TAX COURT OPINION

Case: Arthur Hamilton Grover
Docket Number: 13506-09S
Judge: Colvin
Opinion Type: bench
Filed: 04/29/2010
Pages: 7

UNITED STATES TAX COURT WASHINGTON, DC 2021 7 ARTHUR HAMILTON GROVER , Petitioner , V . COMMISSIONER OF INTERNAL REVENUE , Respondent . Docket No . 13506-09 S ORDER 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 petitioners and to respondent a copy of the pages of the transcript of the trial of this . case before Judge Haines at Seattle Washington on April 12, 2010, containing his 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 ) Harry A. Haines Judg e Dated : Washington, D .C . April 29, 2010 VED MAY - 3 2010 4 3 1 Bench Opinion By Senior Judge Harry A . Haines 2 Grover v . Commissione r 3 April 14 , 2010 Docket No . : 13506-09S 4 THE COURT : The Court has decided to render 5 oral findings of fact and opinion in this case and the 6 following represents the Court's oral findings of fact 7 and opinion . The oral findings of fact and opinio n 8 shall not be relied upon as precedent in any other 9 case . 10 Petitioner filed a petition with this Court 11 in response to a Notice of Determination Concerning 12 Collection Action ( s) Under Section 6320 and/or 6330 13 (notice of determination ) for tax periods endin g 14 June 30 , 2002, June 30, 2004, and September 30, 2004 15 (tax periods at issue ) . Pursuant to section 6330(d), 16 petitioner seeks review of respondent's determination . 17 The issue for decision is whether petitioner i s 18 entitled to any relief from respondent ' s determination 19 that collection may proceed . 20 The parties' stipulation of facts and the 21 attached exhibits are incorporated herein by thi s 22 reference . Petitioner is an individual who maintained 23 his legal residence in the state of Washington at the 24 time his petition was filed in this case . 25 Petitioner untimely filed his Form 941, Heritage Reporting Corporatio n (202) 628-4888 4 1 Employer's Quarterly Tax Return, for his sol e 2 proprietorship, S & D Sales - Best of Nature Florals, 3 for the tax periods ending June 30, 2002, June 30 , 4 2004, and September 30, 2004 . 5 On April 6, 2005, petitioner filed for 6 Chapter 13 bankruptcy and on April 26, 2005 , 7 respondent filed a proof of claim in the bankruptc y 8 proceeding which included petitioner's tax liabilities 9 for employment taxes for the tax periods at issue . 10 Neither petitioner nor the trustee filed an objection 11 to respondent's proof of claim . Petitioner made 12 payments to respondent pursuant to the bankruptcy plan 13 until he became delinquent and his bankruptcy case was 14 dismissed on March 20, 2008 . 15 On June 14, 2008, respondent mailed t o 16 petitioner a final Notice of Intent to Levy and Notice 17 of Your Right to a Hearing with respect to hi s 18 employment tax liabilities for the tax periods at 19 issue . Petitioner timely filed Form 12153, Request 20 for a Collection Due Process Hearing, and requested 21 the collection alternative of an offer-in-compromise . 22 On December 12, 2008, the settlement officer 23 assigned to petitioner' s case mailed a letter t o 24 petitioner scheduling a telephonic collection due 25 process (CDP) hearing and requesting certain Heritage Reporting Corporatio n (202) 628-4888 5 1 documents . Petitioner failed to submit the requested 2 documents or participate in the telephonic CD P 3 hearing . The settlement officer notified petitioner 4 that he had 14 days to submit the requested documents, 5 but petitioner failed to do so . Thus, the settlement 6 officer determined that "Due to lack of possibl e 7 income tax compliance, and lack of preparation of 8 required documents, the taxpayer's request for the 9 collection alternative identified cannot be 10 recommended . " 11 On May 5, 2009, respondent mailed t o 12 petitioner a notice of determination that sustained 13 the levy action for the tax periods at issue . In 14 response to the notice of determination, petitioner 15 filed his petition with this Court on June 3, 2009 . 16 Petitioner challenges the underlying ta x 17 liabilities by arguing that he had no employees during 18 the tax periods at issue . In order to contest the 19 underlying tax liabilities, petitioner must :not 20 otherwise have had an earlier opportunity to dispute 21 such tax liabilities . Sec . 