TAX COURT OPINION

Case: Ernestine Forrest
Docket Number: 8989-10L
Judge: Kroupa
Opinion Type: bench
Filed: 06/27/2011
Pages: 13

UNITED STATES TAX COURT WASHINGTON, DC 20217 ERNESTINE FORREST, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. KVC ) ) ) ) Docket No. 8989-10 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 the pages of transmit the to petitioner and to respondent a copy of transcript of June 10, 2011, containing her oral rendered in this case. the above case before Judge Diane L. Kroupa on findings of fact and opinion In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. June 27, 2011 SERVED Jun 30 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 3 Bench Opinion By Judge Diane L. Kroupa June 10, 2011 Ernestine Forrest v. Commissioner Docket No. 8989-10L THE COURT: THE COURT HAS DECIDED TO RENDER ORAL FINDINGS OF FACT AND OPINION IN THIS CASE AND THE FOLLOWING REPRESENTS T E COURT'S ORAL FINDINGS OF FACT AND OPINION. THESE OR L 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 in sþction 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the taxable year 2006, and all Rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving the filing of a notice of Federal tax lien to collect petitioner's unpaid liabilities for 2006. This collection review mat er is before the Court on respondent's Motion for Summary Judgment, filed February 23, 2011. The Court scheduled the motion for a hearing at the tria session of the Court in Los Angeles, California on June 6, 2011. Petitioner was ordered to file a res onse to respondent's motion by March 31, 2011. Petitioner asked for a 2-month extension. The Court granted her a 1-month extension Heritage Raporting 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 4 to May 2, 2011. Petitioner did not submit a response to respondent's motion until June 6, 2011, when the Court was in Los Angeles for the trial session. The Court filed her response on June 6, 2011, and heard oral arguments on respondent's motion from both parties on June 10, 2011. Petitioner appeared pro se . She is an attorney licensed to p, actice law. Nora Demirjian appeared on behalf of respondent. FINDINGS OF FACT The record e tablishes the following facts. Petitioner resided in California when she filed the petition for collection review. Petitioner is an attorney licensed to practice law in California. Petitioner received an employment discrimination award in 2006 that included back wages for several years being reported in 2006 . She reported the $131,368 award amount in income when she timely filed a return for 2006. She reported a $31,114.22 tax liabil'ty for 2006 that she failed to pay when she filed th return. She claimed 4L. withholding credit for less than $200 because for some reason, no amount was withheld from the back wage amount . Respondent d d not issue a deficiency notice because it was a self reported amount . Respondent Heritage R porting Corporation (232) 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 5 assessed the self-reported tax amount, and he assessed a late-payment additio to tax under section 6651(a) (2). Petitioner failed to pay any of the unpaid tax assessments. Respondent sent petitioner a Notice of Federal Tax Lien Fi ing and Your Right to a Hearing advising petitioner that respondent had placed a lien against petitioner's p operty for unpaid taxes for 2006. Petitioner t mely filed a request for a hearing with Appeals i response to the lien notice. Petitioner's hearing request asserted that the lien was premature and should be withdrawn as she had an approved installment agreement with respondent regarding her unpaid taxes for 2006. Her hearing request was handwritten and was not legible for the most part. Settlement Officer Chavez (SO Chavez) had difficulty deciphering her handwriting and voice mail messages. SO Chavez assigned to petitioner's 2006 liability regarding the lien action was different than the Settlement Office assigned to her 2006 tax liability regarding t e proposed levy action involving an equivalent hearing The earlier equivalent hearing and proposed levy act on was with SO David Kelly. The records shows that petitioner had Heritage Rþporting Corporation (2b2) 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 6 misunderstandings and communication issues with both set tlement of f icers an their supervisors . For example, petitioner was confused about how long she would be on jury duty and therefore available to meet with SO Chavez for her CDP hearing on the lien filing. She was also confused on whether she had negotiated an installment payment arrangement . Petitioner never returned the necessary documents to effectuate the arrangement for the earlier proposed levy action and equivalent hearing. W en petitioner and SO Chavez met for the hearing, petitioner said her only issue was the lien withdrawal. SO Chavez explained that petitioner did not receive a deficiency notice because it