TAX COURT OPINION

Case: Lorinzia Hannah, Deceased and Robbye Rena Hannah, Surviving Spouse and Robbye Rena Hannah
Docket Number: 29480-15SL
Judge: Leyden
Opinion Type: bench
Filed: 03/21/2017
Pages: 21

JRN UNITED STATES TAX COURT WASHINGTON, DC 20217 LORINZIA HANNAH, DECEASED AND ROBBYE RENA HANNAH, SURVIVING SPOUSE AND ROBBYE RENA HANNAH, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) ) Docket No. 29480-15SL. ) ) ) ) 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 Petitioners 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 Houston, Texas, on February 15, 2017, containing her oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, decision will be entered for respondent. (Signed) Diana L. Leyden Special Trial Judge Dated: Washington, D.C. March 21, 2017 SERVED Mar 21 2017 Capital Reporting Company 3 Bench Opinion by Special Trial Judge Diana L. Leyden February 15, 2017 Lorinzia Hannah, Deceased, Robbye Rena Hannah, Surviving Spouse, and Robbye Rena Hannah v. Commissioner Docket No. 29480-15SL I. 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. See Rule 152(c), Tax Court Rules of Practice and Procedure. II. This proceeding was heard as a Small Tax Case pursuant to the provisions of section 7463 of the Internal Revenue Code of 19867as amendedjand Rules 170 through 175 of the Tax Court Rules of Practice and Procedure. III. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code of 1986 as amended and Rule 152 of the Tax Court Rules of Practice and Procedure. 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 4 1 2 3 Hereinafter in this bench opinion, all section numbers refer to the Internal Revenue Codejas amended and in effect for the relevant periods and 4 all ple numbers refer to the Tax Court Rules of 5 6 7 8 9 10 11 Practice and Procedure. The Court uses the term "IRS" to refer to administrative actions taken outside of these proceedings. The Court uses the term "respondent" to refer to the Commissioner of the Internal Revenue, who is the head of the IRS and is respondent in this case, and to refer to actions taken in connection 12 with this case. 13 14 15 16 17 18 19 IV. On November 24, 2015, petitioners filed a petition to review the IRS's Ñotice of etermination koncerning hellection ctions nder hection 6320 and/or 6330 (notice of determination) which sustained the IRS's notices CP90, Intent to Seize Your Assets and Notice of Your Right to a Hearing (notices CP90), 20 with respect to petitioners' unpaid 2008 and 2009 21 22 Federal income tax liabilities. The matter before the Court is respondent's 23 motion for summary judgment filed pursuant to Rule 24 25 121 on January 13, 2017, supported by an affidavit submitted by Susan K. Greene, respondent's counsel in 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 5 1 this case. Petitioner wife objects to respondent's 2 motion and filed a notice of objection on February 9, 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2017. V. Petitioners filed two documents in this case on the eve of the trial session. The first was captioned "Motion-Deficiency or Liability Actions, Tax Court Rule 34(a)." This document purports to be a motion by petitioners to amend their petition. Rule 34(a) governs the filing of a petition in a case. The time for amending the petition without leave of the Court has expired. Rule 41(a), Further, the parties have not consented to amending the petition to conform with the evidence. ule 41(b) The motion/ recit what petitioners a e facts and contain the same frivolous assertions that petitioners made at the hearing. The second document was captioned "Amended Answers to The Court." This document is a series of numbered paragraphs containing statements by petitioners about an offer-in-compromise on the basis h of effective tax administration. As discussed later, that offer was submitted after the notice of determination was issued in this case, and is therefore not properly before the Court. These 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company filings restating frivolous arguments border on an 6 abuse of process by petitioners. VI. Petitioner husband passed away on December 20, 2015, after the filing of the petition in this case. Prior to the hearing on respondent's motion, respondent filed a motion to substitute parties and to correct the caption to reflect that petitioner husband, Lorinzia Hannah, was deceased. The Court granted that motion, changing the caption to "Lorinzia Hannah, Deceased, Robbye Rena Hannah, Surviving Spouse, and Robbye Rena Hannah, 1 2 3 4 5 6 7 8 9 10 11 12 13 Petitioners." 