TAX COURT OPINION

Case: Daniel J. Leone, Jr.
Docket Number: 17462-11SL
Judge: Goeke
Opinion Type: bench
Filed: 03/13/2013
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 DANIEL J. LEONE, JR., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 17462-11SL. ) ) ) ) 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 Tampa, Florida, 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 petitioner. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. March 13, 2013 SERVED MAR 1 4 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 3 1 IBench Opinion by Judge Joseph Robert Goeke 2 Daniel J. Leone, Jr., v. Commissioner 3 Docket No.: 17462-11SL 4 February 28, 2013 5 THE COURT: The Court has decided to render 6 oral Findings of Fact and Opinion in this case, and 7 the following represents the Court's oral Findings of 8 Fact and Opinion. The oral Findings of Fact and 9 Opinion shall not be relied upon as precedent in any 10 öther case . 11 12 13 14 This is a collection due process case and the Court has jurisdiction pursuant to Sec. 6330 (d) . ection references are to the Internal Revenue Code, and Rule references are to the Tax Court Rules of 15 Practice and Procedure. 16 17 18 19 20 21 This opinion is rendered pursuant to Rule 152, and a copy of the opinion shall be served on the arties as provided by Rule 152. This case is before the Court on a petition for review of a notice of determination and a supplemental notice of determination concern1ng 22 collection action for the years 2005 and 2006 23 involving income tax liabilities öf the petitioner. 24 The case was submitted to the Court based upon a 25 s ipulation of facts and a supplemental stipulation (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 1 of facts with attached exhibits . 2 3 4 5 Petitioner also testified and his testimony is part of the record. Petitioner failed to file income tax returns for 2006 and 2007, and respondent forwarded notices of deficiency to the petitioner. 6 Petitioner eludes to the fact that he believes 7 8 9 10 11 12 espondent's calculation in his tax liabilities for 2006 and 2007 may have overstated his tax liabilities, but he did not seriously offer any evidence as to what his correct tax liabilities were, ánd he did not challenge his underlying liabilities n the hearings provided by respondent 's settlement 13 officer. 14 Therefore, this case is before the Court 15 based upon a determination whether respondent abused 16 discretion in denying petitioner relief from the 17 collection action via levy, which is sought for the 18 19 income tax liabilities for 2006 and 2007. Petitioner, in his request for a hearing 20 before respondent's settlement officer, indicated 21 22 23 24 that he was seeking an of fer compromise . P titioner was provided a hearing, initially, and failed to provide the requested information sought by the settlement officer, including filing a delinquent 25 2009 federal income tax return. (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 This led to the case being calendered for 5 trial in March of 2012 after respondent initially issued a notice of determination upholding the 1 2 3 4 collection action via levy. At the trial in March of 5 2012, petitioner testified credibly that health 6 problems of his own and his wife caused him to not 7 8 9 ully participate in the settlement negotiations with the settlement officer. After the trial in March 2012, the parties 10 greed that a remand of the case for a supplemental 11 hearing before a settlement officer was appropriate 12 with the intention to allow petitioner to provide 13 additional documentation in the hopes of reaching a 14 15 16 17 18 esolution regarding an offer, compromise. In the subsequent actions taken by the settlement officer after the remand, petitioner, together with his wife, did provide information to the settlement officer and communicated with the 19 settlement officer largely via e-mail. 20 21 Petitioner did provide a 2009 delinquent f deral income tax return, which had been requested 22 both before and after the March 2012 hearing. 23 Petitioner also provided a Form 433-A, which set 24 forth monthly income and monthly expenses . The 25 income set forth in this form was $3,578, and the (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 1 2 3 4 5 6 expenses wee $3, 661. As a result, petitioner claimed that paying any tax was a hardship because he had expenses that exceeded his pension and Social Security income.. The expenses were aggregated to include significant payments as a result of health problems of both 7 petitioner and his wife. 8 9 The settlement officer carefully reviewed these expenses and determined that he believed 10 petitioner's monthly expenses were more appropriately 11 stated at $2,954. 12 13 The major issue relative to the dispute oncerning the monthly expenses was the amount of 14 expense petitioner claimed with respect to 15 maintaining a residence in New Hampshire during the 16 hot summer months when petitioner maintained that it 17 was necessary to travel to New Hampshire to protect 18 the health of his wife because of the heat and 19 hbmidity in the Tampa area. At the time the petition 20 was filed in this case, petitioner was a resident of 21 22 F orida. And for most of the years in question, including up to the current time, petitioner 23 maintains a residence in Fort Myers, Florida. 