TAX COURT OPINION

Case: Mark E. Arroll
Docket Number: 28432-11S
Judge: Gale
Opinion Type: bench
Filed: 02/25/2013
Pages: 9

RMM UNITED STATES TAX COURT WASHINGTON, DC 20217 MARK E. ARROLL, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent OR D E R ) ) ) ) ) Docket No. 28432-11S. ) ) ) ) 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 in the above case before Judge Joseph H. Gale for the Westbury trial session at New York, New York, on February 13, 2013, containing his oral findings of fact and opinion. Decision will be entered for respondent in accordance with the oral findings of fact and opinion. (Signed) Joseph H. Gale Judge Dated: Washington, D.C. February 25, 2013 SERVED Feb 26 2013 Capital Reporting Company Mark Arroll 02-13-2013 3 1 Bench opinion by Judge Joseph H. Gale 2 February 13, 2013 3 Mark Arroll v. Commissioner 4 5 ·Docket No. 28432-11S THE COURT: The court has decided to render 6 oral findings of fact and opinion in this case, and 7 8 the following represents the Court's oral findings of fact and opinion. The ora findings of fact and 9 opinion shall not be re lied upon as precedent in any 10 other case. 11 This case was heard as a Small Tax Case 12 pursuant to the provisions of Section 7463 of the 13 14 Internal Revenue Code in effect when the petition was filed. This bench opinion is made pursuant to the 15 authority granted by Section 7459(b) of the Internal 16 Revenue Code and Rule 152 of the Tax Court Rules of 17 Practice and Procedure. Hereinafter, all section 18 19 references are to the Internal Revenue C de in effect for the year at issue, and all Rule references are 20 to the Tax Court Rules of Practice and Procedure. 21 22 Petitioner, Mark E. Arroll, appeared on his own behalf. James P.A. Caligure appeared on behalf 23 of re spondent . 24 Respondent determined a $4,802.50 25 deficiency in petitioner's 2010 Federal income tax. (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Mark Arroll 02-13-2013 1 2 3 4 5 6 7 8 The issue for decision is whether two letters respondent sent to petitioner, the first indicating that petitioner had overpaid his Federal income tax for 2010, and the second indicating that his 2010 tax had been paid in full, preclude respondent from issuing the notice of deficiency wherein he determined the deficiency at issue in this case. The parties submitted the case fully 9 stipulated. The stipulation of facts and 10 11 12 13 14 accompanying exhibits are incorporated herein by this reference. Petitioner timely filed his Federal income tax return for 2010. Petitioner did not attach a Form 6251, Alternative Minimum Tax· - Individuals, toÑS 15 .2010 return and he reported no alternative minimum 16 .tax liability for that year. 17 On July 25, 2011, respondent's Holtsville, 18 New York office sent petitioner a Notice CP-16 19 informing him that he incorrectly computed the tax on 20 capital gains he reported on his 2010 return, and 21 ithat the computational error resulted in an 22 overpayment of $185.81. The Notice CP-16 advised 23 petitioner that the overpayment was applied to his 24 .2007 tax liability. 25 At a date not revealed in the record but (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Mark Arroll 02-13-2013 5 1 before August 29, 2011, respondent's Philadelphia, 2 Pennsylvania office commenced an examination of 3 petitioner's 2010 return. 4 no On August 29, 2011, petitioner sent a 5 written response to the examining agent. The 6 examining agent sent petitioner a letter, dated 7 September 16, 2011, advising him that his August 29th 8 response did not cause the examining agent to modify 9 his originally proposed changes to petitioner's 10 return and that, in the absence of a further response 11 from petitioner, a notice of deficiency would be 12 mailed to him determining a deficiency/$4,802.50, 13 attributable to respondent's computation of 14 petitioner's liability for the alternative minimum tax. 15 16 On November 29, 2011, a notice of 17 deficiency embodying the foregoing determination was 18 mailed to petitioner. 19 Previously on August 9, 2011, petitioner 20 had written respondent, apparently inquiring as to 21 the status of his 2010 Federal income tax 22 liabilities. Respondent's Memphis, Tennesse , office 23 responded by a letter denominated LTR 30 4C and 24 dated December 5 2011 (hereinafter, the Letter 25 306 , which stated in pertinent part: (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting-Company Mark Arroll 02-13-2013 6 1 2 3 4 5 6 7 8 "Dear Taxpayer: Thank you for your correspondence dated August 9, 2011. "Our records show that your 2010 refund of 185.81 was offset to your 2007 tax account. At this time your 2010 and 2007 counto are paid in full." osccouv\YS Petitioner timely petitioned this Court for redetermination of/deficiency. Respondent's determinations in the notice 9 of deficiency are presumed correct, and petitioner 10 must prove those determinations wrong in order ·to 11 prevail. 12 13 vio Rule 142 (a)- Welch v. Helvering, 290 U. S. ) 111 (1933). The parties stipulated that respondent 14 correctly calculated petitioner's alternative minimum 15 tax liability for 2010 in the notice of deficiency. 