TAX COURT OPINION

Case: Marvin S. Lieber
Docket Number: 22228-17L
Judge: Morrison
Opinion Type: bench
Filed: 04/26/2019
Pages: 14

RS UNITED STATES TAX COURT WASHINGTON, DC 20217 MARVIN S. LIEBER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 22228-17 L. ORDER OF SERVICE OF TRANSCRIPT 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 respondent a copy of the pages of the transcript in the above case before Richard T. Morrison, at Pittsburgh, Pennsylvania, on March 19, 2019, containing his oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Richard T. Morrison Judge Dated: Washington, D.C. April 26, 2019 SERVED Apr 29 2019 Received 3/25/2019 IN THE UNITED STATES TAX COURT RS In the Matter of: ) ) MARVIN S. LIEBER, ) Docket No. 22228-17L Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Pages: 1 through 12 Place: Pittsburgh, Pennsylvania Date: March 19, 2019 stem (973)406-2250|operationseescribers.net|www.escribers.net IN THE UNITED STATES TAX COURT 1 In the Matter of: MARVIN S. LIEBER, ) ) ) ) Docket No. 22228-17L Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) Moorhead Federal Building 1000 Liberty Avenue Room 1108, 11th Floor Pittsburgh, Pennsylvania 15222 March 19, 2019 The above-entitled matter came on for bench opinion, pursuant to notice at 3:59 p.m. BEFORE: HONORABLE RICHARD T. MORRISON Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 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 51153 (9733406-2250|operationseescribers.net|wwwascribersnet P R O C E E D I N G S 2 (3:59 p.m.) THE CLERK: Docket number 22228-17L, Marvin S. Lieber. (Whereupon, a bench opinion was rendered.) 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 stem (973)406-2250|operationseescribers.net|www.escribers.net 1 2 Bench Opinion by Judge Richard T. Morrison March 19, 2019 3 Marvin S. Lieber v. Commissioner of Internal Revenue 3 4 5 6 7 8 9 Docket No. 22228-17L 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 ON AS PRECEDENT IN ANY OTHER CASE. 10 This bench opinion is made pursuant to the 11 authority granted by section 7459(b) of the Internal 12 Revenue Code of 1986, as amended, and Rule 152 of the Tax 13 Court Rules of Practice and Procedure. 14 In this bench opinion, unless noted otherwise, 15 all section numbers refer to the Internal Revenue Code of 16 1986, as amended. All Rule numbers refer to the Tax Court 17 Rules of Practice and Procedure. The respondent is 18 19 referred to as the IRS. The petitioner, Marvin S. Lieber, brought this 20 case to challenge a notice of determination issued on 21 September 26, 2017, by the IRS Office of Appeals 22 (hereafter referred to as Appeals). The notice of 23 determination followed a collection due process, or CDP, 24 25 hearing by Appeals. In the notice of determination, Appeals 73)406-2250|operations@escribersnet|www.escribersnet sustained a notice of intent to levy to collect Lieber's 4 income-tax liability for tax year 2015. Lieber's petition is timely. We have jurisdiction under section 6330(d)(1). We sustain the determination. FINDINGS OF FACT On Lieber's 2013 return, he reported a $7,035 tax liability, $21,745 of withholding payments, and an overpayment of $14,710. ne elected to have the overpayment applied to his 2014 estimated tax liability. Instead the IRS applied the overpayment to his 1998 tax liability. On his 2014 return, he reported a $1,713 tax liability, $10,337 of withholding payments, and an overpayment of $8,664. se elected to have the overpayment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 applied to his 2015 estimated tax liability. Instead the 17 18 IRS applied the overpayment to his 1998 tax liability. On his 2015 return, he reported a $1,508 tax 19 liability, no withholding payments, $30,626 for "2015 20 21 estimated tax payments and amount applied·from 2014 return", and an overpayment of $29,118. He did not make a 22 Payment of the $1,508 by cash or check. 23 On March 24, 2017, the IRS mailed to Lieber a 24 notice of intent to levy to collect his income-tax 25 liability for 2015. The notice stated that the amount he simen 73)406-2250|operations@escribersaet|www.escribers.net owed for 2015 was $1,699.91, composed of $1,596.30 for 5 "Unpaid Amount from Prior Notices", $75.40 for "Additional Penalty", and $28.21 for "Additional Interest". On April 11, 2017, Lieber mailed the IRS a request for a CDP hearing. In his request, he explained that the issue he wished to raise at the hearing was as follows: "1040--12/31/15 SHOWS A REFUND". By this he meant that his return for 2015, filed on Form 1040, "U.S. Individual Income Tax Return", showed that instead of owing tax for 2015, he had overpaid tax for 2015 and was due a refund. On June 28, 2017, Appeals mai,led Lieber a letter scheduling a telephone conference on August 9, 2017. The 1 2 3 4 5 6 7 8 9 10 11 12 13 14 telephone conference would be later rescheduled to 15 September 12, 2017. 