TAX COURT OPINION

Case: Kristine K. Fringer
Docket Number: 6856-23L
Judge: Leyden
Opinion Type: bench
Filed: 04/15/2024
Pages: 19

United States Tax Court Washington, DC 20217 KRISTINE K. FRINGER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 6856-23L 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 Special Trial Judge Diana L. Leyden at Hartford, Connecticut, on March 12, 2024, containing her 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 appropriate Order and Decision will be entered granting respondent's motion for summary judgment. (Signed) Diana L. Leyden Special Trial Judge Served 04/15/24 REVISED 4/8/24 IN THE UNITED STATES TAX COURT In the Matter of: KRISTINE K. FRINGER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 6856-23L ) ) ) ) ) ) ) ) ) ) ) ) Pages: 1 through 17 Place: Hartford, Connecticut Date: March 12, 2024 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 1 IN THE UNITED STATES TAX COURT In the Matter of: KRISTINE K. FRINGER, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. Docket No. 6856-23L ) ) ) ) ) ) ) ) ) ) ) ) Federal Building & U.S. Courthouse 450 Main Street Room 619, 6th Floor Hartford, Connecticut 06103 March 12, 2024 The above-entitled matter came on for bench opinion, pursuant to notice at 10:04 a.m. HONORABLE DIANA L. LEYDEN Special Trial Judge BEFORE: APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance 2 P R O C E E D I N G S (10:04 a.m.) THE CLERK: Recalling docket number 6856-23L, Kristine K. Fringer. (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 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 Bench Opinion by Judge Diana L. Leyden March 12, 2024 3 Kristine K. Fringer v. Commissioner of Internal Revenue Docket No. 6856-23L 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. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times. The Court uses the term "Internal Revenue Service" or "IRS" to refer to administrative actions taken outside of these proceedings. The Court uses the term "respondent" to refer to the Commissioner of Internal Revenue, who is the head of the IRS and is respondent in this case, and to refer to actions taken in connection with this case. On April 19, 2023, petitioner timely filed a Petition in this case. Petitioner seeks review of a Notice of Determination Concerning Collection Actions Under IRS Sections 6320 or 6330 of the Internal Revenue DL Code (notice of determination), issued to her dated March 4 15, 2023. The notice of determination sustained a Notice of Federal of Tax Lien filing with respect to petitioner's unpaid joint federal income tax liabilities for 2010, 2011, and 2012. Pursuant to Rule 93(a), on December 4, 2023, respondent filed a Notice of Filing of the Administrative Record, a Certificate as to the Genuineness of the Administrative Record, and the Administrative Record, pursuant to Rule 93(a). Petitioner did not file a motion to complete or supplement the record by December 26, 2023, as required by Rule 93(b). On January 9, 2024, respondent filed a Motion for Summary Judgment under Rule 121. Respondent noted in his motion that petitioner opposed the granting of the motion. The Court directed petitioner to file a response to respondent's motion by February 8, 2024, and petitioner filed an Opposition to Motion for Summary Judgment and Exhibit(s) to Opposition to Motion for Summary Judgment on 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 February 5, 2024. 21 22 23 24 25 Respondent's motion was calendared for hearing at the Court's March 11, 2024, Hartford, Connecticut, Trial Session. Respondent's motion was called for hearing on March 11, 2024. Albert H. Thornton Jr. appeared on behalf of petitioner. Heather H. Lee appeared on behalf 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 of respondent. 5 For the reasons discussed below, the Court concludes that there are not any genuine issues of material fact and that respondent is entitled to judgment as a matter of law. Background The following facts are not in dispute and are drawn from documents constituting the administrative record. Petitioner resided in Massachusetts at the time she filed her Petition in this case. Petitioner and Mr. Robert A. Ward late-filed their joint federal income tax returns for tax years 2010, 2011, and 2012, which each showed self-reported balances due. The IRS mailed petitioner and Mr. Ward a Notice of Federal Tax Lien Filing and Your Right to a Hearing dated October 12, 2021 (NFTL), in connection with the unpaid federal income tax liabilities, interest, and penalties/additions to tax for tax years 2010, 2011, and 2012. The NFTL advised petitioner and Mr. Ward of their right to request a collection due process (CDP) hearing. Through counsel, petitioner and Mr. Ward timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, to challenge the NFTL with respect to the unpaid tax liabilities for 2010, 2011, and 2012. They checked the boxes for an offer in compromise 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 as a collection alternative and lien withdrawal. 