TAX COURT OPINION

Case: Kim M. Wolk
Docket Number: 4340-10L
Judge: Kroupa
Opinion Type: bench
Filed: 03/15/2012
Pages: 13

UNITED STATES TAX COURT WASHINGTON, DC 20217 KIM M. WOLK, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. 4340-10 L ) ) ) ) ) ORD E R 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 of the above case before Judge Diane L. Kroupa at Seattle, Washington on February 29, 2012, containing her oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. March 15, 2012 SERVED MAR 1 9 2012 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 3 Bench Opinion by Judge Kroupa February 29, 2012 Wolk v. Commissioner Docket No. 4340-10L 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. These oral findings of fact and opinion shall not be relied upon as precedent in any other case. This bench opinion is made pursuant to the authority granted in § 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the years at issue as later defined, and all rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving a federal tax lien filing to collect Petitioner's unpaid federal income tax liabilities for the taxable years 2003 and 2004 (the years at issue). This collection review matter is before the Court on Respondent's motion for summary judgment filed December 22, 2011. The Court ordered Petitioner to file a response or objection by January 11, 2012, that Petitioner failed to do. The Court scheduled Respondent's motion for a hearing in Seattle, Washington. Petitioner appeared pro se, and Patsy Clarke Heritage Reporting Corporation (202) 628-4888 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 4 appeared on behalf of Respondent. Findings of Fact. The record establishes or the parties do not dispute the following facts. Petitioner resided in Washington at the time the collection review petition was filed. Petitioner is a control technician at the University of Washington. He failed to file federal income tax returns for both of the years at issue because he believes that he gives up his rights when he does so and that Respondent always has the burden of proving that a taxpayer owes taxes. Petitioner does not recall the last time he filed a federal income tax return, but knows that he has not done so since the years at issue. Respondent prepared substitutes for return for the years at issue based upon information from Petitioner's employer and other sources. Respondent issued statutory deficiency notices to Petitioner for the years at issue based upon the substitutes for return. Petitioner alleges he never received the deficiency notices. Petitioner did not contest the deficiencies, so Respondent thereafter assessed the tax liabilities. Petitioner failed to pay the tax assessments. Respondent sent Petitioner a Final Heritage Reporting Corporation (202) 628-4888 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 5 Notice of Intent to Levy and Your Right to a Hearing advising Petitioner that Respondent intended to levy to collect the unpaid taxes for the years at issue and informing Petitioner that he could receive a hearing. Petitioner did not request a hearing. He alleges he first learned of Respondent's claims regarding the years at issue when Respondent began to levy on his wages at the University of Washington, at which time Petitioner updated his address with Respondent. Respondent subsequently sent Petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing advising Petitioner of the lien and informing Petitioner that he could receive a hearing. Petitioner timely filed a request for a hearing with Appeals in response to the lien notice. Petitioner demanded a face-to-face hearing, but did not offer any collection alternatives. Settlement Officer Perales scheduled a telephonic hearing and advised Petitioner that he would be eligible for a face-to-face hearing only if he came into compliance with his obligation to file his income tax returns. SO Perales requested that Petitioner provide copies of his income tax returns for 2003 and 2004 to replace the substitute for returns, provide financial information and file Heritage Reporting Corporation (202) 628-4888 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 delinquent returns for 2006, 2007 and 2008. Petitioner responded to SO Perales with a letter comprising a list of demands and did not participate in the scheduled telephone conference. Petitioner also failed to provide the requested financial information and failed to file the delinquent returns. SO Perales sent Petitioner a second letter, again requesting information. She never received the requested information and documents from Petitioner and issued the determination notice sustaining the lien filing. Petitioner timely filed a petition with this Court. We ordered Petitioner to file an amended petition and pay the filing fee, and we dismissed the case when he failed to do so. We granted Petitioner's motion to vacate the dismissal order and held a partial trial in Seattle, Washington, in early 2011. We remanded the case to afford Petitioner a face-to- face hearing to contest the underlying liability as there was a question regarding whether he received the deficiency notices. Settlement Officer Lewis scheduled a face- to-face hearing with Petitioner and requested that Petitioner bring completed income tax returns with Heritage Reporting Corporation (202) 628-4888 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 7 him. Petitioner sent to SO Lewis a letter saying that he would be unable to participate in the face-to-face hearing, demanding original copies of the deficiency notices and demanding proof of mailing. He did not propose an alternative time for the face-to-face hearing or provide an explanation for his inability to attend, but instead proposed continuing mail correspondence indefinitely beforehand. He did not appear for the scheduled hearing and did not provide the requested information. SO Lewis issued a supplemental determination notice. Petitioner wants to contest his liability, claiming that he never received the deficiency notice for the years at issue, but raises no legal or factual controversy with the underlying liability. Petitioner also argues that he is entitled to a face-to-face collection due process hearing and that the settlement officers erred in their determination, but again A raises no legal or factual arguments. As mentioned previously, Respondent filed a summary judgment motion. Petitioner did not respond or object to the motion, despite the Court's order. Petitioner also did not appear timely at the hearing on Respondent's motion. He appeared belatedly, and the Court heard the parties' arguments. Heritage Reporting Corporation (202) 628-4888 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 8 Opinion. We are asked to decide whether to grant summary judgment. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See e.g. FPL Group, Inc. v. Commissioner, 116 T.C. 73, 74 (2001). A motion for summary judgment will be granted if the pleadings and other acceptable materials show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. See Rule 121(b); Elect. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). The moving party has the burden of proving that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. See: e.g. Rauenhorst v. Commissioner, 119 T.C. 157, 162 · (2002). Respondent has met this burden. We focus our review on Respondent's position in the supplemental determination notice. See Kelby v. Commissioner, 130 T.C. 79, 86 (2008) (stating that when this Court remands a case to the IRS Appeals Office the further hearing is a supplement to the · original hearing, and we review the position taken in the last supplemental determination rather than in any prior determinations). We now explain briefly the collection Heritage Reporting Corporation (202) 628-4888 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 procedures. A lien in favor of the United States is imposed on all property and property rights of a taxpayer liable for taxes after a demand for the payment of taxes has been made and the taxpayer fails to pay those taxes. Sec. 6321. The lien arises when the assessment is made. Sec. 6322. The Secretary generally must file a notice of federal tax lien with the appropriate state office for the lien to be valid against certain third parties. Sect. 6323. The Secretary is also required to send written notice to the taxpayer o;f the filing of a notice of lien and of the taxpayer's right to an administrative hearing on the matter. Sec. 6320(a). At the hearing a taxpayer may raise any relevant issue, including appropriate spousal defenses, challenges to the appropriateness of the collection action and possible collection alternatives. Sec. 6330(c) (2) (A). A taxpayer may contest the validity of the underlying tax liability only if the taxpayer did not receive a deficiency notice or otherwise have an opportunity to dispute the tax liability. See § 6330(c) (2) (B), Sego v. Commissioner, 114 T.C. 604, 609 (2000). Following a hearing, the appeals officer must issue a notice of determination regarding the Heritage Reporting Corporation (202) 628-4888 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 10 validity of the filed tax lien. In making the determination, the appeals officer is required to take into consideration: 1) Verification presented by the Secretary that the requirements of applicable law and administrative procedure have been met; 2) Relevant issues raised by the taxpayer;.and 3) Whether the proposed collection action appropriately balances the need for efficient collection of taxes with the taxpayer's concerns regarding the intrusiveness of the proposed collection action. Sec. 6330(c) (3).. If the taxpayer disagrees with the Appeals Office determination, the taxpayer may seek judicial review by appealing to this Court. Sec. 6330(d). Where the validity of the underlying tax liability is properly at issue, the Court 'reviews the determination regarding the underlying tax liability de novo. Seco v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). (cid:16)042 Where the validity of the underlying tax :liability is not properly at issue, the Court reviews the determination of the Appeals Office for abuse of discretion. Sego v. Commissioner, 114 T.C. at 610; Goza v. Commissioner, 114 T.C. at 182. The record contains copies of the deficiency notices for the years at issue. Both deficiency Heritage Reporting Corporation (202) 628-4888 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 11 notices bear Petitioner's name and a street address in Everett, Washington, for a building that Petitioner used to own. At the motion hearing, Respondent also provided a copy of a certified mailing list, USPS Form 3877, showing that the deficiency notices were properly mailed to the relevant address in Everett, Washington. Petitioner conceded to having used this address for personal correspondence before and did not. recall whether he had updated his address with Respondent before Respondent began levying his wages. Petitioner could not recall the last time he had filed a federal income tax return. We find that Respondent mailed the deficiency notices to Petitioner's last known mailing address. We also note that this Court remanded the case so that Petitioner would be provided a CDP hearing to contest the underlying liabilities, and he failed to attend that hearing. Instead, he tried to delay the hearing by demanding documents and proposing continued mail communication. He did not make any reasonable attempts to challenge the existence or amount of the underlying tax liabilities or prepare his own tax returns for the years at issue. He did not challenge the appropriateness of Heritage Reporting Corporation (202) 628-4888 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Respondent's intended collection method, offer any alternative means of collection or make any bona fide claim that collection was inappropriate. His conduct throughout these proceedings was designed to delay resolution of the 2003 and 2004 tax years, a behavior that is consistent with his continuous and conscious refusal to file federal income tax returns. The purpose of the collection due process statutes, § 6320 and 6330, is to provide taxpayers with a forum to raise relevant issues with respect to proposed levy and lien notices. Burke v. Commissioner, 124 T.C. 189 (2005). Petitioner is not using the statutes for this purpose. Rather, Petitioner is using the statutes solely as a mechanism .15 to delay collection. 16 17 18 19 20 21 22 23 24 25 We find that Petitioner instituted and maintained this proceeding solely for delay and that he does not intend to properly prosecute the 2003 and 2004 tax years. Petitioner has given no bona fide basis for his objection to the collection action. We conclude that Respondent's determination to proceed with collection of the tax liabilities assessed against Petitioner for the years at issue was not an abuse of discretion. We caution Petitioner about § 6673, which Heritage Reporting Corporation (202) 628-4888 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 13 authorizes the Tax 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. It is apparent from the entire record that Petitioner instituted or maintained his proceeding primarily, if not exclusively, for delay. Petitioner's tactics have consumed valuable government resources. Although we do not impose a penalty against Petitioner at this time, we strongly caution Petitioner that he is at risk that the Court may impose such a penalty if he continues his delay tactic. To reflect the foregoing, decision will be entered for Respondent. An appropriate order will be issued sustaining Respondent's collection action set forth in the supplemental determination notice dated March 3, 2011, upon which this case is based, regarding Petitioner's unpaid tax liabilities for 2003 and 2004. An order will also be issued granting Respondent's motion for summary judgment. This concludes the Court's oral findings of fact and opinion in this case. Heritage Reporting Corporation (202) 628-4888 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 (Whereupon, at 1:43 p.m. the bench opinion in the above-entitled matter was concluded.) 14 // // // // // // // // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888