TAX COURT OPINION

Case: Catherine M. Dwyer
Docket Number: 16068-07S
Judge: Colvin
Opinion Type: bench
Filed: 06/17/2008
Pages: 11

UNITED STATES TAX COURT e WASHINGTON DC 2021 7 f1d ,J UiYA*z CATHERINE M . DWYER , Petitioner COMMISSIONER OF INTERNAL REVENUE, Respondent O R D E R Docket No . 16068-07S . Ys 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 of the above case before Special Trial Judge Robert N . Armen, Jr . at New York, New York (Westbury) on June 5, 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 Order and Decision will be entered for respondent . (Signed) Robert N . Armen, Jr. Special Trial Judg e Dated : Washington, D .C . June 16, 2008 SERVED 0 1 1 ~~Q~ 3 1 Bench Opinion by Special Trial Judge Robert N . Armen Jr . 2 June 5, 200 8 3 Dwyer v . Commissioner Docket No . 16068-07S 4 THE COURT : The Court has decided to render oral 5 Findings of Fact and opinion in this case, and the 6 following represents the Court's Oral Findings of Fac t 7 and Opinion . The oral findings of fact and opinion Sal l 8 not be relied upon as precedent in any other case . 9 This proceeding was heard as a small tax cas e 10 pursuant to the provisions of Section 7463(f)(2) of the 11 Internal Revenue Code of 1986, as amended, and Rules 170 12 through 175 of the Tax Court Rules of Practice an d 13 Procedure . See and compare Rules 330 through 334 of the 14 Tax Court Rules of Practice and Procedure . 15 This bench opinion is made pursuant to the 16 authority granted by Section 7459(b) of the Interna l 17 Revenue Code of 1986, as amended, and Rule 152 of the Tax 18 Court Rules of Practice and Procedure . 19 Hereinafter in this bench opinion, all section 20 numbers refer to the Internal Revenue Code of 1986, as 21 amended, and all rule numbers refer to the Tax Court 22 Rules of Practice and Procedure . 23 Marc L . Caine appeared on behalf " of °tte'°- 24 Respondent . There was no-appearance by or on behalf of 25 Petitioner . Heritage Reporting Corporation (202) 628-4888 4 1 By Notice, dated December 28, 2007, this case was 2 calendared for trial on June 2, 2008, in New York, Ne w 3 York (Westbury Session) . However, on March 12, 2008 , 4 Petitioner filed a Motion for Summary Judgment . 5 Thereafter, on April 16, 2008, Respondent file d Response, objecting to the granting of Petitioner's motion . Also on April 16, 2008, Respondent filed a Motio n 9 for Summary Judgment and a Declaration . Thereafter, on 10 April 22, 2008, Petitioner filed a Supplement to he r 11 motion, and on May 16, 2008, Respondent filed a Response 12 to Petitioner's motion, as supplemented, again objecting 13 to its granting, and another Declaration . 14 On May 19, 2008, Petitioner filed a Response to 15 Respondent's motion, objecting to its granting, and a 16 Declaration . Most recently, Respondent filed a n 17 additional Declaration on May 30, 2008 . 18 By Order dated April 22, 2008, the Court 19 calendared the parties' cross-motions for summar y 20 judgment for hearing in New York, New York, on June 4, 21 2008 . 22 Pursuant to notice, the parties' cross-motions for 23 summary judgment were called for hearing at the appointed 24 time and place . Counsel for Respondent appeared and was 25 heard . Petitioner, having previously given notice of her Heritage Reporting Corporatio n (202) 628-4888 5 1 intention not to appear, was not present . 2 The facts relevant to the disposition of the 3 parties' cross-motions may be briefly summarized as 4 follows : 5 Petitioner resided in the State of New York at the 6 time that the petition was filed with the Court . 7 At issue in .this case is Petitioner's liability 8 for the taxable year 1989 . 9 In-1992, Petitioner and her then spouse, Robert J . 10 Dwyer, filed a delinquent Federal income tax return for 11 1989 . Tax of $22,804 was reported, but no paymen t 12 accompanied the filing of the return . 13 On April 20, 1992, Respondent assessed the 14 reported tax, together with applicable penalties an d 15 interest . On that same date, Respondent sent notice and 16 demand for payment . See Sec . 6303(a) . 17 Sometime thereafter, Respondent examined the 1989 18 return and determined a deficiency in tax, addition to 19 tax for late-filing, and an accuracy-related penalty . A 20 petition for redetermination was filed at dkt . No . 2626- 21 95 . See Sec . 6213(a) . 22 Ultimately, a decision was entered in respect of a 23 published opinion filed on May 15, 1996, as Robert J . 24 Dwyer and Catherine Dwyer v . Commissioner , 106 T .C . 337 . 