16 Petitioner argues respondent was 17 precluded from determining the deficiency because the 18 Notice CP-16 and Letter 306 sent to him by 19 respondent indicated that his Federal income tax for 20 2010 was paid in full. 21 . Petitioner has not articulated a legal 22 argument or cited any authority supporting his 23 position that the Notice CP-16 and/or Letter 306 24 prevented respondent from determining the deficiency 25 at issue. It is well established, however, that (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Mark Arroll 02-13-2013 1 2 3 4 5 6 respondent was entitled to do so notwithstanding his initial acceptance of petitioner's return as showing an overpayment. We have held that the Commissioner's statements in "no-change letters" and similar oral and written correspondence with taxpayers to the 7 effect that the taxpayer has no liability for a 8 9 taxable year do not preclude the Commissioner from subsequently reversing his position and issuing a 10 notice of deficiency. See Opine Timber Co. v. 11 Commis sioner, 64 T . C. 700 (1975) ; Fitzpatrick v. 12 Commissioner, T.C. Memo. 1995-548; see also Boulez 13 14 15 v. Commissioner, 76 T.C. 209, 214-215 (1981); Lawton v. Commissioner, 16 T.C. 725, 726-727 (1951) . In Lawton, the Commissioner issued a group 16 of taxpayers notices of deficiency determining 17 deficiencies for 1940 and overjssessments for :1941. 18 Lawton v. Commissioner, 16 T.C. at 726kthe taxpayers 19 petitioned the Tax Court and the proceeding was 20 dismissed for lack of jurisdiction with respect to 21 1941 because no deficiencies were determined for that 22 year. Id. Following dismissal the Commissioner 23 24 issued the taxpayers notices of deficiency for 1941; they again petitioned the Tax Court and argued that 25 the Commissioner was barred from determining a (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Mark Arroll 02-13-2013 1 deficiency for 1941 after previously determining an 8 2 3 4 5 6 7 8 overassessment for that year. Id. We held that, in the absence of a closing agreement, valid compromise, final adjudication or the expiration of the period of limitations, the Commissioner was entitled to issue the notice6 of deficiency. Id. at 726-727. As in Lawton and the other cases cited above, respondent's statements or positions in the 9 Notice CP-16 and Letter 30 C do not preclude him 10 from determining the deficiency at issue in this 11 12 13 case. The Notice CP-16 is merely a document employed by the Commissioner to notify/ taxpayer whose return indicates a refund due that the refund has been 14 applied to satisfy a liability from another taxable 15 period. See Haigh v. Commissioner, T.C. Memo. 2009- 16 140. In this instance, the refund arose as a result 17 of respondent's correction of a mathematical error 18 arising from petitioner's use of the wrong rate to 19 compute his capital gains tax. The Notice CP-16 thus 20 corrected a mathematical or clerical error within the 21 meaning of section 6213 (b) (1) . 22 It follows that the Notice CP-16 was not a 23 notice of deficiency entitling petitioner to petition 24 the Tax Court. Consequently, the Notice CP-16 did 25 not trigger the prohibition on additional deficiency (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Gompany Mark Arroll 02-13-2013 1 determinations in section 6212 (c). Likewise, the 2 Letter 306- 4C was literally and legally correct when 9 3 4 issued. v o Petitioner had no outstanding liability for 5 his 2010 taxable year when the Letter 306 was 6 issued on December 5, 2011, because, even though a 7 notice of deficiency for 2010 had been issued on 8 November 29, 2011, Section 6213 prohibited the 9 assessment of the asserted deficiency, and thus the 10 11 creation of any additional liability for 2010, until the 90-day period for petitioner to petition the Tax 12 Court had expired, or, if a petition had been filed, 13 the Tax Court decision in the case had become final. 14 no The Letter 306 C thus did not purport to 15 settle petitioner's income tax liability for 2010, 16 nor could it --hed- done so under well-established law. 17 18 19 See Opine Timber Company v. Commissioner, supra; Lawton v. Commissioner, supra. no Moreover, petitioner obviously knew at the 20 time he received the Letter 30604C that respondent's 21 examination division had reached a conclusion that he 1 22 had a deficiency for 2010 as a result of his failure 23 to report any alternative minimum tax liability. 24 Petitioner would have known this as a result of his 25 correspondence with the examination division, even if (866) 448 - DEPO www.CapitalReportingCompany.com 2013 Capital Reporting Company Mark Arroll 02-13-2013 he had not yet received the notice of deficiency in 10 the mail. Even if petitioner's position+cr be . construed as a claim of equitable estoppel, th.at 1 2 3 4 5 doctrine would be inapplicable here because 6 .petitioner has not demonstrated any detrimental 7 8 9 reliance on respondent's representations in either of the documents at issue, such as being induced not to timely exercise his right to petition this Court for 10 redetermination of the deficiency for 2010. See 11 Boulez v. Commissioner, 76 T.C. 209, 215 (1981); see 12 also Hofstetter v. Commissioner, 98 T.C. 695, 700-701 13 14 (1992); Miller v. Commissioner, T.C. Memo. 2001-55. On the basis of the foregoing, and because 15 petitioner has stipulated that the notice of 16 deficiency's determination with respect to his 17 alternative minimum tax liability is correct, 18 decision will be entered for respondent . , 19 This concludes the Court's oral findings of 20 fact and opinion in this case. (Whereupon, at 4:57 p.m., the above- entitled matter was concluded.) 21 22 23 24 25 (866) 448 - DEPO www.CapitalReportmgCompany.com 2013