TAX COURT OPINION

Case: Marvel H. Cosner
Docket Number: 1480-14L
Judge: Marvel
Opinion Type: bench
Filed: 07/09/2015
Pages: 12

SYM UNITED STATES TAX COURT WASHINGTON, DC 20217 MARVEL H. COSNER, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Docket No. 1480-14 L ) ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of the proceedings of the above case before Judge L. Paige Marvel at Helena, Montana, on June 17, 2015, containing the Court's oral findings of fact and opinion. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) L. Paige Marvel Judge Dated: Washington, D.C. July 9, 2015 SERVED Jul 13 2015 Capital Reporting Company 3 1 2 Bench Opinion by Judge L. Paige Marvel June 17, 2015 3 Marvel H. Cosner, Petitioner v. Commissioner 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Docket No. 1480-14L 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 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. Unless otherwise indicated, subsequent section references made in this bench opinion are to the Internal Revenue Code of 1986 as amended in effect for the relevant period, and Rule references are to the Tax 18 Court Rules of Practice and Procedure. 19 Petitioner Marvel Cosner appeared pro se. Inga 20 Plucinski-Holbrook appeared on behalf of respondent. 21 Petitioner petitioned this Court pursuant to section 22 23 24 25 6330(d)(1) to review an adverse determination by respondent's Appeals Office (Appeals Office) upholding respondent's proposed levy to collect an unpaid Federal income tax liability for 2009. The 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 2 3 two issues we must decide are: (1) whether petitioner may challenge the merits of the underlying tax liability; and (2) whether respondent's Appeals 4 Office abused its discretion in upholding the 4 5 6 7 8 9 10 11 12 13 14 15 16 17 proposed levy. FINDINGS OF FACT Some of the facts have been stipulated. The stipulations of fact are incorporated herein by this reference. When he petitioned this Court, petitioner resided in Wyoming. Petitioner failed to file a Federal income tax return for taxable year 2009. On the basis of information returns submitted by third party payors, respondent prepared a substitute for return for 2009, and on October 6, 2010, respondent mailed a notice of deficiency to petitioner at two separate addresses, a physical address at which petitioner then resided and 18 still resides, and a post office box address that 19 petitioner used then and continues to use as his 20 mailing address. At least one of the addresses 21 22 23 24 constituted petitioner's last known address. In the notice of deficiency, respondent determined an income tax deficiency and additions to tax with respect to petitioner's 2009 taxable year. 25 United States Postal records show that the notice of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 7 8 9 10 11 12 deficiency was mailed to petitioner's last known address and was delivered. Petitioner did not petition this Court with respect to the notice of deficiency. After the deadline for filing a petition with respect to the deficiency had expired, respondent assessed the tax, additions to tax, and interest for 2009 (2009 tax liability or underlying liability). On March 21, 2011, respondent sent petitioner a notice of assessment and demand for payment. Because petitioner did not pay the assessed 2009 tax liability, respondent sent a Letter 1058, Final 13 Notice of Intent to Levy and Notice of Your Right to 14 a Hearing (levy notice), dated July 4, 2011, to 15 petitioner's last known address. Petitioner timely 16 17 18 19 requested a section 6330 hearing with respect to the levy notice in which he challenged the underlying liability. Petitioner's case was assigned to Settlement 20 Officer Linda Reeve (settlement officer) in the 21 22 23 24 25 Appeals Office. By letter dated October 20, 2011, the settlement officer requested financial information and petitioner's delinquent 2009 and 2010 returns from petitioner and scheduled a telephone conference for December 13, 2011. Petitioner did not 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 provide the requested documentation and did not participate in the scheduled conference call. In a letter to the settlement officer dated December 12, 2011 that the Appeals Office received on December 19, 2011, petitioner requested a face-to-face section 6330 conference, but the settlement officer did not grant his request because she concluded that petitioner could not challenge the underlying liability and did not submit the requested financial information or past due returns. Because petitioner did not submit any additional information, the Appeals Office determined on the basis of the administrative record to sustain the proposed levy. The Appeals Office sent petitioner a Notice of 15 Determination Concerning Collection Action(s) Under 16 17 18 Section 6320 and/or 6330 (notice of determination), dated March 2, 2012, to this effect. Petitioner mailed to the Court a letter dated 19 March 29, 2012, asking for the Court's assistance 20 with regard to the notice of determination but did 21 22 not enclose the notice of determination with the letter. The Court did not docket the letter as a 23 petition when it received the letter. As respondent 24 25 was unaware that petitioner wanted to appeal his section 6330 case to the Court, on December 6, 2013, 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 7 respondent served a levy on petitioner's employer to collect the unpaid 2009 tax liability. Respondent collected by levy the full amount of petitioner's liability before July 1, 2014. On July 22, 2014, the Court directed the Clerk of the Court to file nunc pro tunc petitioner's March 29, 2012, letter as a timely petition as of April 5, 2012. On July 29, 2014, respondent released the December 6, 2013, levy. Respondent refunded to petitioner all payments that he had received from the levy after petitioner's 2009 liability was fully paid but did not refund the amounts applied to the 2009 liability. DISCUSSION Section 6331(a) provides that if any person liable to pay any tax neglects or refuses to pay the tax within ten days after notice and demand, the Commissioner may collect the tax by levying upon the person's property or rights to property. Section 6330(a)(1), however, provides that the Commissioner may not levy unless he has first informed the taxpayer in writing of his right to a hearing. If the taxpayer timely requests a hearing, the hearing shall be held before an impartial officer or employee of the Appeals Office. Sec. 6330(b)(1) and (3). 