6 Petitioner's counsel also wrote on the Form 12153: "Forms 9423 have previously been filed for the tax years 2011 & 2012 (attached). This is the first notification to the taxpayers regarding the 2010 tax year. Divorce decree mandates that Mr. Ward is responsible and holds his ex-wife Krinstine (sic) K. Fringer harmless from any and all taxes with regard to filed returns when they were married. Mr. Ward has totally turned his business and personal life to the positive, is finally current with his tax filings, and is in the process of filing an offer-in-compromise to settle his outstanding tax liabilities." Petitioner and Mr. Ward did not check the box for innocent spouse relief nor did petitioner submit Form 8857, Request for Innocent Spouse Relief, with the Form 12153. At the hearing on respondent's motion, petitioner's counsel conceded that petitioner did not and would not file a request for innocent spouse relief. On January 6, 2022, respondent mailed petitioner a letter 4837, acknowledging receipt of petitioner's request for a CDP hearing, informing petitioner that her request had been assigned to Appeals Officer Debra A. Daugherty (AO). The AO verified that she did not have prior involvement with petitioner for the tax years at issue in this case. The January 6, 2022, letter scheduled a CDP hearing for February 8, 2022. On February 8, 2022, petitioner's counsel, who represented both Mr. Ward and petitioner, conducted the CDP hearing with the AO with respect to petitioner. The 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 AO conducted a separate CDP hearing with Mr. Ward. 7 At the hearing petitioner's counsel indicated to the AO that he had not heard from petitioner and she had not provided any information her counsel requested. Petitioner's counsel discussed with the AO his plan to assist Mr. Ward in submitting an offer in compromise "to hold off levies" while he worked with Mr. Ward and petitioner to resolve the tax liabilities due. However, the AO informed petitioner's counsel that an offer in compromise would likely not be accepted because Mr. Ward was not in filing compliance. The AO also discussed petitioner's request for lien withdrawal and explained to petitioner's counsel that petitioner and Mr. Ward did not qualify for a lien withdrawal because Mr. Ward was not in filing or paying 16 compliance. 17 18 19 20 21 22 23 24 25 Petitioner's counsel also argued that petitioner was not liable for the joint tax liabilities for the years in issue because of the terms of her divorce decree with Mr. Ward. The AO asserted that petitioner was jointly and severally liable for the tax liabilities notwithstanding the divorce decree. Petitioner, through her counsel, did not dispute the underlying liability. Also discussed during the CDP hearing were Mr. Ward's plans to request an installment agreement as a resolution, penalty abatement, 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 Mr. Ward's need to be in filing compliance with tax years 8 2013 through 2019 and to pay estimated tax payments for 2020. The AO determined that she could not consider the requested lien withdrawal and offer in compromise and the parties were unable to come to an agreement because petitioner had not provided any documentation. On March 15, 2023, the AO issued a notice of determination to petitioner sustaining the NFTL. The record does not indicate if a notice of determination was issued to petitioner's ex-spouse, Mr. Ward. A. Summary Judgment Discussion Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Either party may move for summary judgment upon all or any part of the legal issues in controversy. Rule 121(a). The Court may grant summary judgment only if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 121(a)(2). Respondent, as the moving party, bears the burden of proving that a genuine dispute does not exist as to any material fact and that respondent is entitled to 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 judgment as a matter of law. See FPL Grp., Inc. v. 9 Commissioner, 115 T.C. 554, 559 (2000); Bond v. Commissioner, 100 T.C. 32, 36 (1993); Naftel v. Commissioner, 85 T.C. 527, 529. In deciding whether to grant summary judgment, the factual materials and inferences drawn from them must be considered in the light most favorable to the nonmoving party. FPL Grp., Inc. v. Commissioner, 115 T.C. at 559; Bond v. Commissioner, 100 T.C. at 36; Naftel v. Commissioner, 85 T.C. at 529. The party opposing summary judgment must set forth specific facts which show that a question of genuine material fact exists and may not rely merely on allegations or denials in the pleadings. Rule 