TAX COURT OPINION

Case: Ricky T. Burningham
Docket Number: 22147-08
Judge: Colvin
Opinion Type: bench
Filed: 03/29/2010
Pages: 9

UNITED STATES TAX COURT WASHINGTON, DC 20217 RICKY T . BURNINGHAM , Petitioner, ) - v . ) Docket No . 22147-08 . 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 trial-in the above case before Judge Joseph H . Gale at San Francisco, California, on February 11, 2010, containing his oral findings of fact and opinion rendered at the conclusion of trial . Decision will be entered :for respondent in accordance with the oral findings, of fact and opinion. K. (Signed ) Joseph H . Gale Judge Dated :- Washington, D .C . 'March 29, 2010 SERV€D MAR 3,0 2010 Bench Opinion by Judge Joseph,H . Gale February 11, 201.0 Ricky T . Burningham v . Commissioner Docket No . 22147-0 8 3 1 2 3 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 . The oral findings of fact and opinion shall not be relied upon as precedent in any other case . This bench opinion is made pursuant to th e 10 authority granted by section 7459(b) of the Internal Revenue 11 Code of 1986, as amended, and Rule 152 of the Tax Cour t 12 Rules of Practice & Procedure .. Unless otherwise indicated, 13 all section references are to the . Internal Revenue Code of 14 1986 in effect for the years in issue, and all rul e 15 references are to the Tax Court Rules of Practice & 16 Procedure . 17 This is a case under section 66 -- 6330(d) fo r 18 review of Respondent's determination to proceed with a levy 19 to collect two section 6682 penalties assessed agains t 20 Petitioner for taxable years 2004 and 2005 . Respondent 21 conceded at trial that Petitioner is not liable for the 22 penalty for 2005 . . Therefore, the issue for decision i s 23 whether Respondent may proceed with collection of the 2004 24 penalty, as he determined in a notice of determinatio n 25 issued to Petitioner on August 7th, 2008 . Heritage Reporting Corporation (202) 628-4888 Some of the facts have been stipulated and they are incorporated by this reference . 3 Petitioner resided in California when the petition in this case was filed . Petitioner filed a form W-4 , 5 employees withholding allowance certificate, for 2004, 6 claiming that he was exempt from withholding because h e 7 would have no income .tax liability for 2004 . Attached to 8 the form was a signed, handwritten statement in which . Petitioner stated that he was signing the form involuntaril y 10 so that he would be compensated for his services . 11 Respondent subsequently assessed a $500 penalt y 12 under section 6682 for 2004 against Petitioner on Marc h .13 14th, 2005, for filing an invalid form W-4, or mor e 14 precisely, a false or fraudulent one . Respondent's 2004 .15 penalty file for Petitioner records that the assessment 16 received supervisory approval on February 17th, 2005 . 17 Respondent sent Petitioner a final notice0-notic e 18 of intent to levy( and notice of your right to a hearing , 19 dated November .15th, 2007, advising Petitioner tha t 20 Respondent intended to levy on his property to .collect the 21 unpaid liability for 2004, and that Petitioner could receive 22 a hearing with Respondent's office of appeals . On Decembe r 23 lith, 2007, Petitioner submitted a form 12153, request for a 24 collection due process or equivalent hearing . 25 By letters dated January 16th, 2008, and Februar y Heritage Reporting Corporation (202) 628-4888 11th, 2008, Respondent's appeals officer acknowledge d 2 receipt of-Petitioner's request for a collection due process 3 hearing . By letter dated March 18th, 2008, Respondent' s 4 appeals officer informed Petitioner that a telephoni c conference was scheduled for April 22nd, 20.08 at 1 :00 p .m . Respondent's appeals officer informed Petitioner that he wa s entitled to a face-to- .face conference if he raised any non- frivolous issues . Petitioner sent a letter to Respondent's appeal s 10 office rin response to the March 18th letter . The letter wa s A 11 dated April 16th, 2007, but in the circumstances its clea r 12 the year of the letter was 2008 rather than 2007 . In his 13 letter, Petitioner refused to participate in a telephonic 14 conference and demanded a face-to-face conference . 15 Petitioner stated that he wished to raise-the underlying 16 liabilities and denied that he had any taxable income for 17 2004 and thus he could not be liable for a penalty fo r 18 filing an invalid form W-4 . 19 By letter dated June 5th, 2008, Respondent's 20 appeals officer informed Petitioner that she was . denying hi s 21 request for a face-to-face conference because he had not 22 raised any non-frivolous issues . Respondent's appeal s 23 officer offered Petitioner the opportunity to reschedule his 24 telephonic conference . By letter dated July 18th, 2008 , 25 Petitioner again demanded a face-to-face conference . Heritage Reporting Corporation (202),628-4888 1 Respondent's appeals officer verified that al l requirements of applicable law and administrative procedure were satisfied . She reviewed a computer-generated transcript that showed that the assessment of the penalty was made on March 14th, 2005, and notice and demand for payment weve sent on the same date . Wq5 On August 7th, 2008, Respondent issued to Petitioner a notice of determination concerning collection (5) actiorX under section 6320 and / or 6330 in which Respondent's s s 10 appeals officer determined that the levy to collect the 2004 11 section 6682 penalty could proceed . Petitioner timely filed 12 a petition with the Court for review of the determination . 