14 15 Respondent's motion was called for hearing on February 13, 2017, in Houston, Texas. Petitioner 16 wife appeared on her own behalf and on behalf of 17 18 19 20 21 22 23 24 25 deceased petitioner husband and argued in opposition to the motion. Susan K. Greene appeared on behalf of respondent and argued in support of the motion. VII. The Court is satisfied that the material facts are not in dispute, and for the reasons summarized below, respondent is entitled to a decision permitting him to collect by levy petitioners' unpaid 2008 and 2009 tax liabilities. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company VIII. 7 The following facts are not in dispute and are drawn from pleadings and other documents constituting the record in this case as well as testimony from the parties at the hearing. Petitioners resided in the Ótate of Texas at the time the petition was filed with the Court. 1 2 3 4 5 6 7 8 Deficiencies for 2008 and 2009 and Prior Court 9 Proceedings 10 11 12 13 14 15 16 17 18 19 20 Petitioners timely filed joint Federal income tax returns for 2008 and 2009. The IRS subsequently examined petitioners' 2008 and 2009 tax returns. Following the examination, the IRS issued petitioners a notice of deficiency for 2008 and 2009, determining deficiencies in income tax and accuracy- related penalties under section 6662(a) for each year. Petitioners filed a petition with the Court for redetermination of the deficiencies. See Hannah v. Commissioner, Docket Number 709-12S. The case was initially set for trial at the 21 Court's trial session in Houston, Texas, beginning 22 23 24 25 November 26, 2012. At the trial session, the parties reached a basis for settlement and requested 60 days to submit signed decision documents. On January 4, 2013, respondent filed a motion for entry of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 8 1 2 3 4 5 6 7 decision, because petitioners had not returned the signed decision documents to respondent. On January 18, 2013, the Court issued an order denying respondent's motion for entry of decision and restoring the case to the Court's general docket for trial. The case was subsequently set for the 8 Court's trial session in Houston, Texas, beginning 9 December 2, 2013. Petitioners filed a motion to 10 11 12 13 14 15 16 17 dismiss in which they alleged that the IRS and its lawyers engaged in misconduct during the audit of their returns and during pretrial preparation and negotiations. On December 4, 2013, the Court held a trial on the motion to dismiss and ordered the petitioners to present their case. Petitioners were given the opportunity at that time to present their arguments regarding their motion to dismiss. 18 Petitioners refused to testify or call any witnesses 19 20 21 22 23 24 25 to present their case on their motion to dismiss. Respondent filed a motion to dismiss after petitioners refused to testify or call witnesses. The Court denied respondent's motion to dismiss and ordered respondent to present its case. Respondent called petitioner wife to testify but she refused. The Court warned petitioners that a refusal to 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 9 1 2 testify would result in the Court sustaining the notice of deficiency. Respondent moved to have the 3 Court find eb petitioners in contempt and to enter a 4 5 6 7 8 9 10 11 12 13 14 15 16 17 default judgment. On January 16, 2014, the Court issued an order and decision in the case, granting respondent's oral motion to find petitioners in contempt and for entry of default judgment. The Court ordered and decided that there were deficiencies in tax due from petitioners for 2008 and 2009 in the amounts of $19,310.01 and $8,507, respectively, and penalties under section 6662(a) in the amounts of $3,862 and $1,701.40, respectively. The IRS subsequently assessed the deficiencies in tax, section 6662(a) penalties, and interest for 2008 and 2009, and issued petitioners a notice of balance due for each year. 18 Collection Due Process Hearing 19 20 21 22 23 24 25 On April 13, 2015, the IRS sent petitioners notices CP90 for 2008 and 2009. In response to the notices CP90, petitioners filed a Form 12153, Request for a Collection Due Process or Equivalent Hearing for 2008 and 2009. Petitioners requested a collection due process (CDP) hearing on the basis of both a "filed notice of Federal tax lien" and a 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 10 1 2 3 4 5 6 7 8 9 "proposed levy or actual levy." At t-e-iet, ) petitioners conceded that the IRS did not issue petitioners a notice of Federal tax lien for 2008 and 2009. On Form 12153, petitioners did not select any collection alternatives, checked the box for lien discharge, and wrote in, in all caps, "TAX BILL IS WRONG BASED ON FRAUD NEVER HAD A NOD HEARING ON ASSESSED TX" -- which we assume means tax. 10 Petitioners included a 37-page attachment to their 11 12 13 14 15 16 17 18 Form 12153, explaining their position and once again advancing their allegations of fraud by the IRS and respondent. The IRS Appeals Office (Appeals Office) settlement officer (settlement officer) sent