TAX COURT OPINION

Case: Herbert Carl Heintz
Docket Number: 2769-11L
Judge: Kroupa
Opinion Type: bench
Filed: 03/13/2012
Pages: 14

UNITED STATES TAX COURT WASHINGTON, DC 20217 HERBERT CARL HEINTZ, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. ) ) ) ) ) Docket No. 2769-11 L ) ) ) ) ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is 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 of the above case before Judge Diane L. Kroupa at Seattle, Washington on February 29, 2012, containing her oral findings of fact and opinion rendered at the conclusion of trial. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Diane L. Kroupa Judge Dated: Washington, D.C. March 13, 2012 SERVED MAR 1 4 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 Kroupa February 29, 2012 Heintz v. Commissioner Docket No. 2769-11L 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 by § 7459(b) and Rule 152. All section references are to the Internal Revenue Code as amended and in effect for the taxable periods at issue as later defined,.and all rule references are to the Tax Court Rules of Practice and Procedure. This is a collection review case involving the proposed collection by levy to collect Petitioner's § 6672 trust fund liabilities of EPU LLC, a multi-member limited liability company (that shall be referred to in this opinion as the Company) for the fourth quarter of 2006 and 2007, the second, third and fourth quarters of 2008 and the first quarter of 2009 (all quarters shall be referred to in this opinion as the taxable periods at issue). This collection review matter is before the Court on Respondent's motion for summary judgment 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 filed on November 2, 2011. The Court ordered Petitioner to respond or object to Respondent's motion, and the Court scheduled Respondent's motion for a hearing at the Court's Seattle, Washington, trial session beginning February 27, 2012. Robert Stevenson appeared on behalf of Petitioner, and Danae Rawson appeared on behalf of Respondent. Findings of Fact. The record establishes or the parties do not dispute the following: Petitioner resided in Seattle, Washington, at the time he filed the collection review petition in this case. Petitioner was a member of the Company at the time the , Company failed to pay its employment tax liabilities for the taxable periods at issue. Revenue Officer Luna was assigned to collect the unpaid employment tax liabilities of the Company. In 2007, she attempted for more than two years to collect the Company's employment tax liabilities. She spoke on the telephone to Petitioner and his representatives numerous times. She also met with Petitioner and his representatives at the Company's place of business. She repeatedly informed Petitioner that the Company was not filing employment tax returns when they were due, it was not making its federal 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 deposits and it was not paying its employment tax liabilities. Later in 2009, Revenue Office Luna advised Petitioner that she needed to interview him to determine if he should be held personally liable pursuant to § 6672 for the Company's unpaid employment tax liability. She subsequent made the determination that Petitioner was a person who was required to collect and pay over federal employment taxes and willfully failed to do so, thus making him personally liable for the unpaid amounts under § 6672. Revenue Officer Luna hand delivered to Petitioner a Letter 1153 entitled Notification Letter of 100 Percent Penalty Proposed Against Filer for Corporation regarding the unpaid employment taxes for the taxable periods at issue. The letter.advised Petitioner that he had 60 days from the date·of the letter to submit a written appeal of the proposed liabilities. The letter was dated January 26 of 2009 rather than 2010. Petitioner acknowledges he received the letter in 2010. Petitioner and Revenue Officer Luna spoke on March 3, 2010, discussed the date of the letter with Revenue Officer Luna, explaining that the appeal period remained the same. She further explained that 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 the appeal period would not be extended if she provided him a replacement letter with the year 2010 used in lieu of the 2009 date. Petitioner failed to file an appeal within the 60-day p.eriod nor seek an extension to·file a written.appeal. Accordingly, Respondent assessed all the trust fund recovery liabilities against Petitioner. Petitioner failed to pay the assessed amounts so Respondent issued Petitioner a Notice of Intent to Levy and Notice of Your Right to a Hearing that explained Petitioner was entitled to a CDP hearing regarding the trust fund recovery liabilities for the taxable periods at issue.. On the next day, Respondent also issued to Petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under § 6320 regarding the same liabilities. Petitioner timely requested a CDP hearing. Petitioner alleged