TAX COURT OPINION

Case: Jeffrey Brent Sturges & Karen B. Sturges
Docket Number: 23474-13SL
Judge: Guy
Opinion Type: bench
Filed: 03/29/2016
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 JEFFREY BRENTSTURGES & KAREN B. STURGES, Petitioners, v. ) ) ) ) SD ) Docket No. 23474-13SL. COMMISSIONER OF INTERNAL REVENUE, 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 petitioners and to respondent a copy of the pages of the transcript of the trial in the abovecaptioned case before Special Trial Judge Daniel A. Guy, Jr., at San Francisco, California, on March 16, 2016, 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, an order and decision will be entered for respondent. (Signed) Daniel A. Guy, Jr. Special Trial Judge Dated: Washington, D.C. March 29, 2016 SERVED Mar 30 2016 Capital Reporting Company 3 1 2 Bench Opinion by Special Trial Judge Daniel A. Guy, Jr. 3 March 16, 2016 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jeffrey Brent Sturges & Karen B. Sturges v. Commissioner Docket No. 23474-13SL 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 proceeding for the review of a collection action is a small tax case conducted pursuant to the provisions of section 7463 of the Internal Revenue Code of 1986, as amended, and Rules 170 through 174 of the Tax Court Rules of Practice & Procedure. 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 & Procedure. Hereinafter in this bench opinion, section references are to the Internal Revenue Code of 1986, as amended, in effect at all relevant times, and rule 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 references are to the Tax Court Rules of Practice & Procedure. Some of the facts have been stipulated and are so found. The Stipulation of Facts and the accompanying exhibits are incorporated herein by this reference. By Notice of Deficiency dated February 10, 2012, the Internal Revenue Service (IRS) determined a deficiency of $10,310 in Petitioner's federal income tax for 2008, and an accuracy-related penalty of $2218. Petitioners failed to file a petition for redetermination with the Court in accordance with the provisions of section 6213(a). Subsequently, on August 13, 2012, the IRS assessed the tax and penalty determined in the Notice of Deficiency and issued to 16 Petitioners a notice of balance due. Petitioners 17 18 19 20 21 22 23 failed to remit payment, and on February 4, 2013, the IRS issued to Petitioners a final Notice of Intent to Levy and Notice of Your Right To a Hearing for 2008. Petitioners responded by timely submitting to the IRS Office of Appeals (Appeals Office) a form 12153, request for a Collection Due Process or equivalent hearing, indicating that they disagreed 24 with the amount purported to be due for 2008 and 25 making a vague reference to their eligibility to 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 5 1 2 3 4 5 6 carry back a net operating loss from 2009 to offset a portion of their liability. Petitioners' case was assigned within the Appeals Office to Settlement Officer Sylvester Fernando (SO Fernando). After several failed attempts to communicate with Petitioners, the Appeals 7 Office issued a Notice of Determination to 8 Petitioners sustaining the proposed levy action. 9 10 11 12 Petitioners invoked the Court's jurisdiction by filing a timely petition for review under section 6330. On September 3rd, 2014, Respondent filed a 13 Motion for Summary Judgment in this case under Rule 14 121. Petitioners filed a written opposition to 15 Respondent's motion, and the matter was called for 16 17 18 19 20 21 22 23 24 25 hearing. In the light of the record developed at the hearing, the Court, in an order dated November 3rd, 2014, denied Respondent's Motion for Summary Judgment and remanded the case to the Appeals Office for the limited purposes of allowing Petitioners to (1) present any documentation they might have to demonstrate that they were entitled to carry back a net operating loss for deduction in 2008; and (2) offer an alternative to the proposed levy action. While the matter was on remand, Mr. Sturges 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 1 met first with SO Fernando and later (after the case 2 3 was reassigned) with Appeals Officer Paul Baker. On January 14, 2016, the Appeals Office issued to 4 Petitioners a Supplemental Notice of Determination 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 sustaining the proposed levy action. On March 16, 2016, this case was called for trial in San Francisco, California. Joseph E. Conley appeared on behalf of Respondent. Mr. Sturges appeared and testified. He represented to the Court that Mrs. Sturges was unable to attend the trial because of work obligations, but that she was aware of the trial and had consented to permit him to prosecute the case on her behalf. If any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Commissioner is authorized to collect such tax by levy upon the person's property. At least 30 days before enforcing collection by way of a levy on the person's property, the Commissioner is obliged to provide a final Notice of Intent to Levy, including Notice of Available 22 Administrative Appeals. Sec. 6331(d). 