TAX COURT OPINION

Case: Kenneth O. Etefia
Docket Number: 835-08S
Judge: Colvin
Opinion Type: bench
Filed: 12/29/2009
Pages: 17

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 KENNETH 0 . ETEFIA , Petitioner, COMMISSIONER OF INTERNAL REVENUE, ) Respondent . O R D E R Docket No . 835-08 S Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s 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 proceedings in the above case before Judge Laurence J . Whalen at Baltimore , Maryland , containing his oral findings of fact and opinion rendered on December 1, 2009 . In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered . (Signed) Laurence J . Whalen Judge Dated : Washington, D .C . December 29, 2009 SERVED DEC 3 0 2009 3 1 Bench Opinion by Senior Judge Lawrence J . Whalen 2 November 30, 200 9 3 Etefia v . Commissioner Docket No . 835-08S 4 THE COURT : The Court has decided to render ora l 5 findings of fact and opinion in this case, and th e 6 following represents the Court's oral Findings of Fac t 7 and Opinion . This Bench Opinion is made pursuant to the 8 authority granted by section 7459(b) of the Interna l 9 Revenue Code of 1986, as amended, and Rule 152 of the Tax 10 Court Rules of Practice and Procedure . Hereinafter al l ,11 section references are to the Internal Revenue Code, a s 12 amended and in effect for the taxable year in issue, and (cid:127)13 all rule references are to the Tax Court rules o f .14 Practice and Procedure . 15 The instant petition, filed pursuant to sections 16 6330(d) and 7463 in effect at the time the petition was 17 filed, asks the Court to review a Notice of Deficiency 18 Concerning Collection Actions under Sections 6320 and/or 19 6330 dated December 5, 2007, hereafter notice o f 20 determination, in which an Appeals officer of th e 21 Internal Revenue Service determined that Respondent may 22 proceed with the collection of Petitioner's 2002, 2003, 23 and 2004 income tax liabilities, aggregatin g 24 approximately $48,621 .79, including penalties an d 25 interest . The decision to be entered in this case is not Heritage Reporting Corporatio n (202) 628-4888 4 1 reviewable by any other court, and this opinion should 2 not be cited as authority . 3 The case is presently before the Court to decide 4 Respondent's motion for summary judgment . In that motion 5 Respondent asks the Court to summarily decide i n 6 Respondent's favor on the ground that no abuse o f 7 discretion can be found in the settlement officer's 8 issuance of the subject notice of determination, and 9 Respondent is entitled to judgment as a matter of law . 10 Respondent asserts that, "Petitioner raised no 11 issue at the Collection Due Process Hearing other than 12 his underlying liability and [he] failed to provide any 13 documents showing that an alternative collection method 14 would be appropriate ." Respondent argues that , 15 accordingly, "there is no abuse of discretion in the 16 denial of Petitioner's challenge to the use of a ta x 17 levy" and Respondent is entitled to judgment as a matter 18 of law . 19 Background . 20 On January 5, 2006, Respondent sent by certified 21 mail a Notice of Deficiency to Petitioner at his last 22 known address . According to the Notice of Deficiency, 23 Respondent had determined the following deficiencies and 24 penalties in Petitioner's tax : 125 For tax year 2002, a tax deficiency of $7,625, and Heritage Reporting Corporatio n (202) 628-4888 5 1 a penalty under Section 6662 of $1,525 . 2 For 2003, a tax deficiency of $13,272 and a 3 penalty of $2,654 . 4 For 2004, a tax deficiency of $17,920 and a 5 penalty under Section 6662 of $3,584 . 6 The United States Postal Service notifie d 7 Petitioner that the envelope containing the Notice of 8 Deficiency had arrived and was available for pickup on 9 January 6, 2006, and again on January 13, 2006 . 10 Nevertheless, Petitioner did not accept delivery of th e 11 notice and it was returned to the sender on January 21, 12 2006 . 13 In due course thereafter, Respondent assessed the 14 additional taxes and penalties determined in the notice 15 against Petitioner and the collection process began . 16 On or about July 21, 2006, after receiving a 17 Notice of Balance Due, Petitioner called the Interna l 18 Revenue Service and stated that he did not owe the amount 19 shown as the balance due . 