 25 , v . Home State Bank , 501 U . S . 78, 84 (1991) . In other Heritage Reporting Corporation (202) 628-4888 . 1 0 words, a discharge of personal liability in bankruptcy "extinguishes-only one mode of enforcing a claim -- 3 namely, an action against the debtor in personam -- 4 while leaving intact another -- namely, an actio n 5 against the debtor in rem ." Johnson v . Home State Bank , supra at 84 . Thus., any existing Federal tax lien remains in effect and attaches to assets owne d 8 prior to the date of filing of the bankruptc y 9 petition . 11 U .S .C . sec . 522(c)(2)(B) (2000) ; In re 10 Connor, 27 F .3d 365, 366' (9th Cir . 1994) (" A 11 preexisting lien on property, however, remains 12 enforceable against that property even after a n 13 individual ' s personal liability has been 14 discharged .") . See In re Isom , 901 F . 2d 744 , 745 (9th 01-1 0 j ~ 15 Cir . 1990) ; see also 11iU .S . C . secs . 727 and 524(a ) 16 (2000 ) 17 X . 18 in the absence of a valid issue for review, we 19 conclude that respondent is entitled to judgment as a 20 matter of law sustaining the notice of determination . 21 Accordingly, we shall grant respondent's motion an d 22 thereby sustain the determination of the Appeals 23 Office permitting the lien to stand . 24 XI . 25 In sum, we shall enter an Order And Decision i n Heritage Reporting Corporation . (202) 628-4888 11 1 which we shall ( 1) grant respondent ' s Motion For 2 Summary Judgment , filed February 2, 2010, an d 3 supplemented March 1 , 20110 , and (2 ) decide that 4 respondent may proceed with the proposed collectio n action ( notice of Federal tax lien ) for the 4 taxable years-2000 and 2004 through 2006 , as determined in the notice of determination -dated November 5, 2008, upo n 8 which notice this case is based . XII . 10 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT 11 AND OPINION IN THIS CASE . 12 (Whereupon , at 2 :04 p .m ., the bench opinion 13 in the above - entitled matter was concluded . ) 14 15 // 1 6 17 18 19 20 21 22 23 24 25 Heritage Reporting Corporation (202) 628-4888