TAX COURT OPINION

Case: James H. Paiken
Docket Number: 244-13L
Judge: Goeke
Opinion Type: bench
Filed: 04/02/2015
Pages: 14

UNITED STATES TAX COURT WASHINGTON, DC 20217 JAMES H. PAIKEN, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, ) ) ) ) ) Docket No. 244-13 L. ) ) Respondent ) ORDER 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 respondent a copy of the pages of the transcript of the trial in the above case before Judge Joseph Robert Goeke at Portland, Oregonfon March 19, 2015, 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, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. April 2, 2015 SERVED APR 0 3 2015 Capital Reporting Company 3 1 Bench Opinion by Judge Joseph Robert Goeke 2 March 19, 2015 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 James H. Paiken v. Commissioner Docket No. 244-13L 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 bench opinion is rendered pursuant to the authority provided in Internal Revenue Code section 7459(b), and Tax Court Rule of Practice and Procedure 152. Hereinafter, section references are to the Internal Revenue Code currently in effect and rule references are to the Tax Court Rules of Practice and Procedure. The Court has jurisdiction over this case pursuant to section 6330(d). The Petitioner has 20 timely filed a petition seeking review of a Notice of 21 Determination issued by a Settlement Officer of 22 23 24 25 respondent, upholding Respondent's proposed collection action against the Petitioner for various income tax liabilities pursuant to a Notice of Levy. This case is before this division of the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 Court after a prior trial before Judge Diane Kroupa. Judge Kroupa retired before rendering an opinion in the case, and the Petitioner was offered the opportunity to have a second trial making a new record before this Court, and trial was held on 6 March 18, 2015, in Portland, Oregon. 7 8 9 10 11 12 13 14 The Petitioner was a resident of Oregon when he filed the petition in this case. As stated, Respondent seeks to collect income tax liabilities and additions to tax and interest associated with the years 2003 through 2007. At the time Respondent initially determined these liabilities, Petitioner had not filed federal income tax returns for those years. Subsequently, 15 Petitioner did file returns, and t the 2007 return 26- 16 17 18 19 20 21 22 23 24 25 filed by Petitioner, Petitioner reported tax liabilities in excess of those determined by Respondent, and Respondent now seeks to collect liabilities and additions to tax based upon the return filed by the Petitioner for 2007, which was assessed after it was filed. These liabilities or additions to tax and deficiencies total in excess of $100,000. Pursuant to section 6330, in the administrative review process, which Petitioner 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 undertook regarding Respondent's Notice of Levy, 2 Petitioner may seek collection alternatives, may seek 3 4 5 review of the underlying liability if he previously did not have an opportunity to have the underlying liability reviewed, or did not receive a Notice of 6 Deficiency. 7 8 9 10 11 12 13 14 15 16 And the Petitioner may also seek review of Respondent's administrative assessment process to determine if it was in accord with the statute and regulations and Respondent's procedures. In the present case, although at various times Petitioner has indicated he was interested in collection alternatives, and did allude to his efforts to file returns, which he subsequently did after the case was before the Court, Petitioner has not sought review or raised any issue before this 17 Court except that Petitioner asserts that 18 19 20 Respondent's assessment was not made in accord with statutory and regulatory procedures. When this case was called for trial and 21 Petitioner was asked if he intended to introduce any 22 23 24 25 evidence relative to the underlying tax liabilities, he declined to do so. And thus, the record in the case is limited to the Settlement Officer's review of the assessments that were made for the years in 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 6 1 2 3 4 question and the correspondence between Petitioner and the Settlement Officer, in which the Petitioner raised vari on®½ the same attacks on Respondent's assessments that he raised before this 5 Court. 6 7 8 9 10 11 12 13 14 In his in post trial brief, which was filed on August 8, 2014, P r.a.ce4¥e , Petitioner admits that he received signed Form 4340 records from the Internal Revenue Service concerning the assessments for the liabilities in question. Nevertheless, he asserts that he has not received all the proper information indicating that the assessments were made in a proper fashion. The Settlement Officer, in the Notice of 15 Determination issued, which preceded this Court's 16 17 18 review, indicates that he has reviewed Respondent's assessments made pursuant to substitutes for return filed by the Internal Revenue Service on behalf of 19 Petitioner since Petitioner had not filed timely 20 federal income tax returns, and that the Settlement 21 Officer had determined that the assessments were 22 23 24 25 proper. The facts pertinent to the one issue raised are fairly straightforward. Petitioner received in a hand-delivered fashion a form letter 1058 final 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 notice, Notice of Intent to Levy and Notice of