petitioners a letter dated July 29, 2015, to schedule a telephone CDP hearing for August 20, 2015. The telephone CDP hearing was held as scheduled, during 19 which petitioner wife asserted she never had a 20 21 22 23 24 25 hearing on the notice of deficiency and owed far less for 2008 and 2009. The settlement officer verified that the IRS had received from petitioners an offer- in-compromise based on doubt as to liability for their liabilities for 2008 and 2009. Petitioners indicated in their explanation 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 11 1 2 3 4 5 6 7 8 9 of circumstances for the offer that the tax was incorrect because it is "erroneous illegal tax based fraud, extrinsic fraud" and "petitioners have been to U.S. Tax Court three times and never had a hearing." The settlement officer verified that the IRS determined that the offer was not processable because the Court had determined the deficiencies for 2008 and 2009 and had issued an order and decision. The settlement officer verified that (1) 10 all le al and administrative procedures had been 11 12 follow ; (2) petitioners had a prior opportunity to dispute the tax liabilities before the Court; (3) the 13 Court had entered an order and decision determining 14 15 petitioners' liabilities for 2008 and 2009; and (4) the proposed levy action balanced the need for 16 efficient collection of taxes with the legitimate 17 18 19 20 21 22 23 24 25 concern that any collection action be no more intrusive than necessary. On October 19, 2015, the Appeals Office issued a notice of determination, sustaining the proposed levy for 2008 and 2009. In the notice of determination, the settlement officer noted that although petitioners did not request any collection alternatives on Form 12153, the IRS had received a doubt as to liability offer-in--compromise for 2008 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 and 2009 on June 29, 2015, but the offer did not meet the criteria for a doubt as to liability offer and was returned to petitioners because the Court had issued a decision with regard to the underlying tax liabilities at issue in their case. The notice of determination did not address petitioners' request for a lien discharge, because the settlement officer verified that a notice of Federal tax lien had not been filed. After the notice of determination was issued in this case, petitioners filed a second offer- in-compromise based on effective tax administration. As with their prior offer-in-compromise, petitioners' basis for the offer was that they did not have a hearing on the notice of deficiency due to "erroneous illegal tax based fraud, extrinsic fraud" by the IRS. That offer is still pending with the IRS. Petitioners filed a petition with this 19 Court to dispute the notice of determination. 20 Petitioners subsequently filed an amended petition to 21 22 23 24 25 dispute, among other assertions, "The tax bill is wrong. Taxpayers been to the U.S. Tax Court and never had a hearing on the NOD because of the criminal acts performed by the Service." IX. 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 13 1 2 3 4 5 Respondent's motion requests summary adjudication in his favor under Rule 121. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). 6 Either party may move for summary judgment upon all 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or any part of the legal issues in controversy. Rule 121(a). The Court may grant summary judgment only if there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(a) and (b); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). Respondent, as the moving party, bears the burden of proving that no genuine dispute exists as to any material fact and that the respondent is entitled to judgment as a matter of law. FPL Group, Inc. v. Commissioner, 115 T.C. 554, 559 (2000); Bond v. Commissioner, 100 T.C. 32, 36 (1993); Naftel v. Commissioner, 85 T.C. at 529. In deciding whether to grant summary judgment, the factual materials and inferences drawn from them ust be considered in the light most favorable to the nonmoving party. FPL Group, Inc. v. Commissioner, 115 T.C. at 559; Bond v. Commissioner, 100 T.C. at 36; Naftel v. Commissioner, 85 T.C. at 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 14 1 2 3 4 529. The party opposing summary judgment must set forth specific facts which show that a question of genuine material fact exists and may not rely 5 merely on allegations or denials in the pleadings. 6 7 8 9 10 11 12 13 14 Rule 121(d); Celotex Corp. v. Cattrett, 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); Shepherd v. Commissioner, T.C. Memo. 1997-555, 1997 Tax Court Memo LEXIS 645 at page 7. Where the record viewed as a whole could not lead a reasonable trier of fact to find for the nonmoving party, there is no genuine issue for trial. 