16 17 The telephone conference was held on the rescheduled date. Lieber told Appeals that he wished that 18 his overpayment from 2013 be applied to 2014, and the 19 overpayment from 2014 be applied to 2015. As explained in 20 the case activity record, a record made by Appeals with 21 22 23 24 25 respect to the hearing, "T/p [i.e., taxpayer] stated that he requested that his overpayment from 201312 be applied to 201412 and the overpayment from 201412 be applied to 201512." Also, as shown in the case activity record, Lieber told Appeals at the conference that "he is already $733406-2250loperatbns@escribersnet|www.escrbersnet making payments towards his outstanding liabilities." On September 26, 2017, Appeals issued a notice of determination regarding the notice of intent to levy to 6 collect Lieber's liability for 2015. The notice of determination stated that, even though Lieber had overpayments of taxes for 2013 and 2014, those overpayments had been applied by the IRS against his 1998 tax liability and the credits were therefore not available to be applied against his liability for 2015. 1 2 3 4 5 6 7 8 9 10 On October 20, 2017, Lieber filed a timely 11 Petition with this Court in regard to the notice of 12 determination. r 13 14 15 16 17 18 19 In his petition Lieber stated: "1. Taxpayer has paid $75,000 toward prior tax liability"; "2. Carry forward of overpayments from prior years and 2015 did not interfere£be- with ongoing payments for prior years."; "3. Taxpayer is unemployed and relies on Soc KTB4 20 Security"; and 21 22 23 24 25 "4. Agreed only to reduction in Soc. Sec. to satisfy tax liability". He also stated in this petition that he relied on the following facts: "1. 75,000 has been applied to prior tax (973)406-2260|operations@escribers.net|wwwascribers.net liability"; "2. Overpayments for prior years not including Soc. Sec. have been applied to tax liability"; and 7 "3. The deficiency of $1608.73 was incorrect." On November 27, 2017, the IRS filed its answer. OPINION Lieber was a resident of Pennsylvania when he filed the petition. Therefore we follow precedents of the U.S. Court of Appeals for the Third Circuit to the extent 1 2 3 4 5 6 7 8 9 10 they are "squarely in point". Sec. 7842(b) (1) (G) (i); 11 Golsen v. Commissioner, 54 T.C. 742, 747 (1970), aff'd, 12 13 14 15 16 17 18 445 F.2d 985 (10th Cir. 1971). The petitioner as a general rule bears the burden of proof. Rule 142(a). Lieber is the petitioner in this case. He has not argued, nor does the record show, that any exception to the general rule applies. Our review is confined to issues raised in the CDP hearing. Sec. 301.6330-1(f)(2) Q&A-F3, Proc. & Admin. 19 Regs. 20 One issue Lieber raised in the CDP hearing was 21 whether the overpayments for 2013 and 2014 should be 22 applied to 2015. The IRS had applied these overpayments to 23 24 25 1998. Appeals declined to reverse the applications of these overpayments. In reviewing the determination of Appeals $733406-2250|operations@escribetsmet|www_escribersaet regarding the correct application of payments, the Tax Court employs the abuse-of-discretion standard of review. weber v. Commissioner, 138 T.C. 348(2012). Under this standard of review, we do not overturn the determination 8 of APPeals unless it is shown to be "arbitrary, capricious, or without sound basis in fact or law." Murphy v. Commissioner, 125 T.C. 301, 320 (2005). Weber v. Commissioner explains that when a taxpayer elects on income tax return for year one that 1 2 3 4 5 6 7 8 9 10 the overpayment for year one be applied to estimated 11 Payments for year two, the election is not binding and the 12 13 14 15 16 17 IRS has discretion to apply the overpayment as instructed to year two, or apply the overpayment to another year. 138 T.C. at 355-357, 361. Weber relied on provisions of the Revenue Code: section 6402 (a) and (b) . 138 T.C. at 356. Weber also relied on regulations: section 301.6402-3(a)(5) and (6) of the Procedural and 18 Administrative Regulations. 138 T.C. at 356-357. 