was a self-reported amount. SO Chavez further explained that the lien was the least intrusive means of collecting the self-reported amount. SO Chavez also finally determined that petitioner was referencing the earlier levy action and the equivalent hearing, which was not relevant to this collection proceeding. They neg tiated a payment plan for 2006 as part of this proceeding and learned that the payment plan needed t address all petitioner's outstanding tax liabi] ities (the tax liability for 2006 as well as for 2003). Respondent determined that petitioner qualified or an installment agreement 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 7 based upon the financi l information that petitioner provided. Respondent ustained the lien filing and issued petitioner a No ice of Determination Concerning Collection Action(s) u der Section 6320 and/or 6330 dated March 11, 2010 ( etermination Notice) regarding petitioner's outstandi g tax liability for 2006. Petitioner timely filed a petition with this Court contesting the Determination Notice. In fact, petitioner filed two petitions. In both petitions, petitioner fails to ra se any relevant issue to contest the lien actioh. As mentioned previously, respondent filed a summary judgment motion. The Court heard oral arguments from both parties on respondent's motion in Los Angeles, California on June 10, 2011, to afford petitioner sufficient time to prepare for the hearing. OPINION We are asked to decide whether to grant summary judgment. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See, e.g., FPL Group, Inc. v. Commissioner, 116 T.C. 73, 74 (2001). A motion for summary judgment will be granted if the pleadings and other acceptable materials show that there is no genuine issue as to a y material fact and that a Heritage Raporting Corporation (2 2) 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 8 decision may be rendered as a matter of law. See Rule 121(b); Elect. Arts, I c. v. Commissioner, 118 T.C. 226, 238 (2002). The moving party has the burden of proving that no genuine issue of material fact exists and that it is entitle to judgment as a matter of law. See, e.g., Rauenhorst v. Commissioner, 119 T.C. 157, 162 (2002). The party opposing summary judgment must set forth specific facts that show that a genuine question of material fact exists and may not rely merely on allegations or denials in the pleadings. Casanova Co. v. Commissioner, 87 T.C. 214, 216-217 (1986). Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review respondent's determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). We must decide whether respon ent exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. See Woo ral v. Commissioner, 112 T.C. 19, 23 (1999). Based upon our examination of the entire record before us, we find that respondent did not abuse his discretion in sustaining the Federal tax lien filing. Respond nt is therefore entitled to Heritage Raporting Corporation (2'02) 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 9 summary judgment in his favor. We briefly provide an overview of collection proceedings. The Federal Government obtains a lien against all property and rights to property of a taxpayer when demand for payment of that person's liability for taxes ha been made and the person fails to pay those taxes. Sec. 6321. The lien arises automatically when the assessment is made and continues until the tar liability is satisfied or the statute of limitations bars enforcement of the lien. Sec. 6322; Iannone v. Commissioner, 122 T.C. 287, 293 (2004). If the taxpayer fails to pay, the Commissioner files a lien with the appropriate State office to validate the lien against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien credito . See sec. 6323(a); Lindsay v. Commissioner, T.C. Memo. 2001-285. Section 6323(a) requires the filing of notice of Federal tax lien to make the lien valid against any purchaser, holder of security interest, mechanic's llenor or Judgment lien creditor. Behling v. Commissioner, 118 T.C. 572, 575 (2002). The Commiss'oner shall furnish the taxpayer described in section 6321 with written notice that a lien was filed. Sec. 6320. The person may then 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 10 request administrative review of the matter in the form of an Appeals off ce hearing. The Appeals Office hearing generally shall be conducted in a manner consistent with the pr cedures set forth in section 6330 (c) , (d) , and (e) egarding levy actions . Sec . 6320(c). The person is entitled, upon request, to an administrative review hearing before Appeals. Sec. 6330 (b) (1) . If the takpayer requests a hearing, he or she may raise at that earing any relevant issues relating to the unpaid tax or the lien. Sec. 6330(c) (2). Relevant issues include any appropriate spousal defenses, challenges to the appropriateness of collection, and possible alternative means of collection such as an installment agreement or an of fer-in-compromise . Sec . 