20 Respondent's representative suggested t o 21 Petitioner that he request an audit reconsideration of 122 the amount assessed . The representative explained the 23 procedure for .requesting an audit reconsideration, place d 124 a collection hold on Petitioner's account, and ordered 25 for Petitioner a copy of Publication 3598 entitled "Wha t Heritage Reporting Corporation (202) 628-4888 6 1 You Should Know about the Audit Reconsideration Process" . 2 There is no evidence that Petitioner eve r 3 requested audit reconsideration of his taxes for 2002 , 4 2003 and 2004 . 5 The Final Notice of Intent to Levy and Notice of 6 Your Right to a Hearing was issued to Petitioner o n 7 November 4, 2006)with respect to 2002, 2003fand 2004 . At 8 that time, according to the notice Petitioner owe d 9 $11,005 .72, $19,226 .63, and $24,780 .96 , respectively . 10 Petitioner filed a timely Form 12153, Request for 11 Collection Due Process Hearing dated November 14, 2006 . 12 On that form Petitioner stated the following reasons for 13 his disagreement with the Notice of Intent to Levy . 14 "I disagree with the Notice of Intent to Levy for 15 the following reasons : (1) Keith Wagner, the first IRS 16 employee that sent me notice of indebtedness, had sent me 17 a notice with someone else's social security number, an d 118 neither he nor the IRS replied my letter [sic] requesting 19 an investigation in 2005 . (2) I should not be asked to 20 cure an obligation under someone else's social security 21 number . " 22 The "notice of indebtedness" to which Petitioner 23 refers is a letter from Respondent's agent dated July 18, 24 2005, sending to Petitioner an examination report o f 25 proposed changes to his tax liability for tax years 2002, Heritage Reporting Corporatio n (202) 628-4888 7 1 2003, and 2004 . Apparently, the taxpayer identification 2 number on that letter was not Petitioner's . However, the 3 examination report which is enclosed, consisting of Form 4 4549A, Income Tax Examination Changes, Form 4549B, Income 5 Tax Changes, and Form 866A, Explanation of Items, a total 6 of 23 pages, uses Petitioner's correct taxpaye r 7 identification number on each of the 23 pages of the 8 report . 9 More significantly, the Notice of Deficiency 10 subsequently issued to Petitioner on January 5, 2006 , 11 used Petitioner's correct taxpayer identification number, 12 and it enclosed the same examination report which used 13 Petitioner's correct taxpayer identification number on 14 each of the 23 pages of the report . 15 In reply to Petitioner's request for hearing, 1 16 Respondent sent a letter to Petitioner stating that hi s 17 request was being sent to the Memphis Appeals Processing 18 Campus, and he would be contacted shortly . Petitioner 19 followed up with a letter dated December 22, 2006 , 20 repeating his complaint that he had received a letter 21 dated July 18, 2005, from Keith Wagner showing a social !22 security number that was not his, and questioning th e 23 accuracy of Mr . Wagner's report . 24 The Settlement officer who was assigned to .25 Petitioner' s case sent him a letter on May 15, 2007, Heritage Reporting Corporation (202) 628-4888 8 1 scheduling a telephone conference with him on June 7 , 2 2007, and requesting additional information, including a 3 financial statement . When Petitioner did not respond , 4 the Settlement Officer sent a second letter dated May 29 , 5 2007,to Petitioner, reminding him of the scheduled 6 conference and the Settlement Officer's request for 7 additional information . 8 Petitioner never responded to the Settlemen t 9 Officer and he did not call at the scheduled time for the 10 telephone conference . Accordingly, on December 5, 2007, 11 Respondent issued a Notice of Determination Concernin g 12 Collection Actions under section 6320 and/or 633 0 13 sustaining levy as an appropriate collection action . 14 On January 14, 2008, Petitioner filed his petition 15 in the Tax Court . Paragraph 2 of the petition state s 16 that Petitioner disagrees with "the determination 17 contained in the notice issued by the Internal Revenu e 18 Service for the year(s) or period(s) December 2003/04 and 19 05, as set forth in such notice dated 12/26/07, a copy of 20 which is attached . " 21 Paragraph 4 of the petition states the following 22 reasons why Petitioner believes he is entitled to relief : 23 "(1) I was sent an assessment with the wrong 24 social security number and asked to pay someone else's 25 tax bill . (2) I was not contacted for my phone hearin g Heritage Reporting Corporation (202) 628-4888 9 1 my [sic] IRS agents (my phone log will be sent to ta x 2 court) " 3 When Petitioner stated that he had received "an 4 assessment with the wrong social security number" in the 5 portion of the petition quoted above, he was referring to 6 the letter dated July 18, 2005, described above, whic h 7 transmitted the agent's examination report to him for 8 review . 