13 Section 6330 requires the Secretary to furnish a 14 person . notice and opportunity for a hearing before making a 15 levy on the person's property . At the hearing, the person 16 may raise any relevant issue related to the unpaid tax o r 17 proposed levy, including spousal defenses, challenges to the 18 appropriateness of the collection action, and offers o f 19 collection alternatives . The person may challenge th e 20 existence or amount of the underlying tax liability for any 21 period only .if the person did not receive a notice o f 22 deficiency or did not otherwise have an opportunity t o 23 dispute the liability . See section 6330(c)(2)(B) ; Sego v . 24 Commissioner , 114 T .C .(cid:127) 604, 609 (2000) . 25 Petitioner argues that it was an abuse o f Heritage . Reporting Corporation (202) 628-4888 1 discretion for Respondent to deny him a face-to-face 2 conference because he wished to raise the underlyin g 3 liability, and he had not had a prior opportunity to do so . 4 Respondent concedes that Petitioner has not had a prio r 5 opportunity to raise the underlying liability, but argues 6 that Petitioner did not properly raise the underlyin g 7 liability during the collection due process hearing because 8 Petitioner failed to produce any evidence tending to show .that he was not liable for the underlying liability . Se e 10 section 301 .6330-1(f)(2) Q&A F-3, procedural an d 11 administrative reps . 12 Respondent further argues that because Petitione r 13 failed to raise the underlying liability at this collection 14 due process hearing, he may not raise it here . See Giamelli 15 v . Commissioner , 129 T .C . 107, 112 through 113 (2007) . 16 In view of his April 16th, 2008, letter to th e 17 appeals officer .in which Petitioner asserted that he had n o 18 income tax liability for 2004 and therefore could not be ~~-lr► 19 liable for the penalty asserted with respect to theA W-4 he 20 filed for that year, we find that Petitioner did raise a 21 challenge to the underlying tax liability for 2004 and offer 22 evidence relevant to that challenge, namely, his statement 23 that he had no income for that year . Thus, Petitione r 24 raised a non-frivolous issue with respect to 2004, and it 25 was accordingly an abuse of discretion for the appeal s Heritage Reporting Corporation (202) 628-4888 officer to fail to offer Petitioner a face-to-fac e conference . Moreover, the appeals officer's failure to,allow a 4 challenge : to . the underlying tax liability for 2004 wa s 5 improper . See Perkins v . Commissioner , 129 .T .C . 58, .66-67 6 (2007) . 7 .Any errors committed by the appeals officer , 8 however, were harmless . At trial, the Court afforde d 9 Petitioner an opportunity to raise any issue concerning the 10 underlying liability that he contended he would have raised 11 at the hearing . .,The sole challenge to the underlyin g 12 liability raised by Petitioner at trial was his claim tha t 13 compensation . for services or wage income)'was not taxable . .14 Petitioner conceded that . he provided electrician ' s services 15 as an employee for several employers in 2004, and-received 16 compensation for those'services of approximately $ 50 ;000 . 17 Petitioner maintained , however, that there are multipl e 18 definitions of income in the Internal Revenue Code and that 19 the amounts he received in 2004 did not constitute taxabl e 20 income under the code. 21 'Petitioner's contention is patently frivolous, and 22 his admissions with respect to his 2004 income ar e 23 sufficient to establish that the penalty asserted under 66 .82 24 was warranted . See section'61(a)(1) for example, regarding 25 the treatment of compensation for services as income subjec t Heritage Reporting Corporation . (202) 628-4888 9 1 to tax . 2 Petitioner also raised, in connection with a 3 motion for summary judgment, the claim that Respondent had 4 failed to comply with the requirement of section 6751(b)(1) 5 that no penalty be assessed unless the initial determination 6 to assess the penalty is approved in writing by a 7 supervisor . Assuming for purposes of deciding this cas e 8 that Petitioner would have raised such a claim if afforded a face-to-face conference and an opportunity to challenge the 10 underlying tax liability, we nonetheless conclude on th e 11 basis of our de novo review that the section 6682 penalty 12 for 2004 was assessed in compliance with section 6751(b)(1) . 13 As noted, the penalty file for Petitioner's 2004 14 taxable year, offered into evidence by Respondent, records 15 the written supervisory approval of the assessment of th e 16 2004 penalty . Since Petitioner advanced only frivolous or 17 meritless challenges to the underlying tax liability for 18 2004, the appeals officer's failure to consider them or to 19 offer Petitioner aface-to-face conference was harmles s 20 error . 21 Petitioner challenges no other aspect of th e 22 hearing and determination under section 6330 . Accordingly, 23 we will not remand the case . Instead, we sustain th e 24 determination to proceed with collection by levy, th e 25 section 6682 penalty for 2004 . See Perkins v . Commissione r Heritage Reporting Corporation (202) 628-4888 supra at 71 . This . concludes the Court's oral findings of fac t and opinion in this case . (Whereupon, at 12 :08 p .m ., the bench opinion i n above-entitled matter was concluded .)