TAX COURT OPINION

Case: Davendra Anand
Docket Number: 18975-17
Judge: Goeke
Opinion Type: bench
Filed: 10/11/2019
Pages: 13

56 UNITED STATES TAX COURT WASHINGTON, DC 20217 DAVENDRA ANAND, Petitioner(s), v. DRC ) ) ) ) ) Docket No. 18975-17. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) 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 hearing in the above case before Judge Joseph Robert Goeke at Hartford, Connecticut containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, respondent's Motion for Summary Judgment, filed July 3, 2019, will be granted in part and denied in part. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. October 11, 2019 SERVED Oct 15 2019 3 1 2 3 4 5 6 7 8 9 Bench Opinion by Judge Joseph Robert Goeke October 3, 2019 Davendra Anand v. Commissioner of Internal Revenue Docket No. 18975-17 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 op1nlon. The oral findings of fact and opinion shall not 10 be relied upon as precedent in any other case. This 11 opinion is rendered pursuant to section 7459(b) of the 12 Internal Revenue Code, and Rule 152 of the Tax Court Rules 13 of Practice and Procedure. In the remainder of this bench 14 15 16 opinion, section references are to the Internal Revenue Code in effect for the periods in question. And rule references are to the Tax Court Rules of Practice and 17 Procedure. 18 19 Before the Court is respondent's motion for summary judgment under Rule 1213 keeking adjudication 20 that the IRS's determination to disallow the abatement of 21 22 interest on income tax assessed for 2005 through 2011 is sustained. We have jurisdiction in this case pursuant to 23 Section 6404(h). The amounts of interest in dispute by 24 year are as follows, for 2005 $16,872.38; for 2006 25 $1,477.55, for 2007 $1,318.32, for 2009 $645.86, for 2010 cribers (D)406-2250|operations@escribers.netiwwwescribersmet 1 2 $192.18, for 2011 $785.55, for a total amount of interest for which the petitioner seeks abatement of $21,291.84. 3 All these interest amounts have previously been paid by 4 4 5 6 7 8 9 the petitioner and his spouse. Petitioner resided in Connecticut when he timely filed the petition in this case. In his petition the petitioner seeks review of respondent's failure to abate interest for the taxable years 2004 through 2011, a refund of income taxes assessed against him for taxable years 10 2004 through 2011, refund of FBAR penalties assessed 11 against him for taxable years 2004 through 2011, and 12 modification by this Court of the United States India 13 Double Tax Avoidance Agreement. 14 15 16 On October 19, 2017, respondent filed a motion to dismiss for lack of jurisdiction relative to some of the issues raised in the petition. Respondent's motion 17 specifically relates to the refund of the FBAR penalties 18 for 2004 through 2011, and for petitioner's arguments 19. relative to the modification of the U.S. India Tax Treaty 20 language. We granted respondent's motion to dismiss on 21 March 6, 2018. On September 13, 2016, respondent filed a 22 motion for partial summary judgment asking this Court to 23 deny petitioner's request for refund of income tax 24 deficiencies assessed for the years 2004 through 2011. 25 The Court entered a stipulated decision in cribers (9733406.2250loperatiomeescribersmet|www.escribersnet 1 2 3 4 5 6 7 8 9 docket number 23582-15 on September 16, 2016, finding that Petitioner and his wife were liable for income tax deficiencies for the years in issue. Petitioner and his wife did not appeal the decision or file a motion to vacate. We granted respondents motion for partial summary judgment on December 12, 2018. Relative to the current motion for summary judgment, we note that summary judgment may be granted where the pleadings and other 10 materials show that there is no genuine dispute as to any 11 material fact, and that a decision may be rendered as a 12 matter of law. Rule 121 (b) , Sundstrand Corp. v. 13 Commissioner, 98 T.C. 518 (1992), aff'd 17 F.3d 965 (7th 14 Círcuit 1994). The burden is on the moving party to 15 demonstrate that there is no genuine dispute as to any 16 material fact, and that he or she is entitled to judgment 17 as a matter of law. FPL Group Inc. and Subsidiaries v. 18 Commissioner, 116 T.C. 73, 74-75 (2001). In cases 19 20 involving summary judgment the evidence is viewed in the light most favorable to the nonmoving party. Bond v. 21 Commissioner, 100 T.C. 32, 36 (1993). 22 On the other hand the moving party may not rest 23 upon the mere allegation or denial of his or her 24 Pleadings, but must set forth specific facts showing there 25 is a genuine dispute for trial. Sundstrand Corp. at 98 Cribers 73}406-2250|operationseesalbeanetlwwwescribers.net 6 T.C. 520. The factual record before us is based upon a stipulation of facts with exhibits. Respondent also submitted affidavits with attached exhibits in support of respondent's motion for summary judgment. Petitioner has failed to demonstrate by affidavits or any other acceptable reasons that there is a genuine dispute for trial. Thus, we conclude that there is no dispute as to any material fact, and that a decision may be rendered, at least in part, as to respondent's motion for summary judgment, The issue before us is whether the petitioner is 1 2 3 4 5 6 7 8 9 10 11 12 entitled to the abatement of interest for 2005, 2006, 13 2007, 2009, 2011, and 2010 tax years as a result of a 14 ministerial or managerial delay caused by respondent. The 15 petitioner filed a Form 843 claim for Refund and Request 16 for Abatement with the IRS in November 2016. In that form 17 18 the petitioner requested the abatement of interest for 2005 through 2011. Petitioner explained the reasons for 19 the abatement as follows: 1) IRS mishandled the case that 20 required several extensions, because IRS changed the 21 auditor several times. We provided all information 22 23 24 documents in a timely manner. 