25 In that case, the Court held that Petitioners were liable Heritage Reporting Corporatio n (202) 628-4888 6 1 for the 10-percent additional tax under Section 72(t) on 2 a premature IRA withdrawal . 3 On December 10, 1996, Respondent assessed the 4 deficiency and applicable penalty, together wit h 5 statutory interest, and sent notice and demand for 6 payment . See .Sec . 6303(a) . 7 Petitioner and Mr . Dwyer responded by filing a 8 number of offers-in-compromise, which were eithe r 9 rejected or returned . Petitioner and Mr . Dwyer als o 10 filed joint petitions in bankruptcy, but the cases were 11 dismissed . 12 Thereafter, Petitioner filed a request for relief 13 as ,a so-called innocent spouse . Ultimately, in December 14 2002, Petitioner and Respondent executed a Form 906 , 15 Closing Agreement on Final Determination Covering 16 Specific Matters . 17 . .Pursuant to the Closing Agreement, Petitioner was 18 allowed partial innocent spouse relief (in excess o f 19 $162,000), and her tax liability for-1989 was agreed by 20 the parties to be $30,000, plus statutory interest . 21 After the parties had executed the Closing 22 Agreement, Petitioner submitted additional offers-in- 23 compromise, which Respondent either rejected or returned . 24 On December 20, 2004, Respondent sent Petitioner a 25 Final Notice/Notice of Intent to Levy and Notice of You r Heritage Reporting Corporation (202) 628-4888 7 1 Right to a Hearing (final notice) . Respondent sent the 2 final notice to Petitioner in response of her outstanding 3 and separate liability based on the December 2002 Closing 4 Agreement. 5 In response to the final notice, Petitioner filed 6 a Form 12153, Request for a Collection Due Proces s 7 Hearing . In an attachment to the form, Petitioner state d that she relied, in part, on the fact that her ex- 9 husband, Robert J . Dwyer, had filed a petition i n 10 bankruptcy in 2004, and had specifically been granted a 11 discharge of his Federal taxes for 1989 . Petitioner was 12 not a party to Mr . Dwyer's bankruptcy action in 2004 . 13 . On July 5, 2007, Respondent's Office of Appeals 14 sent Petitioner a Notice of Determination Concerning 15 Collection Action(s) Under Section 6320 and/or 633 0 16 (notice of determination) sustaining the proposed levy . 17 The notice of determination summarized Appeals ' 18 determination as follows : 19 "The proposed levy action is sustained because you 20 have not proposed an alternative . You are not eligible 21 to dispute the merits of the assessment because yo u 22 agreed to a final settlement of the issue and executed a 23 Form 906 Closing Agreement . You will not be charge d 24 failure to pay penalty . The statute of limitations for 25 collection has not expired because it has been extended Heritage Reporting Corporatio n (202) 628-4888 I 8 1 by several events . IRS is in the process of makin g 2 corrections to the assessment to more accurately reflect 3 the terms of the settlement . The liabilities were no t 4 discharged through bankruptcy proceedings . " 5 The record is clear that the bankruptc y 6 proceedings referred to in the Summary of Determination 7 were bankruptcy proceedings commenced in 2004 solely by Robert J . Dwyer . As previously mentioned, Petitioner wa s not a party to those bankruptcy proceedings in 2004 . Petitioner appealed from the notice o f 9 10 11 . determination by timely filing a petition with thi s 12 Court . See Secs . 6330(d), 7502(a) . Respondent filed an 13 answer, and the case became at issue . Thereafte r 14 followed the motions that are before us at this time . 15 The Court may grant summary judgment when there is 16 no genuine issue of material fact and a decision may be 17 rendered as a matter of law . Rule 121(b) ; Sundstrand 18 Corp . v . Commissioner , 98 T .C . 518, 520 (1992), affd . 17 19 F .3d 965 (7th Cir . 1994) . 20 After reviewing the record, we conclude that there 21 are no genuine issues of material fact, and that 22 Respondent is-entitled to judgment as a matter of law . 23 Accordingly, we shall grant Respondent's motion, and we 24 shall deny Petitioner's motion, as-supplemented . 25 We begin with Petitioner's Motion for Summary Heritage Reporting Corporatio n (202) 628-488 8 9 1 Judgment, filed March 12, 2008, and supplemented April 2 22, 2008 . 3 In her March 12, 2008 motion, Petitioner alleges 4 that her account balance for 1989 is zero based on a 5 joint transcript of account naming Robert J . Dwyer and 6 herself as the taxpayers . 