TAX COURT OPINION

Case: Ernest D. Portwine
Docket Number: 16988-15L
Judge: Goeke
Opinion Type: bench
Filed: 05/13/2016
Pages: 13

SuB=CweVe UNITED STATES TAX COURT WASHINGTON, DC 20217 ERNEST D. PORTWINE, Petitioner(s), v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 16988-15 L. ) ) ) ) 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 Judge Joseph Robert Goeke at Billings, Montana (Helena, Montana) on April 29, 2016, 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, a decision will be entered for respondent. (Signed) Joseph Robert Goeke Judge Dated: Washington, D.C. May 13, 2016 SERVED MAY 172016 Capital Reporting Company 3 1 Bench Opinion by Judge Joseph Goeke 2 April 29, 2016 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ernest D. Portwine v. Commissioner Docket No. 16988-15L 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. This bench opinion is rendered pursuant to the authority provided in Tax Court Rule of Practice and Procedure 152 and Internal Revenue Code Section 7459(b). Here and after section references are -to the Internal Revenue Code, unless otherwise stated, and rule references are to the Tax Court Rules of Practice and Procedure. This case arises from the IRS's efforts to collect federal income tax liabilities for the years 2008 through 2011 by means of levy and lien. We have jurisdiction under Section 6330(d) to review the notice of determination sent to the petitioner, Mr. Portwine, on May 28th, 2011, which sustained the IRS's collection action. For the reasons explained herein, we will 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company sustain the collection action proposed by the IRS and sustained by the Internal Revenue Service settlement 4 officer. The petitioner resided in Wyoming at the time he filed the petition in this case. He makes two basic arguments: First, that the assessments against him are invalid and, second, that he was entitled to a face-to-face hearing with the IRS settlement officer and he did not receive such a hearing. The petitioner was previously the party to a nearly identical case in this Court involving the years 2002 through 2007. Portwine v. Commissioner, T.C. Memo 2015-29. He made similar arguments and those arguments were rejected after thorough analysis as reflected in the opinion. We adopt the legal analysis relating to the verification of the issuance and receipt of the notices of deficiency made in the previous case by reference. We also note that the record in this case includes postal service tracking records for each of the four notices of deficiency that underlie the years for which collection action is based in the present case and that these records are even more detailed and more pertinent than were available 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 25 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 2 the Court in T.C. Memo 2015-29. We also note that the record of four 3 distinct deliveries of the four notices of deficiency 4 in this case create another element of credibility 5 which supports the settlement officer's determination 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 that the notices of deficiency were delivered to the petitioner for the years in question, 2008 through 2011. Finally, in the present case the petitioner never actually alleged that he did not receive the notices of deficiency. And when asked specifically about that by the Court, he stated he could not remember. Petitioner did not file federal income tax returns for the taxable years 2008, 2009, 2010, and 2011. Respondent determined deficiencies in income tax and additions to tax against the petitioner for those years and issued the four notices of deficiency previously referred to. Those notices of deficiency were sent to petitioner's last known address on May 19, 2014. United States Post Office records show that 23 all four of the notices of deficiency were, in fact, 24 25 delivered to the petitioner on May 23rd, 2014, as specifically referenced previously. The Post Office 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 6 records, which demonstrate the delivery are called tracking records, and there was a tracking record available to the settlement officer for review regarding each of the four notices of deficiency, one for each of the years at issue. The petitioner did not file a petition with this Court in a timely manner after receiving the notices of deficiency. As a result of his default, the amounts of the notices of deficiency were timely and properly assessed as verified by the settlement officer and supported by evidence in the record, which were IRS records submitted into evidence in this case. Petitioner did not specifically allege that there was a flaw in the IRS's assessment procedures nor, as previously stated, that he did not receive the notices of deficiency. The settlement officer also verified that the requirements of any applicable law 4æOnd administrative procedure had been met. The records reviewed by the settlement officer, which are in the evidence of trial in this case, confirmed the proper issuance of the notice and demand, the notice of intent to levy, the notice of federal tax lien filing, and the notice of a right to a collection due 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com 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 Capital Reporting Company 7 process hearing. The settlement officer also verified that an assessment was properly made for each tax period and was properly listed in the collection due process notice, that the notice for lt4 demand for payment was mailed to the last known address of the petitioner, that there was a balance due when the notice of intent to levy was issued, and when the notice of federal tax lien filing was requested. The settlement officer had no prior involvement in this case regarding the specific tax years. The settlement officer reviewed the collection file, the IRS records, and the information the petitioner provided as demonstrated by the evidence in the record of trial and the notice of determination issued to the petitioner. The settlement officer's review confirmed that the Internal Revenue Service had followed all legal and procedural requirements and that the actions taken or proposed were appropriate under the circumstances. When the underlying liability is properly at issue in a collection due process case under Section 6330, such as the present matter, the Court decides the issue of liability de novo. Sego v. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 Commissioner, 114 T.C. 604, 610 (2000). The Court reviews the settlement officer's determination regarding proposed collection action for abuse of discretion when the underlying liability is not at issue. Goza v. Commissioner, 114 T.C. 176 (2000). The burden of showing that the appeals 8 officer's determination was arbitrary or capricious 9 rests with the petitioner. Pacific First Federal 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Savings v. Commissioner, 101 T.C. 117 (1993). In determining whether the underlying liability is properly at issue, we reference Section 6330(c) (2) (B), which provides that if the petitioner received a notice of deficiency for the years in question, the underlying liability is not at issue in the hearing provided by Section 6330 and in the subsequent review of that proceeding by this Court. In addition, this Court has held that if the taxpayer fails to produce records to support an adjustment to the underlying liability, we will not review the underlying liability in a subsequent hearing to review the settlement officer's determination because the underlying liability was not properly raised before the settlement officer. 