that he should not be held liable for the tax liabilities on the hearing request. He contested the liabilities es an attachment to the hearing request. He also checked the box for an offer in compromise as a collection alternative and requested that the lien be discharged. He provided no explanation why the lien should be discharged. Appeals Officer Lerner was assigned the CDP 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 hearing with Petitioner. AO Lerner reviewed Petitioner's CDP hearing request and reviewed his account showing the liability was attributable to trust fund liability obligations of the Company. He determined that Petitioner had been given a Letter 1153 on January 26, 2010, and further determined that he failed to file a written appeal within the 60-day period, even though he had received the letter. Therefore, Appeals Officer Lerner determined that Petitioner had been given an opportunity to contest the tax liabilities at:issue. Appeals Officer Lerner sent Petitioner a letter scheduling a telephonic CDP hearing and advising him that he could have a face-to-face hearing upon request. The letter advised Petitioner that Appeals may consider whether he owes the amount due but only if he has not otherwise had an opportunity to dispute it with Appeals or did not receive a deficiency notice. (Emphasis in the original.) Petitioner stated he wanted a face-to-face hearing and that he wanted his accountant to be present. Appeals Officer Lerner told Petitioner that he could not challenge the existence or amount of the trust fund liability amounts at issue because Petitioner had a prior opportunity to do so. Appeals 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 Officer Lerner told Petitioner that he would discuss only collection alternatives during the CDP hearing. Petitioner contacted Appeals Officer Lerner before the scheduled face-to-face hearing to say he only wished to challenge the existence and amount of the trust fund liability amounts at issue and that he did not want to discuss collection alternatives. Appeals Officer Lerner reiterated that Petitioner could not challenge the existence or amount of the trust fund liability amounts at issue at the CDP hearing because Petitioner had a prior opportunity to do so within the 60-day period after Petitioner received the Letter 1153 on January 26, 2010. Appeals Officer Lerner and Petitioner agreed that the face-to-face hearing would be canceled and that their telephone conference constituted the CDP hearing regarding the trust fund recovery amounts at issue. Appeals Officer Lerner told Petitioner that Appeals would issue Petitioner a determination notice sustaining the lien filing and the proposed levy action. As previously stated, Respondent filed a summary judgment motion. Petitioner filed an objection as the Court ordered. The Court scheduled Respondent's motion for a hearing in Seattle, Heritage Reporting Corporation (202) 628-4888 9 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 Washington. The Court heard oral arguments from both parties at the motion hearing. Opinion. We are asked to decide whether to grant summary judgment. Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See e.g.. FPL Group, Inc. v. Commissioner, 116 T.C. 73, 74 (2001). A motion for summary judgment will be granted if the pleadings and other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as.to any material fact and that a decision may be rendered as a matter of law. See Rule 121(b); Elect.. Arts, Inc. v. Commissioner, 118 T.C. 226, 238 (2002). The moving party has. the burden of proving that.nò genuine issue of material fact exists and that it is entitled to judgment as a matter of law. See e.g. Rauenhorst v. Commissioner, 119 T.C. 157, 162 (2002). The party opposing summary judgment must set forth specific'facts that show. that a genuine question of material fact exists and may not rely merely on allegations or denials in the pleadings. Casanova Co. v. Commissioner, 87 T.C. 214, 217 (1986). Based upon our examination of the entire . record before us, we find that Respondent did nót 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 10 abuse his discretion in determining that the collection action should proceed with respect to Petitioner's unpaid trust fund liabilities for each of the taxable periods at issue. We begin with the standard of review. Where the validity of the underlying tai liability is properly at issue, the Court will review the matter on a de novo basis. Sego v. Commissioner, 114 T.C. 604,. 610 (2000). 