15 Matsushita Electric Industrial Company v. Zenith 16 17 18 19 20 21 22 23 24 Radio Corp., 475 U.S. 574, 585 (1986). The Court concludes that there are not any material facts in dispute and that respondent is entitled to judgment as a matter of law. X. Section 6331(a) authorizes the Secretary to levy upon property and property rights of a taxpayer liable for taxes who fails to pay those taxes within ten days after a notice and demand for payment is 25 made. Section 6331(d) provides that the levy 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 15 1 2 authorized in section 6331(a) may be made with respect to unpaid tax only if the Secretary has given 3 written notice to the taxpayer 30 days before the 4 5 6 7 8 9 10 11 levy. Section 6330(a) requires the Secretary to send a written notice to the taxpayer of the amount of the unpaid tax and of the taxpayer's right to a section 6330 hearing at least 30 days before the levy is begun. If a section 6330 hearing is requested, a hearing is to be conducted by the Appeals Office, and at that hearing, the officer conducting the hearing 12 must verify that the requirements of any applicable 13 14 15 16 17 18 19 20 21 22 23 24 25 law or administrative procedure have been met. Sec. 6330(b)(1), (c)(1). The taxpayer may raise at the hearing "any relevant issue relating to the unpaid tax or the processed levy." Sec. 6330(c)(2) (A). The taxpayer may also raise challenges to the existence or the amount of the underlying tax liability at a hearing if the taxpayer did not receive a statutory notice of deficiency with respect to the underlying tax liability or did not otherwise have an opportunity to dispute the liability. Sec. 6330(c) (2) (B); see Montgomery v. Commissioner, 122 T.C. 1, 7-8 (2004). The Court has jurisdiction under 63 (d) to 866.488.DEPO www.Capita1ReportingCompany.com Capital Reporting Company 16 review the Commissioner's administrative determinations. Sec. 6330(d); Iannone v. Commissioner, 122 T.C. 287, 290 (2004). Where the underlying tax is properly at issue, the Court reviews the determination regarding the underlying tax liability de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). The Court reviews all other determinations for abuse of discretion. Id. at 182. XI. The material facts are not in dispute. The IRS issued a notice of deficiency for 2008 and 2009. 1 2 3 4 5 6 7 8 9 10 11 12 13 Petitioners filed a petition with the Court for 14 15 16 17 18 19 20 21 22 23 24 25 redetermination of the deficiencies for 2008 and 2009. See sec. 6213(a); Hannah v. Commissioner, Docket Number 709-12S. A trial was held on December 4, 2013, in Houston, Texas. Petitioners were present at the trial and had an opportunity to challenge the IRS's determinations in the notice of deficiency for 2008 and 2009. However, as discussed above, petitioners refused to testify despite being warned by the Court that their failure to testify could result in the Court sustaining the determinations in the notice of deficiency. On January 16, 2014, the Court issued an 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 17 1 2 3 4 5 6 7 8 9 order and decision in that case granting respondent's oral motion for entry of default judgment. The Court ordered and decided that there were deficiencies in tax, section 6662(a) penalties, and interest due from petitioners for 2008 and 2009. The underlying tax liabilities are not properly at issue. Petitioners do not contest that they received a notice of deficiency, but rather that they did not have a hearing on the notice of 10 deficiency. Petitioner wife at the hearing on this 11 motion before this Court continued to refuse to 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recognize that the Court held a trial with respect to the notice of deficiency and had afforded petitioners an opportunity for a hearing. The Court pointed out to petitioner wife that she had refused to testify at that trial. Nevertheless, petitioner wife continued to assert frivolous arguments as to why petitioners did not have a prior opportunity to dispute the underlying tax liabilities. Petitioners are barred from challenging the underlying tax liabilities for 2008 and 2009, because taxpayers had a prior opportunity to do so. See sec. 6330(c)(2)(B). Accordingly, the Court will review respondent's determination only for abuse of 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 18 1 2 3 4 5 6 7 8 9 discretion. Goza v. Commissioner, 114 T.C. at 182. XII. Nothing in our review of the administrative record supports a finding that the Appeals Office's determination to sustain the proposed levy was arbitrary, capricious, or without sound basis in fact or law. Whether an abuse of discretion has occurred depends upon whether the exercise of discretion is 10 without reasonable basis in fact or law. Freije v. 11 12 13 14 15 Commissioner, 125 T.C. 14, 23 (2005); Ansley- Sheppard-Burgess Co. v. Commissioner, 104 T.C. 367, 371 (1995). An abuse of discretion occurs if the Appeals Office exercises its discretion "arbitrarily, capriciously, or without sound basis in fact or law." 16 Woodral v. Commissioner, 112 T.C. 19, 23 (1999). 