TAX COURT OPINION

Case: Kid's Playland & Preschool Inc.
Docket Number: 26474-10SL
Judge: Kroupa
Opinion Type: bench
Filed: 11/01/2011
Pages: 8

UNITED STATES TAX COURT WASHINGTON, DC 20217 KID' S PLAYLAND & PRESCHOOL INC. , Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ) O R D E R Docket No. 26474-10S L Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall petitioner and to respondent a copy of transcript of Diane L. Kroupa at Phoenix, Arizona, on October 19, 2011, containing her oral the proceedings of the above case before Judge findings of fact and opinion. the pages of transmit the to 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. November 1, 2011 SERVED NOV - 12011 3 1 Bench Opinion by Judge Diane L. Kroupa October 19, 2011 2 Kid's Playland v. Commissioner Docket No. 26474-10SL 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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. These oral findings of fact and opinion shall not be relied upon as precedent in any other case. This proceeding was heard as a small tax case pursuant to the provisions of section 7463 and Rules 170 through 175. This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the year 2009, 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 and a proposed levy to collect petitioner's employment tax liabilities for the year 2009. Charles Hubbard, President, appeared on behalf of petitioner, and Rachel Zepeda appeared on behalf of respondent. FINDINGS OF FACT Certain facts are stipulated. The stipulation of facts, with accompanying exhibits, is incorporated by Herit'age Reporting Corporation (202) 628-4888 1. this reference. The facts are so found. 2 3 4 Petitioner is a corporation that had nine employees in 2009. Petitioner withheld FICA and other taxes (reportable on Form 941) from its employees' wages. 5 Petitioner filed employment tax returns for all four 6 7 8 9 10 11 quarters of the year 2009 but did not fullypay the tax shown on the returns. Mr. Hubbard admitted at trial that he did not pay the employment taxes due in 2009 because respondent had levied petitioner's checking account in 2010 regarding other years. Respondent sent to petitioner a Final Notice- 12 Notice of Intent to Levy and a Notice of Your Right to a 13 Hearing advising petitioner that respondent intended to 14 15 16 17 levy to collect the unpaid employment taxes for 2009. Respondent also issued petitioner a Notice of Federal Tax Lien with respect to petitioner's unpaid employment tax liability for 2009. The lien notice also involved 18 petitioner's unpaid employment tax liability for the 19 20 first quarter of 2008. The first quarter of 2008 is no longer at issue. Petitioner timely requested a hearing. 21 During his hearing with Settlement Officer Brewton, Mr. 22 23 24 25 Hubbard alleged that petitioner was unable to make payments due to budget cuts from the State of Arizona and that his child care business lost revenue. At trial, Mr. Hubbard admitted that he did not make payments for 2009. Heritage Reporting Corporation (202) 628-4888 5 1 2 3 4 5 In scheduling the hearing, Settlement Officer Brewton asked Mr. Hubbard to provide certain financial information and copies of employment tax returns and deposits for 2010 as well as unemployment tax returns for 2007,.2008 and 2009 to ensure that petitioner was current 6 with its filing and payment obligations. During the 7 8 9 10 11 12 13 14 15 16 17 18 telephonic hearing, Mr. Hubbard claimed that payments that he had made were misapplied and that he was unable to make timely employment tax deposits due to levies for periods other than the periods at issue. After the hearing, Mr. Hubbard left Settlement officer Brewton a voicemail claiming that he also wanted to discuss an offer in compromise or the possibility of having the debt considered currently not collectible due to a hardship. Settlement Officer Brewton considered the issues petitioner raised and reviewed the documentation submitted. She determined that petitioner's debt was not currently uncollectible. She also determined that 19 petitioner was not eligible for a collection alternative 20 21 22 because petitioner was not timely with its payment and filing obligations and petitioner did not provide any information to establish that the lien should be 23 withdrawn. 24 25 Acting Appeals Team Manager Darrell Pharms sustained the proposed collection action by levy and the Heritage Reporting Corporation (202) 628-4888 1 lien filing in a Notice of Determination Concerning 2 Collection Action(s) under Section 6320 and/or 6330, 3 4 5 dated November 1, 2010 (Determination Notice). Petitioner timely filed a petition contesting that it ny unpaid employment tax liability for 2009. 