121(d); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322, 325 (1988); King v. Commissioner, 87 T.C. 1213, 1217 (1986). B. Hearings Under Section 6320 Section 6321 imposes a lien in favor of the United States on all property and rights to property of a taxpayer where there exists a failure to pay any tax liability after demand for payment. The lien generally arises automatically at the time assessment is made. I.R.C. § 6322. Section 6323(a), however, provides that the lien shall not be valid against any purchaser, holder of a security interest, mechanic's lienor, or judgment 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 lien creditor until the Commissioner files a notice of 10 federal tax lien with the appropriate public officials. Section 6320 sets forth procedures to afford protections for taxpayers upon the filing of a notice of federal tax lien. Section 6320(a)(1) establishes the requirement that the Commissioner notify in writing the taxpayer described in section 6321 of the filing of a notice of federal tax lien under section 6323. This notice required by section 6320 must be sent not more than five business days after the notice of federal tax lien is filed and must inform the taxpayer of the opportunity for administrative review of the matter in the form of a CDP hearing before the Appeals Office. I.R.C. § 6320(a)(2)(C), (3). If a CDP hearing is requested, section 6320(b) and (c) grants the taxpayer the right to a fair hearing before an impartial Appeals officer, generally to be conducted in accordance with the procedures described in section 6330(c), (d), and (e). At the CDP hearing the Appeals officer conducting the hearing must verify that the requirements of any applicable law or administrative procedure have been met. I.R.C. § 6330(c)(1); see I.R.C. § 6320(c). The taxpayer may raise at the hearing "any relevant issue relating to the unpaid tax", including 1 2 3 4 5 6 7 8 9 10 11 12 appropriate spousal defenses, challenges to the 11 appropriateness of the collection action, and offers of collection alternatives. I.R.C. § 6330(c)(2)(A); see I.R.C. § 6320(c). Within 30 days after the Appeals Office issues a notice of determination, the taxpayer may appeal the determination to the Court. I.R.C. § 6330(d)(1); see I.R.C. § 6320(c). In reviewing an IRS administrative determination in a CDP case, if the underlying tax liability is properly in dispute the Court reviews the issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-82 (2000). The Court reviews all other determinations for abuse of discretion. 13 Id. at 182. 14 15 16 17 18 19 20 21 22 23 24 25 Petitioner has not disputed the underlying tax liabilities. Therefore, the Court reviews the determination in dispute for abuse of discretion. Id. at 182. Abuse of discretion exists when a determination is arbitrary, capricious, or without sound basis in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff'd, 469 F.3d 27 (1st Cir. 2006). The Court's review of CDP cases is limited to issues that taxpayers raised during their CDP hearings. Giamelli v. Commissioner, 129 T.C. 107, 112-13 (2007); Magana v. Commissioner, 118 T.C. 488, 493 (2002); Treas. Reg. § 301.6330-1(f)(2), Q&A-F3. Petitioner did not raise 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 innocent spouse relief at the CDP hearing. C. Scope of Review 12 Respondent asserts that in nonliability CDP cases such as this the scope of our review is limited to the administrative record. Murphy v. Commissioner, 469 F.3d 27, 31 (1st Cir. 2006), aff'g 125 T.C. 301 (2005); Robinette v. Commissioner, 439 F.3d 455, 459-60 (8th Cir. 2006), rev'g 123 T.C. 85 (2004). This case is appealable to the U.S. Court of Appeals for the First Circuit, see I.R.C. § 7482(b)(1)(G)(i), and thus, the Court will limit our review to the administrative record. See Golsen v. Commissioner, 54 T.C. 742, 756-57 (1970), aff'd, 445 F.2d 985 (10th Cir. 1971). Respondent filed the administrative record certified as genuine in accordance with Rule 93(a). Petitioner did not move to complete or supplement the administrative record in accordance with Rule 93(b). Petitioner asserts that petitioner counsel's time records should be considered but because petitioner did not move to supplement the administrative record the Court finds that they are not included in the administrative record. Further, such time sheets were not documents that were submitted to the AO and under Reg. 301.6330-1, Q&A-F4 they cannot be considered part of the administrative record. 