9 Furthermore, we note that the date of the Notic e 10 of Determination which is at issue in this case is 11 December 5, 2007, not "12/26/07" as stated in th e 12 petition . Also, we note that the Notice of Determination 13 sustained levy as an appropriate collection action as to 14 "Tax period(s) ending : 12/2002, 12/2003, and 12/2004" not 15 "period(s) December 2003/04 and 05", as stated in the 16 above quoted portion of petition . 17 In view of the fact that the subject Notice of 18 Determination does not involve tax year 2005, on March 19 12, 2008,the Court granted Respondent's Motion to Dismis s X20 for Lack of Jurisdiction and to Strike as to Taxable Year 121 2005 . As a result, this case involves only taxable year s 22 2003 and 2004 . 23 On November 12, 2008, the Court granted 24 Respondent's motion for remand of the case t o 25 Respondent's Office of Appeals for administrative Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 15 X 16 17 18 19 20 21 X22 23 24 25 1 0 hearing . Respondent ' s motion was premised on the fac t that the Settlement Officer's letters of May 15, 2007Jan d June 7, 2007 " could reasonably lead to confusion a s Petitioner ' s responsibility to contact the Settlement Officer in order to participate in the telephoni c conference . " The Settlement officer scheduled a new administrative hearing for January 7 , 2009, and she agai n requested Petitioner to submit a financial statement an d other documents to consider alternative collectio n methods . The telephone conference was rescheduled fo r March 2 , 2009jat Petitioner ' s request and it was finall y held on March 5, 2009 . According to Respondent's repor t on March 5, 2009, "Petitioner refused to participate i n the conference ." Further, Petitioner failed to provid e any requested financial information . On March 25, 2009, the Settlement Officer issued a Supplemental Notice of Determination Concernin g Collection Action ( s) under Section 6320 and / or 633 0 sustaining the levy . According to the Supplementa l Notice of Determination , " The Notice of Intent to Levy i s an appropriate collection action and is sustained i n Appeals . " Discussion . The purpose of summary judgment is to expedit e Heritage Reporting Corporation (202) 628-4888 1 1 1 litigation and avoid unnecessary and expensive trials . 2 See Keene v . . Commissioner , 121 T .C . 8, at 14 ; Florida 3 Peach Corp . v . Commissioner , 90 T .C . 678, at 681 . 4 Generally we grant summary judgment if the pleadings , 5 answers to interrogatories, depositions, admissions, and 6 any other acceptable materials show that there is n o 7 genuine issue of any material fact and a decision may be 8 rendered as a matter of law . Rule 121(b) ; see Sundstrand { 9 Corp . v . Commissioner , 98 T .C . 518, at 529, affd . 17 F .3d 10 965 ; Zaentz v . Commissioner , 90 T .C . 753, at 754 . 11 The moving party, Respondent in this case, bears 12 the burden of proving that there is no genuine issue of 13 material fact . Dahlstrom v . . Commissioner , 85 T .C . 812 ; 14 Jacklin v . Commissioner , 79 T .C . 340 . Factual inferences 15 will be made in a manner most favorable to the part y 16 opposing summary judgment, Petitioner in this case . 117 Dahlstrom v . Commissioner , supra at 821 . 18 For the reasons set forth below, we conclude that 19 there is no genuine issue of any material fact and 20 Respondent is entitled to judgment as a matter of law . .21 Accordingly, we will grant Respondent's motion . 22 We have previously summarized the authority of the 23 Commissioner to levy against the property or propert y 24 rights of the taxpayer and the protections afforded to 25 such taxpayer in Lunsford v . Commissioner , 117 T .C . 