TAX COURT OPINION

Case: Howard Robert Hofelich
Docket Number: 24825-11L
Judge: Kroupa
Opinion Type: bench
Filed: 07/11/2012
Pages: 9

UNITED STATES TAX COURT WASHINGTON, D.C. 20217 HOWARD ROBERT HOFELICH, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) ) ) ) ORDE R Docket No. 24825-11L Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit to petitioner and to respondent a copy of the pages of the transcript of proceedings of this case before Judge Diane L. Kroupa in Honolulu, Hawaii on June 18, 2012, containing her oral findings of fact and opinion rendered at the trial session at which this case was calendared. In accordance with the oral findings of fact and opinion, an appropriate decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Date: Washington, DC July 11, 2012 SERWD JUL 12 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 Diane L. Kroupa June 18, 2012 Hofelich v. Commissioner Docket No. 24825-11L 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 2005 and 2006, the years at issue, and all rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving the notice of federal tax lien to collect the unpaid tax liabilities for each year at issue. Petitioner appeared pro se. Jonathan Ono appeared on behalf of Respondent. Findings of Fact. Certain facts have been stipulated. The stipulation of facts the parties filed, with accompanying exhibits, is incorporated by this reference. The facts are so found. Petitioner resided in Hawaii at the time he filed the petition 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 4 Petitioner timely filed a federal income tax return for each of the years at issue. Petitioner claimed net losses on Schedule C for a sole proprietorship arising from legal and professional services of $91,000 in each year. Respondent examined the returns and disallowed the deductions claimed. Petitioner protested Respondent's determination, and his case was referred to Respondent's Appeals Office for consideration. Respondent's Appeals Office, after holding a telephonic conference with Petitioner, sustained the determination to disallow the claimed Schedule C deductions. Respondent denied Petitioner's request to transfer his file from Illinois to Hawaii on August 13 2008. Respondent sent Petitioner a deficiency notice on September 10, 2008. One was sent to an address in Illinois where his mother lived and signed for the deficiency notice and one to a P.O. box in Hawaii that Petitioner admits his son signed for. d e f-·ci encies Each deficiency noticed determined the dafirianry at DLK issue in this collection review case. !½SO Petitioner3failed to file a petition to contest the disallowance of the Schedule C expenses. Petitioner also failed to pay the assessed tax 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 amounts. Respondent then sent Petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under Section 6320 advising Petitioner that a lien had been filed with respect to his unpaid tax liabilities for 2005 and 2006. Petitioner timely filed a request for a hearing with Appeals by submitting Form 12153, Request for a Collection Due Process Hearing. The hearing request covered both 2005 and 2006 and asked Respondent to allow him to deduct losses he incurred under § 165 as business losses. That was the same issue that was covered in the examination, disallowed in the deficiency notices and with respect to which Petitioner defaulted. Petitioner was told on numerous occasions that he could not contest the underlying liabilities as he had a prior opportunity to do so when the deficiency notices were issued. Petitioner had asked that he be entitled to a face-to-face hearing in Hawaii that was granted. Petitioner provided some financial information. After the face-to-face hearing and considering Petitioner's financial situation, the appeals officer sent a letter to Petitioner that proposed a "Streamlined Installment Agreement" to 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 6 satisfy the delinquent income tax liabilities. Petitioner failed to respond. Respondent's Hawaii Appeals Office concluded that the federal tax lien filing should be sustained and issued a notice of determination dated October 4, 2011. Petitioner timely filed a petition with this Court. Petitioner seeks to raise the issue again that he is entitled to claim the business losses he sustained in 2005 and 2006. Opinion. We are asked to decide in this collection review matter whether Respondent abused his discretion in deciding to sustain the lien filing. We begin with the standard of review. Where, as is the case here, the validity of the underlying tax liability is not properly placed at issue, the Court will review Respondent's determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). We must decide whether Respondent exercised his discretion arbitrarily, capriciously or without sound basis in fact or law. ¼|00Åfal See JkwwhHnv v. DLk Commissioner, 112 T.C. 19, 23 (1999). We turn now to a brief overview of lien proceedings. A lien is imposed in favor of the United 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 States on all property and rights to property of a taxpayer when demand for payment of that person's liability for taxes has been made and the person fails to pay those taxes. Sec. 6321. The lien arises when the assessment is made and continues until the tax liability is satisfied or the statute of limitations bars enforcement of the lien. Sec. 6322; Iannone v. Commissioner, 122 T.C. 287, 293 (2004). If the taxpayer fails to pay, the Commissioner files a lien with the appropriate state office to validate the lien against any purchaser or lien creditor. See Sec. 6323(a); Lindsay v. Commissioner, T.C. Memo 2001-285. The Commissioner shall furnish the taxpayer described in § 6321 with written notice that a lien was filed. Sec. 6320. The person may then request administrative review of the matter in the form of an Appeals Office hearing. The Appeals Office hearing generally shall be conducted in a manner consistent with the procedures set forth in §§ 6330(c), (d) and (e). Sec. 6320(c). If the taxpayer requests a hearing, he or she may raise at that hearing any relevant issues relating to the unpaid tax or the proposed lien. Sec. 6330 (c) (2). Relevant issues include any appropriate 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 spousal defenses, challenges to the appropriateness of collection and possible alternative means of collection such as an installment agreement or an offer in compromise. Sec. 6330(c) (2) (A). After the hearing, the Appeals Office is required to make a determination that addresses issues the taxpayer raised, verifies that all requirements of applicable law and administrative procedures have been met and balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary. Sec. 6330(c) (3) (C). The Appeals Officelhere properly verified DLk that legal and procedural requirements had been met. The Appeals Officeíconfirmed, using a transcript of OL Petitioner's accounts, that assessments were properly made for each year at issue, that appropriate and timely notices were sent regarding the assessments, and that Petitioner washinformed of his rights with DL% respect to the lien. Petitioner has not raised any challenges to the appropriateness of collection, did not assert any spousal defenses or otherwise offer any collection alternative. See Sec. 6630(c) (2). Accordingly, these issues are now deemed conceded. Rule 331(b) (4). 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 9 Petitioner has not presented any evidence or persuasive arguments to convince us that Respondent abused his discretion. We therefore conclude that the Appeals Office did not abuse its discretion in upholding the collection action regarding the outstanding income tax liabilities for 2005 or 2006. The Court notes that Petitioner is living off of military disability pay and social security disability pay. These amounts are exempt from collection. Petitioner also stated that the lien is affecting his ability to get a job and affecting his credit rating. We have previously held we lack authority to grant relief to a taxpayer's claim that filing the lien adversely affected that taxpayer's credit rating. Gerakios v. Commissioner, T.C. Memo 2004-203. To reflect the foregoing, decision will be entered for Respondent and an appropriate order will be issued sustaining the determinations set forth in the Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 dated October 4, 2011, upon which this case is based, regarding the unpaid tax liabilities for 2005 and 2006. This concludes the Court's oral findings of 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 fact and opinion in this case. (Whereupon, at 10:40 a.m. the bench opinion in the above-entitled matter was concluded.) 10 // // // // // // // // // // // // // // // // // // // // // // Heritage Reporting Corporation (202) 628-4888