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 D. Abuse of Discretion 13 In deciding whether the AO abused her discretion in sustaining the filed federal tax lien the Court considers whether the AO: (1) properly verified that the requirements of applicable law and administrative procedure had been met; (2) considered any relevant issues petitioner raised; and (3) considered "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the * * * [taxpayer] that any collection action be no more intrusive than necessary." See I.R.C. § 6330(c)(3). In reviewing for abuse of discretion, the Court generally considers only the arguments, issues, and other matters that were raised at the hearing or otherwise brought to the attention of the Appeals Office. Giamelli v. Commissioner, 129 T.C. at 115. 1. Withdrawal of Notice of Federal Tax Lien With regard to withdrawal of the notice of federal tax lien, in pertinent part, section 6323(j)(1) provides that the Secretary may withdraw a notice of federal tax lien before the underlying tax liability is paid if the Commissioner determines that: (1) the notice of federal tax lien was filed prematurely or not in accordance with IRS procedures, (2) the taxpayer entered into an installment agreement under section 6159 that 1 2 3 4 5 6 7 8 9 10 11 12 satisfies the tax liability for which the lien was 14 imposed, (3) withdrawal of the notice of federal tax lien will facilitate collection of the tax liability, or (4) withdrawal is in the best interests of both the taxpayer and the United States. The decision of whether to withdraw the notice of federal tax lien is within the discretion of the Commissioner. See I.R.C. § 6323(j); Treas. Reg. § 301.6323(j)-1. Respondent argued that the AO did not abuse her discretion because withdrawal of the notice of federal tax lien is permissive and petitioner failed to demonstrate that she met any of the four criteria for permissive 13 withdrawal. 14 15 16 17 18 19 20 21 22 23 24 25 Petitioner argues that the notice of federal tax lien should be withdrawn because Mr. Ward, petitioner's ex-spouse, is liable for the outstanding liabilities pursuant to a divorce decree. However, petitioner did not raise relief from joint and several liability (innocent spouse relief) at the hearing or file a request for innocent spouse relief. The AO correctly informed petitioner's counsel that a provision in a divorce agreement does not control as to petitioner's liability for a joint tax liability. Petitioner also argues that the AO considered but did not accept Mr. Ward's offer to enter into an installment agreement or accept an offer in compromise. 15 Although petitioner's counsel asserted that Mr. Ward was going to pay off all outstanding liabilities as of the date of the notice of determination petitioner did not provide at the hearing evidence that the liabilities had been paid or that a installment agreement had been approved by the IRS. Accordingly, petitioner has not proven that the requirements for withdrawal of the federal tax lien have been met. Thus, the AO did not abuse her 1 2 3 4 5 6 7 8 9 10 discretion in denying the request for the lien to be 11 withdrawn. 12 13 14 15 16 17 18 19 20 21 22 23 24 2. Spousal Defenses Petitioner failed to raise any spousal defenses during the CDP hearing. Thus, the Court does not consider this matter here. See Giamelli v. Commissioner, 129 T.C. at 113-15; Treas. Reg. § 301.6330-1(f)(2), Q&A-F3. 3. Verification The record shows that the Appeals Office properly verified that the requirements of all applicable laws and administrative procedures were met in the processing of petitioner's' case and that the proposed lien balances the Government's need for the efficient collection of taxes with petitioner's concerns that the collection action be no more intrusive than necessary. DL DL 25 FE. Conclusion In sum the Court concludes that there is no 16 genuine dispute as to a material fact and that respondent is entitled to judgment as a matter of law sustaining the notice of determination, upon which this case is based. Premises considered, it is ORDERED that respondent's motion for summary judgment, filed January 9, 2024, is granted. It is further ORDERED AND DECIDED that respondent may proceed with the collection action (notice of federal tax lien filing) in respect of petitioner's remaining tax liabilities for 2010, 2011, and 2012 as determined in the notice of determination dated March 15, 2023, upon which this case is based. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 10:25 a.m., the above-entitled matter was concluded.) 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 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 CERTIFICATE OF TRANSCRIBER AND PROOFREADER 17 CASE NAME: Kristine K. Fringer v. Commissioner DOCKET NO.: 6856-23L We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 17 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Lee Miller on March 12, 2024 before the United States Tax Court at its session in Hartford, CT, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording. _______________________________________________ Susan Patterson, CDLT-174 3/30/24 Transcriber Date _______________________________________________ Traci Fine, CDLT-169 Proofreader 4/1/24 Date