183, Heritage Reporting Corporation (202) 628-4888 1 2 1 at 183 and 184, in which we stated as follows : 2 "Section 6331(a) authorizes the Commissioner to 3 levy against property and property rights where a 4 taxpayers fails to pay taxes within 10 days after notice 5 and demand for payment is made . Section 6331(d) requires 6 the Secretary to send notice of an intent to levy to the 7 taxpayer, and Section 6330(a) requires the Secretary t o 8 send a written notice to the taxpayer of his right to a 9 hearing . Section 6330(b) affords taxpayers the right to 10 a "fair hearing" before an "impartial" IRS Appeal s 11 Officer . Section 6330(c)(1) requires the Appeals Officer 12 to obtain verification that the requirements of any 13 applicable law or administrative procedure have been met . 14 Section 6330(c)(2)(A) specifies issues that the taxpayer 15 may raise at the Appeals hearing . The taxpayer i s 116 allowed to raise "any relevant issue relating to the 17 unpaid tax or the proposed levy" including spousa l .18 defenses, challenges to the appropriateness of collection 19 action, and alternatives to collection . Sectio n 20 6330(c)(2)(A) . The taxpayer cannot raise issues relating 21 to the underlying tax liability if the taxpayer received X22 a notice of deficiency or the taxpayer otherwise had an . 23 opportunity to dispute the tax liability . Sectio n 24 6330(c) (2) (B) . 25 "Section 6330(c)(3) provides that a determination Heritage Reporting Corporatio n (202) 628-4888 13 1 of the Appeals Officer shall take into consideration th e 2 verification under Section 6330(c)(1), the issues raised 3 by the taxpayer, and whether the proposed collectio n 4 action balances the need for the efficient collection of 5 taxes with the legitimate concern of the person that any 6 collection action be no more intrusive than necessary . 7 Section 6330(d)(1) allows the taxpayer to appeal a 8 determination to the Tax Court or a District Court . 9 Section 6330(e)(1) suspends the levy action until th e 10 conclusion of the hearing and any judicial review of the 11 determination . " 12 In order for a taxpayer to appeal a lev y X13 determination in this Court, pursuant to Section 6330(d), .14 the Rules of the Court require the taxpayer to file a 15 petition for review of the determination . See Rule 331 . 16 That petition must contain clear and concise assignments 17 of each and every error which the taxpayer alleges t o 18 have been committed in the determination, together with 19 clear and concise statements of facts on which th e 20 taxpayer bases each assignment of error . See Rul e .21 331(b)(4) and (5) . The Rules warn that any issue that is 22 not raised by the taxpayer in the assignments of erro r 23 shall be deemed conceded . Rule 331(b)(4), Lunsford v . 24 Commissioner , supra at 190 ; Goza v . Commissioner , 114 25 T .C . 176, at 178 . Heritage Reporting Corporation (202) 628-4888 14 1 If the underlying tax liability was properly at 2 issue in the CDP hearing and the taxpayer includes that 3 matter in the assignments of error .in the petition for 4 review, then we review the Appeals officer' s 5 determination as to that issue de novo . See Sego v . 6 Commissioner , 114 T .C . 604 ; Goza v . Commissioner , supra . 7 However, if the underlying tax liability was not at issue 8 in the CDP hearing, or if the taxpayer does not rais e 9 that issue in his or her petition for review, then we 10 review the determination using the abuse of discretion 11 standard of review . See Sego v . Commissioner , supra at 12 610 ; Goza v . Commissioner , supra , at 182 . 13 We described the abuse of discretion standard of 14 review in Robinette v . Commissioner , 123 T .C . 85, at 93- 15 94 as follows : 16 "Under an abuse of discretion standard, 'we do not 17 interfere unless the Commissioner's determination i s 18 arbitrary, capricious, clearly unlawful, or without sound 19 basis in fact or law .' Ewing v . Commissioner , 122 T .C . 20 32 ; see also Woodral v . Commissioner , 112 T .C . 19 . 21 Review for abuse of discretion includes any relevant 22 issue relating to the unpaid tax or the proposed levy', 23 including 'challenges to the appropriateness o f 24 collection actions' and 'offers of collectio n 25 alternatives' such as offers in compromise . Section Heritage Reporting Corporatio n (202) 628-4888 1 5 1 6330(c)(2)(A) . Questions about the appropriateness of 2 the collection action include whether it is proper fo r 3 the Commissioner to proceed with the collection action as 4 determined in the notice of determination, and whethe r 5 the type and/or method of collection chosen by th e Commissioner is appropriate . See Swanson v . 