TAX COURT OPINION

Case: Stone Family Vault, Inc.
Docket Number: 9395-07S
Judge: Colvin
Opinion Type: bench
Filed: 04/14/2008
Pages: 11

UNITED STATES TAX COUR T WASHINGTON , DC 2021 7 STONE FAMILY VAULT, INC ., Petitione r v . ) Docket No . 9395-07S . : COMMISSIONER OF INTERNAL REVENUE, Respondent O R D E R 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 petitioner and to respondent a copy of the pages of the transcript of the hearing in the above case before Special Trial Judge Robert N . Armen, Jr . at Denver, Colorado on March 11, 2008, containing his oral findings of fact and opinion rendered at the conclusion of the hearing . In accordance with the oral findings of fact and opinion, an Order and Decision will be entered for r espondent . le (Signed ) Robert N . Armen, Jr. Special Trial Judg e Dated : Washington, D .C . April 14, 2008 APR 1 6 2008 1 Bench Opinion by Special Trial Judge Robert N . Armen, Jr . 2 March 11, 200 8 2 3 STONE FAMILY VAULT, INC . Docket Number 9395-07S 4 I . 5 THE COURT : THE COURT HAS DECIDED TO RENDER 6 ORAL FINDINGS OF FACT AND OPINION IN THIS CASE, AN D 7 THE FOLLOWING REPRESENTS THE COURT'S ORAL FINDINGS OF 8 FACT AND OPINION . THE ORAL FINDINGS OF FACT AN D 9 OPINION SHALL NOT BE RELIED UPON AS PRECEDENT IN ANY 10 OTHER CASE . 11 II . 12 This proceeding was heard as a Small Ta x 13 Case, pursuant to the provisions of section 7463(f)(2) 14 of the Internal Revenue Code of 1986, as amended, and 15 Rules 170 through 175 of the Tax Court Rules o f 16 Practice and Procedure . See and compare Rules 330 17 through 334 of the Tax Court Rules of Practice and 18 Procedure . 19 III . 20 This bench opinion is made pursuant to the 21 authority granted by section 7459(b) of the Internal 22 Revenue Code of 1986, as amended, and Rule 152 of the 23 Tax Court Rules of Practice and Procedure . 24 Hereinafter in this bench opinion, al l 25 section numbers refer to the Internal Revenue Code of Heritage Reporting Corporatio n (202) 628-4888 3 1 1986, as amended , and all Rule numbers refer to the 2 Tax Court Rules of Practice and Procedure . 3 IV . 4 Tamara L . Kotzker appeared on behalf of 5 respondent . There was no appearance on behalf of 6 petitioner . 7 V . 8 Having been calendared for trial pursuant to 9 notice dated October 10 , 2007, this case is now befor e 10 the Court on respondent ' s Motion for Summary Judgment, 11 filed pursuan t to Rule 121 , on December 6, 2007, and 12 supplemented on February 26, 2008 . 13 VI . 14 The facts relevant to the disposition of 15 respondent ' s motion are as follows : 16 Petitioner , a corporation , had its principal 17 place of business in Greensburg, Indiana, at the time 18 that the petition was filed with the Court . 19 Petitioner failed to pay its employment tax 20 liabilities for the calendar quarters ended December 21 31, 2005 , and March 31, 2006, and its unemployment tax 22 liability for the calendar year 2005 . See secs . 23 3102 ( a), 3402 ( a), and 7501(a) . 24 On November 30, 2006, respondent sen t 25 petitioner a Final Notice of Intent to Levy and Notice Heritage Reporting Corporation (202) 628-4888 4 1 of Your Right To A Hearing (final notice) . See sec . 2 6330(a) . The final notice reflected petitioner' s 3 outstanding employment and unemployment tax 4 liabilities . 5 Petitioner timely filed with respondent a 6 Form 12153, Request for a Collection Due Proces s 7 Hearing, in respect of the final notice . The only 8 issue raised in the hearing request was tha t 9 petitioner was "in the final process of reaching a 10 negotiable installment agreement with the IRS" and 11 that a levy might "cause hardship to the business . " 12 In response, a letter was sent to petitioner 13 on February 12, 2007, by respondent's Appeals Office, 14 requesting various documents in anticipation of th e 15 hearing, including a corporate tax return (Form 1120) 16 for 2005 and proof of Federal tax deposits for the 17 quarters ended December 31, 2006, and March 31, 2007 . 18 Also requested was a completed Form 433-B, Collection 19 Information Statement for Business . The letter also 20 served to schedule a telephone conference wit h 21 petitioner for later in the month . 