6 After filing the petition, Mr. Hubbard questioned whether 7 8 9 10 11 12 13 14 15 16 17 18 each of petitioner's payments had been applied properly. Ms. Kimberly Hayden met with Mr. Hubbard and showed him where the payments had been posted. As mentioned previously, Mr. Hubbard admitted that petitioner failed to pay the employment tax liabilities at issue because it lacked the funds. OPINION We begin with whether we have jurisdiction to review petitioner's employment tax liability for the year ended 2009. This Court lacked jurisdiction over employment tax liabilities before amendments made to section 6330 gave the Tax Court exclusive jurisdiction in 19 all collection review matters regardless of the type of 20 21 22 23 underlying tax involved. Perkins v. Commissioner, 129 T.C. 58, 63 n.7 (2007); Pension Protection Act of 2006, Pub. L. 109-280, sec. 855(b), 120 Stat. 1019. This amendment is effective for determinations made after 24 October , 2006. Id. Here, the Determination Notice 25 was issued on November 1, 2010, which is after the Heritage Reporting Corporation (202) 628-4888 7 1 2 3 4 effective date. We therefore have jurisdiction to decide this case. We now address the standard of review. Petitioner does not contest the employment taxes due. Thus, the 5 Court will review this collection review matter on 6 whether respondent abused his discretion in sustaining 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the proposed levy action and lien filing. See Sego v. Commissioner, 114 T.C. 604, 610 (2000). We briefly explain collection procedures. If any person liable for Federal tax liability neglects or refuses to make payment within ten days of notice and demand, the Commissioner is authorized to collect the tax by levy on that person's property. See sec. 6331(a). At least 30 days before enforcing collection by levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person. See sec. 6331(d). The person is entitled, upon request, to an administrative review hearing before Appeals. Sec. 6330(b) (1). If the taxpayer requests a hearing, he or she may raise at that hearing any relevant issues relating to the unpaid tax or the proposed levy. Sec. 6330(c) (2). Relevant issues include any appropriate spousal defenses, challenges to the appropriateness of Heritage Reporting Corporation (202) 628-4888 8 1 2 3 4 5 6 7 collection, and possible alternative means of collection such as an installment agreement or an offer-in- compromise. Sec. 6330 (c) (2) (A). After the hearing, the Appeals officer 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 8 efficient collection of taxes with the legitimate concern 9 of the person that any collection action be no more 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 intrusive than necessary. Sec. 6330(c) (3) (C). The record reflects that the Settlement officer properly verified that all the legal and procedural requirements have been met. The Settlement Officer, confirmed, using a transcript of petitioner's accounts, that assessments were properly made for each period at issue, that appropriate and timely notices were sent regarding the assessments, and that petitioner was properly informed of its rights with respect to the proposed levy action and lien filing. The record is replete with all the appeals and questions that Mr. Hubbard made on behalf of petitioner. The record also shows the various excuses that Mr. Hubbard gave for why petitioner failed to pay the employment taxes due for the four quarters in 2009. The record also reflects that the Settlement Officer properly balanced the need for Heritage Reporting Corporation (202) 628-4888 1 efficient collection of taxes with petitioner's 2 3 4 5 6 7 legitimate concern that any collection be no more intrusive than necessary. Petitioner has not raised any other challenges to the appropriateness of collection, did not assert any spousal defenses, or otherwise offer any additional collection alternatives. See sec. 6330(c) (2). 8 Accordingly, these issues are now deemed conceded. Rule 9 331(b) (4). 10 11 12 13 14 15 16 17 Petitioner has not presented any evidence or persuasive arguments to convince us that respondent abused his discretion. We therefore conclude that respondent did not abuse his discretion in upholding respondent's proposed levy action and lien filing. 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 18 Determination Concerning Collection Action(s) Under 19 Section 6320 and/or 6330, dated November 1, 2010, upon 20 which this case is based, regarding petitioner's unpaid 21 22 23 24 25 employment tax liability for the year 2009. THIS CONCLUDES THE COURT'S ORAL FINDINGS OF FACT AND OPINION IN THIS CASE. (Whereupon, at 9:35 a.m., the bench opinion in the above-entitled matter was concluded.) Heritage Reporting Corporation (202) 628-4888