23 24 25 Generally speaking, the Commissioner cannot proceed with collection by levy until (1) the person has been given notice and the opportunity for an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 7 1 2 3 4 5 6 7 8 administrative review of the matter (in the form of an Appeals Office hearing), and if the person is dissatisfied; (2) judicial review of the administrative determination is final. Sec. 6330; see Davis v. Commissioner, 115 TC 35, 37 (2000); Goza v. Commissioner, 114 TC 176, 179 (2000). The Appeals Office is responsible for conducting administrative hearings in collection 9 matters. Sec. 6330(b)(1). 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In particular, the Appeals Office must verify that the requirements of any applicable law or administrative procedure have been met in processing the case. Sec. 6330(c)(1), -(3) (A). The Appeals Office also must consider any issues raised by the person relating to the unpaid tax or proposed levy, including offers of collection alternatives, appropriate spousal defenses, and challenges to the appropriateness of the collection action. Sec. 6330(c) (2) (A), -(3)(B). A person may challenge the existence or amount of his or her underlying tax liability if the person did not receive a Notice of Deficiency or did not otherwise have an opportunity to dispute such tax liability. Sec. 6330(c)(2)(B). Finally, the Appeals Office must consider 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 whether the collection action balances the need for 2 efficient collection against the person's concern 3 4 5 6 that collection be no more intrusive than necessary. Sec. 6330(c)(3) (C). This Court has jurisdiction to review the administrative determination made by the Appeals 7 Office. Sec. 6330(d)(1). 8 9 10 11 12 13 14 If the taxpayer's underlying tax liability is not in dispute, as is the case here, we review the Appeals Office's administrative decision for abus,e of discretion. Goza v. Commissioner, 114 TC at 181-182. An abuse of discretion occurs if the Appeals Office exercises its discretion "arbitrarily, capriciously, or without sound basis in fact or law." 15 Woodral v. Commissioner, 112 TC 19, 23 (1999). 16 17 The Court granted the parties an extended period to attempt to resolve the issues in dispute 18 while the case was on remand. The record reflects 19 20 21 22 23 that the Appeals Office made a good-faith effort to obtain from Petitioners the documents and records it needed to determine whether they were entitled to a deduction for a net operating loss for 2008, as well as the documents needed to evaluate Petitioners' 24 eligibility for a collection alternative. 25 In the end, because they were unable to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 6 7 8 retrieve tax records that they had stored in Illinois, and as a consequence of delays occasioned by Mr. Sturges's poor health, Petitioners failed to produce any documents to show entitlement to a deduction for a net operating loss. Nor did they submit delinquent tax returns for 2012 and 2013, or a Form 433-A, Collection Information Statement, to permit the Appeals Office to evaluate their 9 eligibility for a collection alternative. 10 11 12 With the foregoing as background, we conclude on this record that the Appeals Office did not abuse its discretion in determining to proceed 13 with the proposed levy action. The Appeals Office 14 15 properly verified that the requirements of all applicable laws and administrative procedures were 16 met in the processing of Petitioners' case -- Sec. 17 18 6330(c)(1) -- and determined that the proposed levy action balances the Government's need for the 19 efficient collection of taxes with Petitioners' 20 21 22 concerns that the collection action be no more intrusive than necessary. Sec. 6330(c)(3)(C). The Appeals Office determination to proceed 23 with the proposed levy is sustained. 24 25 This concludes the Court's oral findings of fact and opinion. 866.488.DEPO www.CapitalReportingCompany.com 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 Capital Reporting Company (Whereupon, at 4:47 p.m., the above- entitled matter was concluded.) 10 866.488.DEPO www.CapitalReportingCompany.com