25 Giamelli v. Commissioner, 129 T.C. 107, 115 (2007). 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 9 1 2 3 4 5 We note that the petitioner in the present case was requested to produce financial information regarding the underlying liability and that he failed to do so. We also note that he was advised that the arguments he made were not relevant and that if he. 6 wished to raise relevant arguments, he could have a 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 face-to-face hearing. But he had to articulate those arguments to the settlement officer and submit the underlying financial information, including a statement of his current net worth and file delinquent federal income tax returns for which he had several. Petitioner failed to do any of these things and, therefore, because he received the notices of deficiency, as we will discuss more in detail, and because he failed to produce any of the underlying financial information, which would have related to his underlying tax liability, the underlying tax liability is not properly at issue in this case. Based upon the authority cited in T.C. memo 2015-29, including Coleman v. Commissioner, 94 T.C. 82, 92 (1990), the mailing records reviewed by the settlement officer and in the record of trial in this case reflect that the notices of deficiency tracking numbers within the Post Office were, in fact, the 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 tracked documents, which were delivered to the petitioner. And those records show that delivery was achieved by the postal service. The appeals officer took the appropriate steps to verify the issuance of the notices of deficiency to the proper address and the fact that the notices of deficiency were actually delivered to that address. As we stated previously, the 9 petitioner's not challenged that he lived at that 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 address nor does he actually allege that he did not receive the notices of deficiency. He offered no evidence at trial in this matter and declined to testify. In addition, the evidence in the record supports that the settlement officer properly verified the subsequent assessment of the income taxes reflected in the notices of deficiency and that he also verified that a notice of federal tax lien and the first notice of intent to levy were served upon the petitioner and that petitioner received all other appropriate notices of liability, which would underlie the assessments in question. This information is contained in the documents submitted by the Internal Revenue Service as part of the record of trial, which were admitted into evidence without 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 11 objection from the petitioner. Petitioner, as we previously stated, also alleges he was improperly denied a face-to-face hearing with the settlement officer. We note when asked at trial what arguments or issues he would have raised at such a hearing, he had no response. We also note he has never offered any evidence that he doesn't actually owe the amounts in question nor has he given us any specific reason why he believes the Internal Revenue Service did not follow proper procedures in assessing these amounts and pursuing collection action relative to these amounts. As we previously stated, petitioner did not provide the financial information or any information relative to why he would not have owed the underlying liabilities to the settlement officer. And based upon the authority of this Court, that, in itself, would be grounds not to review the underlying liability in this case. But that because petitioner received notices of deficiency, the underlying liability is not properly at issue in any event. Regarding the face-to-face hearing, we note the longstanding authority that it would be an abuse of discretion had the settlement officer acted 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 arbitrarily and capriciously in denying a hearing. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 1 Woodral v. Commissioner, 112 T.C. 19, 23 (1999). 12 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There was no such abuse of discretion in the present case. A face-to-face hearing is not required under Section 6330. Katz v. Commissioner, 115 T.C. 329, 337-338 (2000). See also Section 301.6330-1(d)(2) Q&A-D7 the Proced. & Admin. Regs. We also previously held in T.C. Memo 2015- 29 that a face-to-face hearing with the petitioner would have been unfruitful because the petitioner failed to raise any relevant arguments and present any of the requested financial information. That same circumstance exists in the present case. When that circumstance exists, this Court has other authority for the proposition that a face-to-face hearing is unnecessary. Moline v. Commissioner, T.C. Memo 2009-110, aff'd, 363 Fed. Appx. 675 (10th Cir. 2010). In addition, as we previously stated, the Internal Revenue Service regulations support this result, as well. As we previously stated, Mr. Portwine was given several opportunities to provide information or raise relevant arguments which would have resulted in the arrangement of a face-to-face hearing with the settlement officer. He declined to do any of those things and simply now maintains without giving us any 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 reason why a face-to-face hearing would have been helpful^that he should have been given such a hearing. We believe his current argument is specious and simply made for delay. Based upon the record before us, we believe that the settlement officer did not abuse bee discretion in upholding the collection action and that the petitioner's interests were properly balanced against the public interest to collect the underlying tax liabilities. The settlement officer also reviewed all the required procedural steps taken by the Internal Revenue Service in assessing the liabilities and seeking the collection action and he determined that those steps were followed. We have verified these steps were taken and the verification of these steps based upon review of the documentation in the record of trial. Respondent has alluded to the fact that the petitioner should be sanctioned under Section 6673(a)(1) given his prior case before this Court and his failure to present any pertinent arguments in the present case. We've considered such a sanction carefully in the present matter, but we note that the procedural circumstances of this case are such that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 14 1 2 3 4 5 6 petitioner earlier sought to have the case fully stipulated which would have eliminated some of the underlying delay. Given that circumstance and the fact that we are uncertain whether the petitioner was sincere in that request, we are reluctant to order sanctions in the present case; however, we do advise 7 Mr. Portwine that he should not continue to pursue cases such as the present matter without having any reasonable arguments or actual information that relates to his tax liability and that his continued efforts to pursue cases in a manner similar to this case and the prior case before this Court will result in him being sanctioned in the future. Given our opinion in this case, a result of a decision upholding respondent's collection action is merited. This concludes the Court's oral findings of facts and opinion in this case. (Whereupon, at 10:02 a.m., the above- entitled matter was concluded.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 866.488.DEPO www.CapitalReportingCompany.com