2) The case was created due to confusing and misleading U.S.A. India DTAA, which should be made more specific on this issue. Along with 25 deficiency, this interest is a huge burden on me. I cribers (9733406-2250loperations+escribers.netlwww.escribersnet 7 1 2 3 4 5 6 7 8 9 10 11 request full waiver of interest. On March 16, 2017, the petitioner mailed a protest letter and certain attachments to the Internal Revenue Service Center at Kansas City, Missouri. These documents were sent because the initial request for relief was rejected in a preliminary fashion by the IRS on November 16, 2016. The protest, which the petitioner sent included in part the following, "IRS had to request several extensions and reassign the case to at least four agents midstream to understand India tax laws and property laws, particularly for refugee properties of Daryagunj-New 12 Rajindra Nagar and how the directive DTAA applied to them, 13 14 15 and in the process the IRS mishandled the case. It was not until the case reached Appeals Officer Karen Graham who went through the underlying issues at great length in 16 order to finish this case." 17 On March 20, 2017, respondent issued a final 18 determination regarding petitioner's request dated 19 November 16, 2016. In that determination the disallowance 20 of the claim for interest abatement was sustained. 21 Respondent sent a letter dated August 28, 2011 to the 22 Petitioner and his spouse indicating that they were 23 24 enabled to submit an offshore voluntary disclosure letter. The audit activity records do not indicate what occurred 25 prior to June 19, 2012. The initiation of the compliance vCribers (973)406-2250l operations@eseríbermet j www.escribersnet certification by IRS examination division personnel was dependent on the petitioners voluntarily entering into the 8 voluntary disclosure program by submitting the letter which the petitioner submitted on August 28, 2011. Once the petitioner and his wife had entered into this voluntary disclosure program and consented to extend the statute of limitations for assessment, the case was assigned to a revenue agent especially trained regarding the India Voluntary Disclosure Program. The activity records of this revenue agent demonstrate that work was conducted on the case from October 31, 2012, through March 20, 2013. On March 20, 2013, the examining agent emailed 1 2 3 4 5 6 7 8 9 10 11 12 13 14 petitioner a list of open items that needed to be 15 resolved. On March 25, 2013, she issued an information 16 document request to the petitioner and his wife with a due 17 18 19 date of April 1st, 2013. On March 28, 2013, the examining agent informed the petitioner and his wife that although the voluntary disclosure process did not involve an audit, 20 it did require that she certify that the petitioners had 21 22 23 24 complied with the reporting obligations of the program. On April 3, 2013, petitioner and his wife submitted a power of attorney and they informed the examining agent that they wished to opt out of the voluntary disclosure 25 process. As a result of this, the case was reassigned to C beÑ (9731442250loperations@esertersmet|www.escribetsner 9 a different revenue agent on May 22, 2013. The activity records of the initial revenue agent indicates that she was on emergency leave and that she set up an appointment with the power of attorney for the petitioners on October 9, 2013. Between September 25, 2013 and February 11, 2014, the case ae on hold due to a parallel examination of petitioner's brother who had also opted out of the voluntary disclosure program. On February ll, 2014, the case was transferred to a different revenue agent who, in fact, was already conducting the examination of petitioner's brother. During this time, the examining agents requested assistance from respondent's IRS counsel concerning some 1 2 3 4 5 6 7 8 9 10 11 12 13 14 of the issues in the case. While this advice was pending _15 the agent continued requesting information and examining 16 records as part of the examination process. On January 17 18 12, 2015, the revenue agent assigned received requested advice from IRS counsel. Jáwl Ôn January 22, 2015, she 19 sent a letter to the power of attorney outlining the IRS c 20 21 22 as reflected in the advice. On February 3, 2015, the revenue agent notes state that the power of attorney had refused to cooperate with the production of any more 23 documents. On February 26, 2015, petitioner and his wife | 24 submitted a form 1040 X, Amended U.S. Income Tax Return 25 for the 2009 taxable year. On March 10, 2015 the power of ) cdbers 73)4002250|operations@escribersmet|veww.escribersnet attorney produced additional documents. The revenue 10 agent's work papers and log reflect that she worked on the case to close the case and issue a notice of deficiency for the years 2004 through 2011, and the notice of deficiency was issued on July 23, 2015. After the notice of deficiency was issued the respondent filed an answer in the case, and the case was referred to IRS's office of appeals in a timely manner. After a meeting between the power of attorney and respondent's counsel, while the case was pending with appeals, a joint motion for continuance was filed, which represented that the case was currently pending in appeals and that the parties were working toward a resolution of the case. On September 2, 2016, a settlement stipulation was filed with the Court, and on September 6, 2016, the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Court entered an agreed decision in docket number 23582- 17 18 19 15. Pursuant to section 6601(a) interest is payable on the underpayment of tax. Interest is not a penalty for late payment, but merely compensation for delayed payment 20 to the Internal Revenue Service. 