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.Capita1ReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 8 During the section 6330 hearing, the taxpayer may raise any relevant issue, including appropriate spousal defenses, challenges to the appropriateness of the collection action, and collection alternatives. Sec. 6330(c)(2) (A). The taxpayer may also dispute the existence or amount of the underlying tax liability, but only if he did not receive a notice of deficiency or did not have a 9 prior opportunity to dispute the liability. Sec. 10 11 12 13 14 15 16 17 6330(c)(2) (B); Sego v. Commissioner 114 T.C. 604, 609 (2000). A taxpayer who presents a relevant, nonfrivolous reason for objecting to a proposed levy ordinarily will be offered a face-to-face hearing at the Appeals Office closest to the taxpayer's residence. Sec. 301.6330-1(d)(2), Q&A-D7, Proced. & Admin. Regs. Following the section 6330 hearing, the Appeals 18 Office must determine whether the proposed levy may 19 20 21 22 23 24 25 proceed. The Appeals Office is required to take into consideration: (1) verification presented by the Secretary that the requirements of applicable law and administrative procedure have been met; (2) relevant issues raised by the taxpayer; and (3) whether the proposed collection action appropriately balances the need for efficient collection of taxes with a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 taxpayer's concerns regarding the intrusiveness of the proposed collection action. Sec. 6330(c)(3). This Court has jurisdiction to review the Appeals Office's determination. Sec. 6330(d)(1) (A). However, the standard of review that we apply depends upon whether the underlying liability was properly at issue in the section 6330 hearing. If the underlying liability is properly at issue, we review the determination regarding the underlying liability de novo; if the underlying liability is not properly at issue, we review the determination for abuse of discretion. Sego v. Commissioner, 114 T.C. at 610. We will not conclude that a determination is an abuse of discretion unless it is arbitrary, capricious, or 15 without sound basis in fact or law. Woodral v. 16 17 18 19 20 21 22 23 24 25 Commissioner, 112 T.C. 19, 23 (1999). The existence or amount of the underlying liability is not properly at issue unless the taxpayer did not receive a notice of deficiency for the liability or did not otherwise have a prior opportunity to dispute it. Sec. 6330(c)(2)(B). If the taxpayer contests receipt of the notice of deficiency, the Commissioner must introduce evidence of actual mailing. Coleman v. Commissioner, 94 T.C. 82, 90 (1990). The Commissioner is entitled to a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 presumption of mailing if he (1) introduces evidence that the notice of deficiency existed, and (2) produces a properly completed U.S. Postal Service Form 3877 (Form 3877) or its equivalent, such as a certified mailing list. Id. Where the presumption of mailing arises, receipt of the notice of deficiency will be presumed in the absence of strong evidence to the contrary. See Sego v. Commissioner, 114 T.C. at 611. A taxpayer's self-serving claim that he did not receive the notice of deficiency will generally be insufficient to rebut the presumption. See id. Our determination of whether a taxpayer has received a notice of deficiency so as to preclude a challenge to the underlying tax liability under section 6330(c)(2)(B) is made on the preponderance of the evidence. See id. In this case, respondent produced a copy of the notice of deficiency and a certified mailing list that shows that respondent mailed the notice of deficiency to petitioner at two addresses, including the address on the petition, and credible evidence showing that the notice was delivered. At trial petitioner confirmed that he received mail at those addresses and expressed uncertainty as to whether he actually received the notice of deficiency. On this 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 record respondent is entitled to a presumption of 2 mailing and receipt that petitioner did not 3 4 5 6 7 8 successfully rebut. Accordingly, we find that petitioner received the notice of deficiency and cannot challenge the underlying liability here. We therefore review respondent's determination to sustain the levy for abuse of discretion. Id. at 610. The record clearly indicates that the Appeals 9 Office properly verified that the requirements of 10 applicable law and administrative procedure had been 11 met. Sec. 6330(c)(3); Wadleigh v. Commissioner, 134 12 13 14 15 16 17 18 19 20 21 22 23 24 25 T.C. 280, 287-288 (2010). Petitioner did not suggest a collection alternative or submit the necessary financial information and past due returns that would allow respondent to consider accepting one. See sec. 6330(c)(2) (A). Because petitioner was not entitled to challenge the underlying liability and was not eligible for a collection alternative, a face-to-face hearing would not have been productive, and Settlement Officer Reeve did not abuse her discretion in denying petitioner a face-to-face hearing under these circumstances. See Rivas v. Commissioner, T.C. Memo. 2012-20; sec. 301.6320-1(d)(2), Q&A-D8, Proced. & Admin. Regs.; see also Lunsford v. Commissioner, 117 T.C. 183, 189 (2001). The Appeals Office 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 properly balanced the need for efficient collection of taxes with petitioner's concerns regarding the intrusiveness of the proposed collection actions. Petitioner has failed to prove that the Appeals 5 Office abused its discretion in sustaining the 6 7 8 9 10 11 proposed levy. In fact, the record clearly establishes that petitioner failed to submit any of the required financial information that was necessary to evaluate collection alternatives and that petitioner never actually submitted an offer in compromise or other collection alternative. 12 Petitioner left the Appeals Office no choice but to 13 14 15 sustain the proposed levy. Because we sustain respondent's determination to proceed with the levy, we do not and need not address 16 whether respondent was required to return the money 17 18 19 20 21 collected as a result of the premature levy that respondent applied to satisfy the 2009 liability. We have considered the parties' remaining arguments, and to the extent not discussed above, conclude those arguments are irrelevant, moot, or 22 without merit. 23 To reflect the foregoing, an appropriate decision 24 will be issued. 25 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 AND OPINION. (Whereupon, at 10:40 a.m., the above- entitled matter was concluded.) 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.Capita1ReportingCompany.com