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, supra; Goza v. Commissioner, 11:4 T.C. 176, 181-182 (2000). We must decide whether Respondent ekercised Èis discretion arbitrarily, capriciously or without sound basis in fact or law. See Woodral v. Commissioner, 112 T.C. 19, 23 (1999); Fargo v. Commissioner, T.C. Memo 2004-13. We focus on whether Petitioner otherwise had an opportunity to contest the underlying liabilities at issue. This Court and other Courts have held that the receipt of a Notice of a Proposed Trust Fund Recovery Penalty Assessment, otherwise known as a Letter 1153, constitutes a prior opportunity 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 11 dispute the underlying tax liability in Appeals. McClure v. Commissioner, T. C. Memo 2008-136; Render v. United States, 389 F. Supp.2d 808, 810-811 (E.D. Mich. 2005) ; See also Jackling v. Commissioner, 352 F. Supp.2d 129, 132 (D. N.H. 2004); Pelliccio v. United States, 253 F. Supp.2d 258, 261-262 (D. Conn. 2003) . Cf. Planes v. United States, 98 A.F.T.R. 2d 2006-7044 (M.D. Fla. 2006) . Thus, Petitioner is therefore precluded from contesting the underlying liability during the CDP hearing or with this Court. We now focus on an overview of collection proceedings. If any person liable.for federal tax liability neglects or refuses to make payment within 10 days of notice and demand, the t'ommissioner is authorized to collect the tax by levy on that person's property. See § 6331(a). At least 30 days after enforcing collection by levy on the person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person. See § 6331(d). The person is entitled, upon request, to an administrative review hearing before Appeals. Sec. 6330(b) (1). If the taxpayer requests a hearing, he or 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 12 she may raise at that hearing any relevant issues relating to the unpaid tax or the proposed levy. Sec. 6330 (c) (2). Relevant issues include any appropriate 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 officer 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). Petitioner argued at the motion hearing that Petitioner should not be liable for any trust fund liabilities of the Company as he had no control of the .business from May 2006 to May 2007. He also argued that his assessed liability should be reduced by the amount his business associate (a Mr. Petro) failed to pay. These arguments are of no moment, and we cannot nor will we place any weight upon them. In addition, now is not the time to make these arguments. 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 13 The appropriate time was when he received the Letter 1153. Issues that were not raised to Appeals cannot later be raised to the Court. Giamelli v. Commissioner, 129 T.C. 107 (2007). Petitioner also argues that Respondent should not be granted summary judgment as there is a material fact in dispute. The Letter 1153 being dated 2009 instèad of 2010 is apparently the disputed fact Petitioner alleges. This is not a material fact. Petitioner knew before the 60-day period ended in 2010 that he needed to file a written appeal with Appeals to contest his liability for the trust fund liability amounts of t,he Company. We find that summary judgment is appropriate. Th:e record reflects that the appeals officer properly verified that all the legal and procedural requirements have been met. The appeals officer confirmed, using a transcript of Petitioner's accounts, that assessments were properly made for each of the periods at issue, that appropriate and timely notices were sent regarding the assessments and that Petitioner was informed of his rights with respect to the lien filing and the proposed levy action. The record also reflects that the appeals officer addressed all the issues that Petitioner Heritage Reporting Corporation (202) 628-4888 14 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 raised, including Petitioner's inability to contest the underlying liability. The record also reflects that the appeals officer properly balanced the need for efficient collection of taxes with Petitioner's . legitimate concern that any collection be no more intrusive than necessary. Petitioner has not raised any challenge to the appropriateness of collection, did not assert any spousal defenses or otherwise offer any additional collection alternatives. See § 6330(c) (2). Äccordingly, these issues are now deemed conceded. Rule 331(b) (4). In conclusion, we find that Petitioner has not presented any evidence or persuasive arguments: to cbnvince us that Respondent abused his discretion.· We therefore conclude that Respondent did not abuse his discretion in upholding Respondent's lien filing and proposed levy action to collect from Petitioner outstanding trust fund liabilities for each of the periods at issue. . 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 § 6320 and/or 6330 dated January 7, 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 . 15 2011, upon which this case is based, regarding Petitioner's unpaid trust fund liabilities for the taxable periods at issue. An order will also be issued granting Respondent's summary judgment. This concludes the Court's oral findings of fact and opinion in this case. (Whereupon, at 2:25 p.m. the bench opinion in the above-entitled matter was concluded.) // // // // // // // // // // // // // // // // // . . Heritage Reporting Corporation (202) 628-4888