22 When the settlement officer assigned to the 23 case spoke with petitioner's representative on th e 24 appointed day, the representative explained that 25 petitioner had not yet sent him the requested Heritage Reporting Corporatio n (202) 628-4888 5 1 documents . The settlement officer granted petitioner 2 an extension of time in which to prepare th e 3 documents, but explained that if the requeste d 4 information was not made available, she would make her 5 determination based on the existing administrativ e 6 file . 7 On March 12, 2007, the date of th e 8 rescheduled hearing, petitioner's representativ e 9 advised the settlement officer that there was no need 10 for a hearing and requested that a determination be 11 made based on the existing file . As of that date , 12 neither petitioner nor its representative had provided 13 the settlement officer with a completed Form 433-B or 14 proof of federal tax deposits for the quarters ended 15 December 31, 2006, and March 31, 2007 . 16 On March 26, 2007, respondent's Appeals 17 Office sent petitioner a Notice of Determination 18 Concerning Collection Action(s) Under Section 632 0 19 and/or 6630 (notice of determination) . The notice of 20 determination sustained the proposed levy, based on 21 the existing administrative file, for petitioner' s 22 outstanding employment tax liabilities for th e 23 calendar quarters ended December 31, 2005, and March 24 31, 2006 . (We note parenthetically that the Appeals 25 Office concluded, erroneously, that petitioner's 2005 Heritage Reporting Corporatio n (202) 628-4888 6 1 unemployment tax liability had been paid in full and 2 therefore did not reference that liability in th e 3 notice of determination . ) 4 The notice of determination also explained 5 that as the only relevant issue raised by petitioner 6 in its request for a hearing was a collectio n 7 alternative and as petitioner had failed to provide 8 the requested information, the proposed collection 9 action properly balanced the need for efficien t 10 collection with any concerns about the intrusiveness 11 of the action . 12 In response to the notice of determination, 13 petitioner filed a petition with this Court on April 14 30, 2007 . See secs . 6330(d) ; 7502(a) . The petition 15 requested that the proposed levy "be rescinded because 16 to proceed with such levy would cause the destruction 17 of petitioner's ability to obtain credit necessary to 18 maintain normal business operations . " 19 On December 6, 2007, respondent filed a 20 Motion for Summary Judgment, a copy of which wa s 21 served on petitioner . The motion was supplemented on 22 February 26, 2008, which supplement was also served on 23 petitioner . Although expressly directed by the Court 24 to respond to respondent's motion, petitioner failed 25 to do so . Heritage Reporting Corporation (202) 628-4888 7 1 In (cid:127)i motion , respondent moves, pursuant t o In 2 Rule 121, for summary adjudication in his favor on the 3 issues presented in this collection review cas e 4 involving petitioner's outstanding liabilities that 5 were the subject of the March 26, 2007, notice o f 6 determination . 7 VII . 8 Summary judgment is intended to expedit e 9 litigation and avoid unnecessary and expensive trials . 10 Florida Peach Corp . v . Commissioner , 90 T .C . 678, 681 11 (1988) . Summary judgment may be granted where there 12 is no genuine issue of a material fact and a decision 13 may be rendered as a matter of law . Rule 121 (a) and 14 (b) ; see Sundstrand Corp . v . Commissioner , 98 T .C . X1 8 15 'ss81, 520 (1992), affd . 12 F .3d 965 (7th Cir . 1994) . 16 After reviewing the record, and in view of t7AM 17 petitioner's failure to respond to the motion pursuan t 18 to our Order or to appear at the hearing on th e 19 motion, see final sentence of Rule 121(d), we conclude 20 that there is no genuine issue as to any material fact 21 and that a decision may be rendered as a matter o f 22 law . Accordingly, we shall grant respondent's Motion 23 for Summary Judgment, as supplemented . 24 VIII . 25 Section 6330(d)(1), as amended and Heritage Reporting Corporatio n (202) 628-4888 8 1 applicable to this case, grants the Court jurisdiction 2 to review the determination made by respondent' s 3 Office of Appeals in its March 26, 2007, notice of 4 determination . 5 In determining that a proposed levy ma y 6 proceed, the Appeals Office is required to take into 7 consideration : (1) The verification presented by the 8 Secretary that the requirements of applicable law and 9 administrative procedures have been met, (2) th e 10 relevant issues raised by the taxpayer, and (3) 11 whether the proposed levy action appropriatel y 12 balances the need for efficient collection of taxe s 13 with a taxpayer's concerns regarding the intrusiveness 14 of the proposed levy action . Sec . 