TAX COURT OPINION

Case: Angela H. Bush
Docket Number: 14865-20L
Judge: Goeke
Opinion Type: bench
Filed: 05/09/2023
Pages: 6

United States Tax Court Washington, DC 20217 Angela H. Bush, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 14865-20L. ORDER Pursuant to Rule 152(b) of the Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to the Commissioner a copy of the pages of the transcript of the trial in this case before Judge Joseph Robert Goeke at Seattle, Washington containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, an appropriate order and decision will be issued. (Signed) Joseph Robert Goeke Judge Served 05/09/23 Bench Opinion by Judge Joseph Robert Goeke April 28, 2023 Angela H. Bush v. Commissioner of Internal Revenue Docket No. 14865-20L 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. Section references herein are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period. Rule references are to the Tax Court Rules of Practice and Procedure. The present findings of fact and opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. Except as provided in Rule 152(c), this bench opinion shall not be cited as 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 authority. 16 17 18 19 20 21 The Court has decided to render oral findings of fact and opinion, as explained above. Before the Court are cross Motions for Summary Judgment. We previously denied respondent's Motion for Summary Judgment without prejudice, but we are reconsidering it here, and petitioners have filed a Motion for Summary Judgment 22 recently. 23 24 25 Petitioner brought this case under section 6630 to challenge the Notices of Determination issued by respondent's Settlement officer, related to income tax liabilities and penalties for 2012, 2013, and 2014. The 4 Notices of Determination applied to a proposed levy and lien to collect tax liabilities which arose because petitioner's joint federal income tax returns for the years with in question with her then husband, failed to JRG have sufficient withholdings of taxes or estimated tax payments to cover the liabilities and liabilities existed after the filing of the returns. The petitioner was a resident of Washington when she timely filed her petition in this case. The case centers around a tragic event in petitioner's life, which is set forth in her original petition. Petitioner's husband died of a heart attack at age 41. At the time of his death, she did not work outside the home, but rather took care of their child. His sudden death thrust her into the workforce in an attempt to support her family. Initial efforts to obtain income resulted in meager wages. At that time or close approximate time to his death, she became aware that he had not adequately withheld taxes or paid estimated tax payments to cover the tax liabilities in their joint income tax returns. These circumstances led the Settlement officer in analyzing the levy proposed against the petitioner to find that the income petitioner received was barely enough to cover the living expenses of her and her child and he agreed that 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 petitioner's tax liabilities, based upon the joint income 5 tax returns in question, should be placed in the category called "currently not collectible". The dispute in this case follows not from the levy because it is in this currently not collectible status, but rather because petitioner attempted to resolve the liability in total with an offer in compromise. This offer in compromise became very controversial because the petitioner had taken life insurance funds to purchase an automobile for the transportation of herself and her son. This automobile was used by petitioner to seek employment and to make the meager wages that she did for the period after her husband's death. The fact that the automobile cost $47,000-some- odd initially, led to a dispute about how that should be taken into account in petitioner's offer in compromise. Originally, the examining collection personnel determined that the petitioner had available funds to make a payment in excess of $35,000 as part of the offer in compromise. The Settlement officer found that an amount of $25,750 was appropriate. This calculation was based upon the Settlement officer's determination that the fair- market value of petitioner's vehicle was $36,500 and that the vehicle had a resale potential of $29,200. And then after consideration of the loan on the vehicle or a lien 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 or the vehicle exemption, the Settlement officer 6 JRG determined that the equity that could be considered by the Internal Revenue Service in analyzing the offer in compromise was $25,750. Petitioner has asserted from the outset of this case, through her representatives, that this amount should not have been considered in analyzing her offer in compromise given the fact that the vehicle was important in her efforts to make income and that her overall circumstances did not warrant consideration of the vehicle as part of the offer in compromise. We agree with petitioner. We find that it was abuse of discretion to include the value of the vehicle in the offer in compromise negotiations. This raises the question of how we deal with the pending lien filing. Petitioner, through her representatives, asserted that the lien should be withdrawn because she felt that she was entitled to resolve the tax liability through an offer in compromise and that therefore, it was appropriate that the lien should be withdrawn pursuant to section 6159 and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 section 6223(j). 22 23 24 25 Since there was no offer in compromise, that provision technically would be inapplicable. However, section 6323(j) does provide for the withdrawal of a lien notice when it is in the best interest of the taxpayer. We agree that circumstance applies to the present case, 7 and we find that the lien should be withdrawn and that a decision in this case should be rendered for petitioner. We appreciate that the Settlement officer was faced with the difficult task of balancing the needs for the IRS for collection with petitioner's personal circumstances under section 6330. But we believe it was an abuse of discretion to fail to take into account petitioner's need for the automobile and the difficult circumstances in which the petitioner found herself upon her husband's death. This ends the Court's oral findings of fact and opinion in this case. (Whereupon, at 11:55 a.m., the above-entitled matter was concluded.) 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