7 However, the record demonstrates that after Petitioner was granted innocent spouse relief, a s 9 memorialized in the Form 906 Closing Agreement executed 10 in December 2002, separate accounts were created by 11 Respondent for Mr . Dwyer and Petitioner . 12 Thus, the couple's former joint account was 13 "zeroed out" . But that action in no way constitutes a 14 concession by Respondent that Petitioner's accoun t 15 balance for 1989 was zero . Indeed, Petitioner's account 16 balance for 1989 was not zero . 17 In her April 22, 2008 supplement, Petitioner again 18 alleges that her account balance for 1989 is zero b y 19 virtue of an entry in her separate account transcrip t 20 showing that the statute of limitations on collection had 21 expired . 22 But the same transcript also shows that the entry 23 was quickly reversed, and at the hearing on June 4, 2008, 24 Respondent's counsel adequately explained th e 25 circumstances regarding this matter . Heritage Reporting Corporation (202) 628-4888 1 And more to the point, at the June 4, 2008 hearing 2 Respondent's revenue officer advisor was called as a 10 witness and explained in detail Respondent's determination regarding the expiration date of the statute of limitations on collection . 6 Suffice it to say . that Section 6502 ( a) provides 7 . generally for a 10-ear period of limitations o n collection after assessment . In the present case , 9 Petitioner's original liability as reported on th e 10 delinquently-filed return for 1989 was .assessed on April 11 . 20, 1992, and Petitioner's liability per the deficiency 12 action at dkt . No . 2626- 95 was assessed on December 10, 13 1996 . 14 However, by virtue of Section 6503, the running of 15 the 10-year period of limitations on collection i s 16 suspended upon the occurrence of various events, such as 17 the commencement of a bankruptcy case . Sec . 6503(h) . 18 The Declaration of Respondent ' s revenue -se-zr:T e--°_.. 6cc 19 advisor, filed May 30, 2008, together with the testimony 20 of that individual at the hearing on June 4, 2008 , 21 demonstrate that the collection statute does not bar 22 Respondent from attempting to collect Petitioner's 23 outstanding liability for 1989 . The May 30, 200 8 24 Declaration, together with the worksheet attached 25 thereto, .is incorporated herein . Heritage Reporting Corporation (202) 628-4888 11 1 In view of the foregoing, we shall deny 2 Petitioner's motion for Summary judgment, a s 3 supplemented . 4 We turn now to Respondent's motion . Given that 5 neither the existence nor the amount of the underlying 6 liability, i .e ., the $30,000 (plus statutory interest) 7 amount specified in the Form 906 Closing Agreement, i s properly at issue, the Court reviews the administrative determination of Respondent ' s Office of Appeals for abus e 10 of discretion . Lundsford v . Commissioner , 117 T .C . 183, 11 185 (2001) ; Sego v . Commissioner , 114 T .C . 604, 61 0 12 (2000) ; Goza v . Commissioner , 114 T .C . 176, 182 (2000) . 13 A settlement officer abuses his or-her discretion 14 if the determination is exercised "arbitrarily , 15 capriciously, or without sound basis in fact ." Mailman 16 v . Commissioner , 91 T .C . 1079, 1084 (1988) . 17 Here the record, as previously described i n 18 detail, demonstrates that Respondent's settlement officer 19 exercised discretion reasonably and with sound basis in 20 fact . In addition, Petitioner did not submit an y 21 collection alternative, and the matter regarding th e 22 spousal defense was definitively resolved by the December 23 2002 closing agreement . 24 The fact that Mr . Dwyer obtained a discharge of 25 his separate liability for 1989 from the Bankruptcy Court Heritage Reporting Corporatio n (202) 628-4888 1 2 1 in 2004 does not serve to discharge Petitioner from her 2 separately liability . In short, no genuine issue o f 3 material fact remains, and Respondent is entitled to 4 judgment as a matter of law . In conclusion : We shall (1) grant Respondent's motion for Summary Judgment, filed April 16, 2008, and (2) decide that Respondent may proceed with collection 8 for the taxable year 1989, as determined in the notice of determination dated July 5, 2007, upon which notice thi s 10 case is based . We shall also deny Petitioner ' s Motion 11 for Summary Judgment , filed March 12, 2008, an d 12 supplemented April 22, 2008 . .13 This concludes the Court's oral findings of fact . 14 and opinion in this case . 15 (Whereupon , at 9 :41 a .m ., the bench opinion in the 16 above-entitled matter was concluded . ) 17 18 19 20 // 2 1 22 // 2 3 24 25 Heritage Reporting Corporation (202) 628-4888