6330(c)(3) . 15 IX . 16 As there is no dispute as to the underlying 17 liability, our review is performed under an abuse of 18 discretion standard . See Goza v . Commissioner , 114 19 T .C . 176, 182 (2000) . A settlement office abuses her 20 discretion if her determination is exercise d 21 "arbitrarily, capriciously, or without sound basis in 22 fact ." Mailman v . Commissioner , 91 T .C . 1079, 1084 23 (1988) . See also Freije v . Commissioner , 125 T .C . 14, 24 23 (2005) . We find no abuse here such that a reversal 25 of respondent's determination is warranted . Heritage Reporting Corporation (202) 628-4888 9 1 X . 2 Petitioner did not respond to respondent's 3 Motion for Summary Judgment and, consequently, ha s 4 offered no cogent argument with regard to any alleged 5 error in respondent's determination . 6 Further, in her February 12th letter , 7 respondent's settlement officer requested information 8 from petitioner that was never provided . She gav e 9 petitioner two opportunities to provide the requested 10 information, neither of which was taken . In addition, 11 it was made very clear to petitioner and it s 12 representative that if no further information were 13 forthcoming, a determination would be made based on 14 the administrative file . 15 The settlement officer's position wa s 16 reasonable and was consistent with established IRS 17 policies that a taxpayer must be in compliance wit h 18 current filing and payment requirements to be eligible 19 for a collection alternative . See, e .g ., Ho v . 20 21 22 Commissioner , T .C . Memo . 2006-41 ; Londono v . Commissioner , 2003-99 ; cf . Scharringhausen v . Commissioner , T .C . Memo . 2008-26 . 23 In addition, we have no record that 24 petitioner ever actually proposed any specific 25 collection alternative, nor did it provide the Heritage Reporting Corporation (202) 628-4888 1 0 1 settlement officer with completed current financial 2 information to support a collection alternative . 3 Lacking any information from petitioner, it was not an 4 abuse of discretion to sustain the proposed levy . 5 Finally, we note that in its petition, 6 petitioner requested that this Court rescind th e 7 proposed levy because "the levy would disrupt normal 8 business operations ." That is not a valid reason for 9 excusing a corporation's failure to pay its employmen t 10 tax liabilities . "The Seventh Circuit has found that 11 when a company keeps delinquent trust fund taxe s 12 rather than remitting them to the government on a 13 quarterly basis, the company uses these funds for 14 operating expenses, and this practice makes the 15 government an unwilling partner in a floundering 16 business ." Burt, Inc . v . I .R .S . , 2007 WL 952009 , 17 2007-1 U .S .T .C . para . 50,416, 99 A .F .T .R .2d 2007-185 6 18 (N .D . Ind . 2007), quoting Diamond Plating Co . v . 19 United States , 390 F .3d 1035(7th Cir . 2004) . m3-) 20 The settlement officer's decision that th e 21 Government should not remain an unwilling partner in 22 petitioner's business was not an abuse of discretion . 23 See Living Care Alternatives of Utica, Inc . v . United 24 States , 411 F .3d 621, 628 (6th Cir . 2005) ("The case 25 law supports the proposition that the government i s Heritage Reporting Corporation (202) 628-4888 1 1 1 not required to continue subsidizing failin g 2 businesses by forgoing tax collection . Any other 3 conclusion would create a bizarre tax system with 4 perverse incentives for businesses to maintai n 5 themselves on the edge of insolvency in order to enjoy 6 immunity from tax enforcement ." ) 7 XI . 8 In sum, we shall enter an Order and Decision 9 in which we shall (1) grant respondent's Motion fo r 10 Summary Judgment, filed December 6, 2007, an d 11 supplemented February 26, 2008, and (2) decide that 12 respondent may proceed with the collection action as 13 determined in the notice of determination dated March 14 26, 2007, upon which notice this case is based . 15 XII . 16 THIS CONCLUDES THE COURT'S ORAL FINDINGS OF 17 FACT AND OPINION IN THIS CASE . 18 (W'iereupon, at 10 :10 a .m ., the bench opinion 19 in the above-entitled matter was concluded . ) 20 // 2 1 22 23 24 / / 25 // Heritage Reporting Corporation (202) 628-4888