Your 2 Rights to a Hearing, on April 18, 2012. Petitioner 3 then submitted a document he characterized as 4 Collection Appeal Request under IRC 6330 on May 7, 5 6 7 8 9 2012, and that began a process of administrative review involving the Settlement Officer of Respondent. There was a series of correspondence between Petitioner and the Settlement Officer, in 10 which the Settlement Officer requested information of 11 12 13 14 15 16 17 18 19 20 the Petitioner, if the Petitioner wished to seek collection alternatives. And the Settlement Officer asked the Petitioner to file returns for the years in question if he wished to have the underlying liabilities reviewed. All these events took place before October 2012, and by that time, Petitioner had not submitted any information to support collection alternatives, nor had Petitioner submitted the underlying income tax returns. At the end of October, the Settlement 21 Officer wrote a letter giving Petitioner one last 22 23 24 25 chance to provide this information. And when it was not received, the Settlement Officer issued a Notice of Determination, which was then timely petitioned to this Court by the Petitioner for review pursuant to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 9 10 11 section 6330(d). The Notice of Determination was issued on November 27, 2012, and upheld Respondent's attempts to collect via levy for the years 2003 through 2007. Given the fact that the Petitioner has narrowed the areas of dispute and declined to pursue any other aspects of the case, we will focus our attention on Petitioner's challenge to the assessments in question. Petitioner's challenge in the present case is very analogous to the position taken by the 12 Petitioner in the case of Tucker v. Commissioner, 13 T.C. Memo 2012-30, affirmed 504 F. App'x 166 (3rd 14 Cir. 2012). 15 16 17 18 19 20 21 22 23 24 25 In the.Tucker case, the Court first discussed whether the underlying tax liability was at issue. And when the issue had never been raised with the Appeals Officer, the Court determined it could not be part of the Appeals Officer determination, citing Giamelli v. Commissioner, 129 T.C. 107, 112- 113 (2007), and Treas. Reg. section 301.6330-1(f)(2), procedural and administrative regulations. Both those authorities are equally applicable to the present case, as we previously stated. And we will move on to the only argument 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 9 1 Petitioner raised at trial. 2 3 4 5 6 Prior to trial, Respondent filed a motion seeking an Order to Show Cause under Tax Court Rule 91(f), why certain documents shouldn't be deemed stipulated. Petitioner objected to the motion, but provided no information that would be inconsistent 7 with either the proposed stipulations or the exhibits 8 9 10 11 12 13 14 15 16 attached to Respondent's proposed stipulation. And the Court determined that the documents offered in Respondent's proposed stipulation should be admitted into evidence as exhibits and that the stipulations proposed by Respondent should be made as stipulations of fact pursuant to the Court's rules. This information is the basic administrative record previously discussed and alluded to, and provides the background for the 17 Notice of Determination issued by the Settlement 18 Officer. 19 20 21 22 23 Also included in the Stipulation of Facts and the admitted documents are the returns for the years in question, which were filed by the Petitioner after this case was docketed, but also after the Settlement Officer had issued the Notice of 24 Determination. 25 As the Court determined in Tucker, the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 determination of an Appeals Officer reviewing collection action must take into consideration verification that the requirements of applicable law and administrative procedures have been met, and 5 whether the proposed collection action balances the 6 7 8 9 10 11 12 13 need for efficient collection of taxes with the legitimate concern of the person that any collection be no more intrusive than necessary. See also section 6330(c) (3) in Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). As previously stated in Tucker, the only issue raised by the taxpayer was the assertion that the assessments made by Respondent were not in accord 14 with the statute and regulations. 15 16 17 18 19 20 21 22 23 24 25 In Tucker, the Tax Court held that a Form 4340 constitutes presumptive evidence that a tax has been validly assessed pursuant to section 6203, citing Davis v. Commissioner, 115 T.C. 35, 40 (2000), and Carillo v. Commissioner, T.C. Memo 2005-290. The Court specifically stated in Tucker, "Consequently, absent a showing by the taxpayer of some irregularity in the assessment procedure, that would raise a question about the validity of the assessments, a form 4340 reflecting that tax liabilities were assessed and remain unpaid, is 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company sufficient to support collection action under section 11 6330." Tucker also points out authority for the proposition that it is not an abuse of discretion for an Appeals Officer to rely upon a Form 4340 or a computer transcript of account to comply with section 6330(c)(1), citing Nester v. Commissioner, 118 T.C. 163, 166 (2002) other cases. In the present case, the record of trial contains Forms 4340 for each of the taxable years at issue which would support the fact that assessments were made pursuant to substitute for returns ans-ehen 51.ubsequewt Notices of Deficiency which were not petitioned before the United States Tax Court. The Tax Court has previously held that a Form 4340 provides all the documentation which is required to be provided to a taxpayer pursuant to section 6203, citing Roberts v. Commissioner, 118 T.C. 365, 370-371 (2002), affirmed 329 F.3rd 1224 (11th Cir. 2003). When a taxpayer has received a Form 4340 and failed to raise a bona fide issue relative to that form, the Tax Court has consistently upheld the validity of the assessments. See for example, Tucker and Holliday v. Commissioner, T.C. Memo 2005-240. 