19 20 21 22 23 24 Lieber's 2013 return requested that the overpayment for 2013 be applied to his estimated income tax for 2014, and his 2014 return requested that his overpayment for 2014 de applied to his estimated income tax for 2015. Thus, when the IRS received Lieber's 2013 return in 2014, it was confronted with the question of 25 whether to treat the 2013 overpayment as a payment towards (973)406-2250[operationseescribers.net|www.escribers.net 9 Lieber's estimated 2014 income tax (which would also count as a payment against his 2014 income tax, see sec. 6315), or instead to credit the overpayment against his past-due liability for 1998. We see no basis for criticizing the IRS's exercise of its discretion to apply the overpayment to the past-due 1998 liability rather than the 2014 estimated tax liability. Similarly we see no basis for criticizing the IRS's exercise of its discretion to apply the 2014 overpayment to dhe 1998 liability instead of the 2015 estimated tax liability. The other issue that Lieber raised in the CDP hearing was that the IRS should not have applied the 2013 1 2 3 4 5 6 7 8 9 10 11 12 13 and 2014 overpayments to the 1998 liability because he was 14 already making payments to the 1998 liability. At trial he 15 16 17 18 testified that in 1995 he had struck a deal at an "APPellate conference" for the IRS to deduct $921 of tax from his Social Security payments each month, indefinitely, with the deductions to begin in 1996. Under 19 the agreement, he testified, he also agreed that the IRS 20 would make deductions from payments of "other income" 21 until the year 2012. 22 23 The record reflects that Appeals was aware that $921 was still being deducted from Lieber's monthly Social 24 Security payments and was being applied to tax liabilities 25 other than the 2015 income-tax liability. Despite these (973)406-2250|operatiom@escribers.net|www.escribersaet payments, however, 10 there was still an outstanding balance for 1998. It was not an abuse of discretion for the IRS to continue to collect this balance for 1998 by applying the 2013 and 2014 overpayments against this balance. At trial Lieber testified that the agreement he made in 1995 forbade the IRS from collecting his future tax liabilities through any means other than the $921 deductions from his monthly Social Security checks and the deductions from other payments (the latter type of 1 2 3 4 5 6 7 8 9 10 deductions to cease in 2012). Therefore, according to 11 Lieber, the IRS breached the 1995 agreement when it 12 applied the overpayments from 2013 and 2014 to his 1998 13 liability. The IRS also breached the 1995 agreement by 14 Proposing a levy to collect his 2015 tax liability, 15 16 17 18 19 according to Lieber. It would be óda unusual for the IRS to agree in 9 1995 to limit its ability to collect a future tax liability such as the 1998 tax liability. We are not convinced by the trial evidence that the 1995 agreement 20 was such an agreement. Lieber did not introduce the 1995 21 22 23 agreement at trial. He only introduced his self-serving testimony to prove how the 1995 agreement was written. See Tokarski v. Commissioner, 87 T.C. 74, 77 (1986). He 24 did not prove that he gave to Appeals in his CDP hearing 25 any reliable indication that the 1995 agreement was (973) 406-2250| operations@escribersnet j www.escribersmet 11 1 written the way he described it at trial. Appeals did not abuse its discretion in failing to incorporate into its determination the view that the 1995 agreement barred the IRS from collecting future tax liabilities except through two types of deductions from payments due Lieber. To reflect the foregoing, a decision will be entered for respondent. This concludes the bench opinion. (Whereupon, at 4:13 p.m., the above-entitled matter was concluded.) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (973)406-2250|operationsøescribers.net|wwmescribers.ner CERTIFICATE OF TRANSCRIBER AND PROOFREADER 12 CASE NAME: Marvin S. Lieber v. Commissioner DOCKET NO.: 22228-17L We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 12 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Jennifer L. Lindeman on March 19, 2019, before the United States Tax Court at its session in Pittsburgh, PA, in accordance 1 2 3 4 5 6 7 8 9 10 with the applicable provisions of the current verbatim 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. Aliza Blumenfeld, CET-634 Transcriber 3/22/19 Date Jessica Hernandez Proofreader 3/25/19 Date (973)406-2250|operations@escribers.net|www.escribersaet