7 Commissioner , 121 T .C . 111 , (challenge to appropriateness 8 of collection reviewed for abuse of discretion) . " 9 In order for Petitioner to prevail under the abus e 10 of discretion standard, it is not enough for us t o 11 conclude that we would not have authorized collection ; we 12 must conclude that, in authorizing collection, th e 13 Appeals Officer has exercised her discretio n 14 "'arbitrarily, capriciously, or without sound basis i n 15 fact"' . Estate of Jung v . Commissioner , 101 T .C . 412, at 16 449 ; (quoting Mailman v . Commissioner , 91 T .C . 1079 a t 17 1084) . 18 Section 6330(c)(2)(B) provides that the existence !19 and amount of the underlying tax liability can b e ~20 contested at an Appeals Office due process hearing onl y 121 if the taxpayer did not receive a notice of deficienc y 22 for the taxes in question or did not otherwise have an 23 opportunity to dispute such tax liability . See Sego v . X24 Commissioner . Furthermore, a taxpayer cannot defea t 125 actual notice of the deficiency determined by Responden t Heritage Reporting Corporation (202) 628-4888 1 6 1 nor can he claim that he had no opportunity to dispute 2 the liability by deliberately refusing delivery of the 3 notice of deficiency . Id at 611 . 4 Absent special circumstances, in an appeal of a 5 levy determination we will consider only arguments , 6 issues, and other matters that were raised at the Section 7 6330(b) hearing or otherwise brought to the attention of 8 the Appeals Office . See Robinette v . Commissioner , supra 9 at 101-103 ; Ewing v . Commissioner , supra at 41 ; Magana v . 10 Commissioner , 118 T .C . 488 . Thus it must appear that the 11 matters raised before this Court were also raised before 12 the Appeals Office . See Robinette v . Commissioner . 13 In this case the record shows that Respondent 14 issued a notice of deficiency with respect to taxabl e 15 years 2002, 2003rand 2004 to Petitioner by certified mail 16 on January 5, 2006,at his last known address . The record 17 further shows that the U .S . Postal Service notifie d 18 Petitioner on two occasions that he had a certified mail 19 letter for delivery . Petitioner did not accept deliver y 20 of the letter and it was returned to Respondent . {21 Under these facts, we find the Petitioner had a n 22 opportunity to challenge the tax liability determined in 23 the subject notice of deficiency prior to the due process 24 hearing . See id . 25 Accordingly, we agree with Respondent that th e Heritage Reporting Corporation (202) 628-4888 17 1 Petitioner ' s underlying tax liability for the years 2002, 2 2003, and 2004 is not properly before the Court in thi s 3 proceeding , and we must review the subject determination 4 using the abuse of discretion standard of review . 5 The only issue raised in Petitioner ' s Request for 6 a Collection Due Process Hearing is the fact that a 7 letter from Respondent ' s agent dated July 18, 2005, used 8 a taxpayer identification number which was no t 9 Petitioner ' s social security number . 10 The Settlement Officer correctly concluded that i11 this issue related to Petitioner's underlying ta x 12 liability which Petitioner could not raise because he had !13 had a prior opportunity to contest his tax liability for 14 the years in issue . 15 The Determination and Supplemental Determination i'16 show that the Settlement Officer gave Petitioner every 17 opportunity to raise another valid issue during th e 18 collection due process proceedings . Petitioner failed to 19 raise any other issue, and he failed to provide th e 20 financial information that the Settlement Officer had 21 requested to allow her to consider collectio n 122 alternatives . 123 Petitioner has not shown anything in these '24 proceedings to suggest that the Settlement office r 25 exercised her discretion arbitrarily, capriciously, or Heritage Reporting Corporatio n (202) 628-4888 11 1 8 1 without sound basis in fact . 2 For the above reasons, an appropriate order will 3 be issued granting Respondent's motion for summar y 4 judgment . 5 This concludes the Court's oral findings of fact 6 and opinion in this case . 7 (Whereupon, at 11 :28 a .m . the bench opinion in the 8 above-entitled matter was concluded . ) 9 10 11 12 13 14 / / 15 16 17 18 / / 19 2 0 21 2 2 23 124 25 Heritage Reporting Corporation (202) 628-4888