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 12 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 The Court of Appeals' opinion in Tucker goes into more detail concerning Respondent's obligations under section 6203 and the appropriate regulations. And given Petitioner's arguments, we think some additional discussion of those authorities is warranted. Section 6203 provides as follows: "The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment." Treas. Reg. 301.6203-1 of the Procedural and Administrative Regulations sets forth in some detail the method of assessment. We will quote the entire regulation. "The district director and the director of the regional service center shall appoint one or more assessment officers. The district director shall also appoint assessment officers in the service center servicing his district. The assessment shall be made by an assessment officer signing the summary record of assessment. The summary record, through supporting records, shall provide identification of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 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 the taxpayer, the character of the liability assessed, the taxable period, if applicable, and the amount of the assessment. The amount of the assessment shall, in the case of tax shown on a return by the taxpayer, be the amount so shown, and in all other cases the amount of the assessment shall be the amount shown on the supporting list or record. The date of the assessment is the date the summary record is signed by an assessment officer. If the taxpayer requests a copy of the record of assessment, he shall be furnished a copy of the pertinent parts of the assessment which set forth the name of the taxpayer, the date of the assessment, the character of the liability assessed, the taxable period, if applicable, and the amounts assessed. " As the Court of Appeals points out in Tucker v. Commissioner, 506 F. App'x 166 (3rd Cir. 2012), the summary record to which the regulation refers is generally known as Form 23(c), or more recently, Form RACS006. The Third Circuit Court of Appeals cites March v. IRS, 335 F.3rd 1186, 1188 (10th Cir. 2003) for discussion of these forms. Form 4340 is not the actual summary record of assessment, but instead, has the information which provides when the assessment was made and the amount of the 866.488.DEPO www.CapitalReportingCompany.com o Capital Reporting Company 1 14 1 2 3 4 5 6 7 8 9 10 11 assessment. The 3rd Circuit cites Perez v. United States, 312 F.3rd, 191, 193 (5th Cir. 2002) for discussion which distinguishes form 4340 from the summary record of assessment. As the 3rd Circuit Court of Appeals discusses in Tucker, Form 4330 is a computer printout reflecting the current state of assessment. The Court of Appeals acknowledges that this form has consistently been held to provide a taxpayer with a copy of the actual summary record of assessment and that the form has been held to fulfill the 12 Government's requirement to provide information to 13 the taxpayer pursuant to section 6203. The Tax Court 14 Authority likewise is consistent with the analysis of 15 16 17 18 19 20 21 22 23 24 25 the 3rd Circuit in Tucker. See Davis v. Commissioner, 115 T. C. 35 (2000) , as previously cited. For example, in Roberts v. Commissioner, 329 F.3rd 1224, 1228 (11th Cir. 2003), the Court stated, "A petitioner is not prejudiced by having received copies of the records of assessment only after the CDP hearing. " So the timing of when the Petitioner in the present case received the form 4340 is not a relevant issue, as he acknowledged in his trial brief that he had received the Form 4340 well before the trial of 866.488.DEPO www.CapitalReportingCompany.com 0 1 1 2 this case. Capital Reporting Company 15 From a careful review of Procedural and 3 Administrative Reg., section 301.6203-1 previously 4 5 quoted, there's no requirement that the Petitioner actually received a signed copy of the summary record 6 which underlies the original assessment. And we .. 7 8 9 10 11 12 13 could find no authority which specifically required that. Rather, as previously stated, all the authority would support the proposition that form 4340 is a sufficient notification to the taxpayer pursuant to section 6203. Given this authority, we believe that the only argument made by the Petitioner in this case is 14 misplaced, and that there's no basis to determine that the Settlement Officer did not fulfill the statutory requirements in sustaining the proposed collection action. Given that determination, a decision will be entered for Respondent. This concludes the Court's oral findings of fact and opinion in this case. THE CLERK: All rise. (Whereupon, at 9:50 a.m., the above- entitled matter was concluded.) 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com