24 We felt petitioner was credible in his 25 t stimony that it was necessary to go to New (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 1 Hampshire every summer to cause his wife to avoid 2 breathing problems associated with high humidity and 3 heat. Respondent's settlement officer maintains that 4 petitioner has not adequately demonstrated the health 5 6 7 8 9 risk associated with remaining in Florida during the summer. We believe petitioner's failure to demonstrate the need to travel to New Hampshire was because of trres.r inability to communicate adequately 7 10 with the settlement officer. 11 12 We believe that our review of this case is based upon an abuse of discretion standard as the 13 underlying tax liability is not properly raised 14 before us and was not properly raised before the 15 16 17 settlement officer. The only issue raised by petitioner is doted in the respondent's supplemental trial 18 memorandum, his financial hardship and whether the 19 collection action proposed by the settlement officer, 20 which would include a monthly payment by petitioner 21 22 of -- in excess of $600, would cause hardship. The existence of an economic hardship may 23 require the release of the lien, despite the fact 24 that a taxpayer has not filed all required returns. 25 Vantieri v. Commissioner 133 DC 392, 402 (2009) and (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 8 1 Sec. 6343 (a) (1) (D). 2 Economic hardship occurs when a levy would 3 prevent a taxpayer from paying basic living expenses. 4 Treasury Rec. 301. 6342-1 (b) (4) (i) . 5 The question boils down to whether payment 6 bf the amounts determined by the settlement officer I 7 ould leave the petitioner with adequate means to 8 provide basic living expenses for himself and his 9 wife. Brombach v. Commissioner T.C. Memo 2012-265. 10 etitioner maintained in trial that he and his wife 11 were willing to negotiate a smaller monthly payment 12 t!han that sought by the settlement officer. This is 13 at odds with the position taken by the settlement 14 dfficer in his supplemental notice of determination 15 and the evidence stipulated in the supplemental 16 stipulation of facts. 17 18 We believe this discrepancy is a result of the petitioner's infirm physical status and tëe-i-r 19 inability to properly communicate with the settlement 20 officer. This creates a dilemma in that the burden is 21 o the petitioner to communicate properly with the 22 settlement officer. 23 However, in a situation such as the pre:sent 24 case where the petitioner was clearly subject to 25 significant health concerns and had previously had (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 I I 1 2 3 4 problems in properly communicating with respondent and respondent's representatives, we believe it was an abuse of discretion by the settlement officer not to take more steps to adequately provide the 9 5 petitioner and his spouse with an opportunity to 6 provide a proposal for an intermediate monthly 7 payment. 8 9 We believe the $634 payment sought by.the settlement officer was simply too high as it exòeeded 10 he amounts petitioner had available, given the 11 nature of their continuing health problems, and the 12 increase in the cost of maintaining their medical and 13 prescription services as required to maintain their 14 basic health. 15 We also believe the settlement officer was 16 unreasonable in his treatment of the claimed expenses 17 associated with the travel by the petitioner to New 18 Hampshire in the summer to avoid potential health 19 20 risks to petitioner's spouse. Respondent recognizes that the settlement 21 officer had three obligations; the verification of 22 the requirements of applicable law½ administrative 23 procedures, addressing the issues raised by the 24 táxpayer, and balancing the proposed collection 25 action with the need for efficient collection of (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 10 1 2 3 4 taxes against the legitimate concern of the taxpayer that any collection not be too intrusive or more intrusive than was necessary. Sec. 6330 (c) (3) . We believe in this instance the proposed 5 collection action is more intrusive than meets the 6 7 standard of Sec. 6343(a) (1) (d) because it causes economic hardship to the petitioner and would not 8 provide the petitioner with the ability to meet basic 9 living expenses, primarily health-related expenses . 10 11 12 13 14 15 We believe it's unfortunate that an intermediate resolution was not reached when this ase was sent back on remand, and that some esolution requiring the petitioner to pay $200 to 300 per month would have been reasonable. However, settlement officer's determination 16 that over $600 per month was necessary to resolve the 17 case and his failure to properly entertain further 18 discussions with the petitioner, given their ages and 19 nfirm status, requires us to determine that there 20 was an abuse of discretion in this case. 21 Accordingly, a decision will be entered for 22 the petitioner and a collection action sought by 23 respondent will not be upheld. 24 This concludes the Court's oral Findings of 25 Fact and Opinion in this case. (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Daniel J. Leone, Jr 02-28-2013 (Whe reupon, at 9: 02 a . m. , the above- entitled matter was concluded. ) 11 (866) 448 - DEPO www.CapitalReportingCompany.com 2013 1 2 3 4 5 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25