6330 (c) (2) (A) . After the hearing, the Appeals cfficer is required to make a determination that addresses issues the taxpayer raised, verifies that all requirements of applicable law and administrative procedures have been met, and balances the need for the efficient collection of taxes with the legitinate concern of the person that any collection action be no more intrusive than necessary. Sec. 6330 Ic) (3) . We now focus on whether respondent should Heritage Reporting Corporation (202) 628-4888 | I 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 11 have withdrawn the lier. Petitioner argues that respondent should have withdrawn the lien because she had an installment agreement to satisfy the liability. We agree with petitioner that the Commissioner may withdraw the lien if the taxpayer has entered into an installment agreement to satisfy the liability for which the lien was imposed. Sec. 6323(j) (1). We do not find those facts here, however. Instead, we find that petitioner did no have an agreement for 2006. The Determination Noti e stated that petitioner failed to return the necessar documents for an installment plan regarding the earlier proposed levy action and equivalent hearing. The lien at issue was filed properly. Even if petitioner had entered into an installment agreement to satisfy the liability for which the lien was i osed, respondent would not have been required to withdraw the lien. See sec. 6323(j) (1); sec. 301.6323 (j)-1(c), Proced. & Admin. Regs. IRS Publicatio 594, What You Should Know About the IRS Collection Process, specifically states that the Commissioner may file a tax lien even if an installment agreement is in effect. IRS Publication 594 at 6; see, e.g., Heery v. Commissioner, 122 T.C. 184, 189-190 (2004) (Commissioner not precluded from 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 12 filing a Federal tax lien); Crisan v. Commissioner, T.C. Memo. 2007-67 (same). WE similarly reject petitioner's argument that respondent abused his discretion by sustaining the tax lien filing because the filing will damage petitioner's credit rating and employment prospects especially during thes dire economic times. We generally have no auth rity to grant relief to a taxpayer's claim that iling the lien adversely affects that taxpayer' credit rating. Gerakios v. Commissioner, T.C. Mem . 2004-203. Petitioner seeks redress that neither we nor respondent has authority to grant. We also address petitioner's claim that respondent abused his discretion in failing to abate the late filing addition. Petitioner argues that she did not pay the $31,000 tax due on the 2006 return because she essentially "ran out of money." She had little to no income in the years before 2006 and all the back wages were lumped together and not subject to withholding. It is well established that adLinability to pay, however, does not relieve a taxpayer of his or her obligation to properly and timely file an income tax return. See Bowden v. Commissioner, T.C. Memo. 1996-318 (taxpayer's lleged inability to pay tax was Heritage Raporting 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 13 not reasonable cause fór late filing.) The record reflects that the Settlement Officer properly verified that all the legal and procedural requirement have been met. The Settlement Officer confirmed, usi g a transcript of petitioner's account for 2006, that assessments were properly made for 2006, that appropr ate and timely notices were sent regarding the ass ssments, and that petitioner was properly informed f her rights with respect to the tax lien. The rec rd also reflects that the Settlement Officer properly balanced the need for efficient collection oE taxes with petitioner's legitimate concern that any collection action be no more intrusive than necessary. Petitioner has not raised any valid challenge to the appropriateness of collection and did not assert any spousal defenses. See sec. 6330(c) (2). Accordingly, these ispues are now deemed conceded. Rule 331(b) (4). Petitioner has not presented any evidence or persuasive arguments to convince us that respondent abused his discretion. We therefore conclude that respondent did not abtse his discretion in sustaining the lien filing regarding petitioner's outstanding tax liability for 2006. Heritage Reporting Corporation (2þ2) 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 14 To reflect the foregoing, decision will be entered for respondent and an appropriate order will be issued sustaining the determinations set forth in the Notice of Determin tion Concerning Collection Actions Under Section 6320 and/or 6330, dated March 11, 2010, upon which this case is based, regarding the unpaid 1 abilities for 2006. The order will also grant respon ent's motion for summary judgment. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 3:09 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888