17 18 19 20 21 22 23 24 25 On Form 12153 petitioners did not propose a collection alternative, such as an installment agreement or an offer-in-compromise. See sec. 6330(c) (2) (A)(iii). Petitioners did not propose a collection alternative at their telephone CDP hearing on August 20, 2015, but rather referred to a previously submitted offer-in-compromise based on doubt as to liability. The settlement officer verified that 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 19 1 2 3 4 5 6 7 8 9 before the CDP hearing, the IRS had determined that the offer in compromise was not processable. After the settlement officer issued the notice of determination, petitioners submitted a second offer" in-compromise, and that offer is still being reviewed by the IRS. This Court's review in a collection review case is limited to issues raised during the CDP hearing or otherwise brought to the settlement 10 officer's attention. Magana v. Commissioner, 118 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 T.C. 488, 493 (2002); Giamelli v. Commissioner, 129 T.C. 107, 114 (2007). The offer-in-compromise based on doubt as to liability was not raised at the CDP hearing, as it had already been determined to be not processable by the IRS. The second offer-in- compromise was not submitted until after the notice of determination was issued. Thus petitioners have failed to present any claim that is reviewable by this Court. Petitioners also requested on Form 12153 a lien discharge. However, the IRS did not issue petitioners a notice of Federal tax lien filing for 2008 or 2009. See sec. 6320(a)(1). Therefore, the Court does not have jurisdiction to review petitioners' request for a lien discharge under 866.488.DEPO www.CapitalReportingCompany.com Capital Reporting Company 20 sections 6320(c) and 6330(d). XIII. The record reflects the settlement officer properly verified the requirements of all applicable laws and administrative procedures were met in the processing of petitioners' case and that the proposed levy appropriately balanced the need for the efficient collection of taxes with petitioners' concerns that any collection action be no more intrusive than necessary. The materials attached as exhibits to respondent's motion and the accompanying declaration, along with statements of the settlement officer in the attachment to the notice of determination, show that the required assessment and collection procedures were followed. XIV. The Court concludes that there is no genuine dispute of material fact in this case and that respondent is entitled to judgment as a matter of law. The Court grants respondent's motion for summary judgment. Respondent may proceed with the collection action in respect to petitioners' outstanding tax liabilities for 2008 and 2009, as determined in the notice of determination upon which this case is based. 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 21 In closing, the Court thinks e s appropriate to note that petitioners' claims that the IRS actions were fraudulent and criminal are patently frivolous. Section 6673 authorizes the Court to require a taxpayer to pay to the United States a penalty up to $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or that the taxpayer's position in such proceedings is frivolous or groundless. Sec. 6673. The purpose of Section 6673 is to compel taxpayers to think and conform their conduct to settled tax principles. Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986); see also Grasselli v. Commissioner, T.C. Memo. 1994-581. The Court has indicated its willingness to impose such a penalty in lien and levy cases. Pierson v. Commissioner, 115 T.C. 576, 580-581 (2000), and has, in fact, imposed a penalty in many such cases. See e.g. Cipolla v. Commissioner, T.C. Memo. 2004-6. Respondent is not seeking sanctions under section 6673(a)(1), and the Court would not impose those sanctions in the present matter. Petitioner is pro se and may not be familiar with all the rules and procedures. Pro se status, however, is not a license to litter the dockets of the Federal courts 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 22 1 with ridiculous allegations. Parker v. Commissioner, 117 F.3d 785 (5th Cir. 1997). The Court puts petitioner wife on notice that advancing similar positions in other pending or future cases before this Court will likely result in the imposition of a penalty under section 6673. XV. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 9:50 a.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 25 866.488.DEPO www.CapitalReportingCompany.com