6330(c)(2)(B) . A n 22 opportunity to dispute the underlying tax liabilit y 23 includes the opportunity to contest the liability in a 24 prior judicial proceeding, including a bankruptc y 25 proceeding . When a taxpayer files for bankruptcy and Heritage Reporting Corporation (202) 628-4888 6 1 the Internal Revenue Service (IRS) files a proof of 2 claim for payment of the tax liability in th e 3 bankruptcy proceeding , the taxpayer/debtor has an 4 opportunity to dispute the tax liability by filing an 5 objection to the proof of claim . See 11 U .S .C . 6 Section 502 . If the taxpayer does not file a n 7 objection to the proof of claim, he is precluded from challenging the underlying liability in a subsequen t 9 CDP hearing . See Kendricks v . Commissioner , 124 T .C . 10 69, 77 ( 2005 ) ; Salazar v . Commissioner , T .C . Memo . 11 2008-38 . 12 In this case, petitioner had an opportunity 13 to dispute the underlying tax liabilities i n 14 bankruptcy court upon respondent ' s filing of the proof 15 of claim, but failed to do so . Thus, he is precluded 16 from challenging the underlying tax liabilities i n 17 this Court . See sec . 6330(c)(2)(B) ; Kendricks v . 18 Commissioner , supra ; Salazar v . Commissioner , supra . 19 Where the underlying tax liability is not 20 properly at issue, the Court reviews determinations 21 regarding collection actions for abuse of discretion . 22 23 Sego v . Commissioner , 114 T .C . 604 , 610 (2000) ; Goza v . Commissioner , 114 T .C . 176 , 182 (2000) . 24 Petitioner petitioned for the collection 25 alternative of an offer - in-compromise . However, he Heritage Reporting Corporatio n . (202) 628-4888 7 1 did not participate in his CDP hearing, provide any 2 information, or submit any documentation to th e 3 settlement officer . A taxpayer is required to provide 4 financial information and be current on tax return 5 filing requirements before the taxpayer may b e 6 considered as a candidate for an offer-in-compromise . 7 Rev . Proc . 2003-71, 2003-2 C .B . 517 . Becaus e 8 petitioner did not participate in his CDP hearing , 9 provide any information, or submit any documentation 10 to the settlement officer, the determination tha t 11 petitioner was not entitled to an offer-in-compromise 12 was .not an abuse of discretion . 13 Petitioner argued at trial that : (1) Over 14 $4,000 has been paid against the underlying ta x 15 liability ; (2) penalties and interest should onl y 16 apply on what was not paid during the bankruptcy, and 17 (3) he has not been credited for 2005 taxes paid . 18 None of these issues were raised in the petitioner's 19 CDP hearing . The sole issue considered by th e 20 settlement officer was the offer-in-compromise . Our 21 review is limited to the determination by th e 22 settlement officer to reject the offer-in-compromise . 23 Giamelli v . Commissioner , 129 T .C . 107, 115 (2007) . 24 As section 301 .6330-1(f)(2) . A-F3, Income Tax 25 Regs, states : "In seeking Tax Court review of a Heritage Reporting Corporation (202) 628-4888 8 1 Notice of Determination, the taxpayer can only ask the 2 court to consider an issue, including a challenge t o 3 the underlying tax liability, that was properly raise d in the taxpayer's CDP hearing . An issue is not 5 properly raised if the taxpayer fails to request consideration of the issue by Appeals, or i f consideration is requested but the taxpayer :Fails to present to Appeals any evidence with respect to tha t 9 issue after being given a reasonable opportunity t o 10 present such evidence ." Thus, petitioner is precluded 11 from raising issues before this Court that were no t 12 raised before Appeals . 13 In reaching these the .Court has considered 14 all arguments made and, to the extent not mentioned, 15 concludes that they are moot, irrelevant, or without 16 merit . 17 To reflect the foregoing, decision will be 18 entered for respondent authorizing collection t o 19 proceed . 20 This concludes the Court's oral findings of 21 facts and opinion . 22 (Whereupon, at 9 :28 a .m ., the bench opinion 23 in the above-entitled matter was concluded . ) 24 25 Heritage Reporting Corporation (202) 628-4888