21 22 The petition in this case was brought under section 6404(e) and (h). For taxable years beginning 23 after July 30, 1996, section 6404(e) permits the ecretary 24 of the reasury to abate the assessment of interest on any 25 deficiency attributable in whole or in part to any ) cribers (973)406-2250loperationsøescribetsmetlwwwascribersnet 1 2 unreasonable error or delay an officer or employee of the Internal Revenue Service in performing administerial or 3 managerial act. Such error or delay shall be taken into 4 5 6 7 8 9 account only if no significant aspect of such error or delay can be attributable to the taxpayer involved, and only after the Internal Revenue Service is contacted the taxpayer in writing with respect to the deficiency. Section 6404(e)(1). Administerial act is defined as a procedural or 10 mechanical act that does not involve the exercise of 11 judgment or discretiong And that occurs in the processing ank 6 12 of a taxpayers case after all prerequisites to the act, 13 14 such as a conference and review by supervisors have occurred. Treas. Reg. Section 301.6404-2(2)(b)(2). A 15 managerial act is an administrative act that occurs during 16 the processing of a taxpayer's case involving either 17 18 temporary or permeant loss of records or exercise of judgment or discretion relating to the management of 19 personnel. Treas. Reg. Section 301-6404-2(b)(1). 20 21 22 Section 6404(h) authorizes this court to determine whether the Internal Revenue Service's failure to abate interest under section 6404(e) was an abuse of 23 discretion. The determination of whether the IRS abused 24 discretion is a question of fact, but the standard of 25 review is a narrow one. Where the commissioner has cdbers (9733406-2250|operations®escritersnet{www.escdbennet 1 granted broad discretion by statute, his determination 2 will be overturned only if it is unreasonable or 12 3 4 5 6 7 8 9 arbitrary. Ballentine Motor Company v. Commissioner, 321 F.2d 796 (4th Circuit 1963). An arbitrary and capr1clous standard is applied to the conduct of the commissioner in such a situation. Lee v. Commissioner, 113 T.C. 145 (1999). Petitioner is largely unwilling to form his arguments in this case based upon section 6404(e). 10 Rather, he challenges the underlying tax liability and the 11 12 13 14 15 complexity of the law involving the United States and India. In reviewing his arguments, it is difficult to find an assertion related to administerial or managerial act which causes unreasonable error or delay. However, the petitioner does assert that his brother should not 16 have been involved in his case. 17 18 19 20 21 22 23 24 Respondent does agree that a portion of the delay in the audit of this case from September 22, 2013, through February 11, 2014, was due to respondent's waiting On for workAthe brother's examination to proceed, so it could 324- be done simultaneously with the examination of the tax returns of petitioner and his spouse. Respondent asserts that this delay was a normal administrative decision. We disagree with respondent's analysis and find 25 this delay was potentially unreasonable and resulted from ) Cribers (973}4062250|opwations@escribers.netiv.wwesalben.net a potential management decision to delay petitioner's audit. Accordingly, we find that interest for the period from September 26, 2013, through February 11, 2014 is not subject to summary judgment, as based upon the facts that 13 have been presented and the of facts in this case. It is not clear that there was not a managerial administerial act that caused an unreasonable delay for that period. With respect to the other periods involved, we 1 2 3 4 5 6 7 8 9 10 find that respondent has sustained the fact that these 11 activities were not subject to any errors or delays that 12 were unreasonable, and that petitioner has provided no 13 14 15 rebuttal evidence to such findings. Regarding the remainder of the audit, other than the period for which the delay was agreed to have been caused by the audit of 16 petitioner's brother, the petitioner has not articulated 17 18 19 20 21 22 23 24 25 any unreasonable administerial or management act, and we find none in the audit record that has been stipulated. In conclusion, based upon the uncontested record, including the stipulated documents we find that summary judgment is sustained for all periods except the interest which would flow from the period September 26, 2013 until February 11, 2014. An appropriate order will be issued. This concludes the Court's oral findings of fact CdberS (973)4002250loperatiomeesalbermet|www.escrbersnet and opinion in this case. 14 (Whereupon, at 9:45 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 BElE!E (J73)406-2250loperations®escribertnet|www.escribers et