TAX COURT OPINION

Case: Douglas M. Marinos,PC
Docket Number: 6441-11L
Judge: Morrison
Opinion Type: bench
Filed: 08/24/2012
Pages: 10

UNITED STATES TAX COURT WASHINGTON, DC 20217 DOUGLAS M. MARINOS, PC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent ) ) ) ) ) Docket No. 6441-11L. ) 3 ) ) ) ORDER OF SERVICE OF TRANSCRIPT Pursuant to Rule 152(b), Tax Court Rules of Practice of Procedure, there is transmitted herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Judge Richard T. Morrison, at Philadelphia, Pennsylvania, on June 29, 2012, containing his oral findings of fact and opinion rendered at the conclusion of the trial. In accordance with the oral findings of fact and opinion, an appropriate order and decision will be entered. (Signed) Richard T. Morrison Judge Dated: Washington, D.C. August 24, 2012 SERVED AUG 2 8 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 Bench Opinion by Judge Richard Morrison June 29, 2012 Marinos v. Commissioner Docket No. 6441-11L 3 THE COURT: The Court has decided to render Oral Findings of Fact and Opinion in this case. The following represents the Court's Oral Findings of Fact and Opinion, which shall not be relied on as precedent in any other case. This bench opinion is made pursuant to the authority granted by ection 7459(b) and Rule 152. All section references are to the Internal Revenue Code of 1986, as amended, and all gule references are to the Tax Court Rules of Practice and Procedures. The-F'etitioner is Douglas M. Marinos, PC. The /F'etitioner will be referred to as "the firm". Its 7 president, Douglas M. Marinos, will be referred to as "Marinos". The office of the firm was in Pennsylvania when it filed the petition. By a notice of determination dated February 8, 2011, the IRS Appeals Office sustained a proposed levy to collect the firm's unpaid employment taxes for the second quarter of 2008 ("2Q 008") d the third quarter of ("3Q 008") . The firm timely filed a petition with the Tax Court challenging the determination of the IRS Appeals Office. We have Heritage Reporting Corporation (202) 628-4888 1 2 3 4 5 6 7 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 jurisdiction under pection 6330 (d) (1) to review the Appeals Office's determination. We sustain the determination. The case was tried on June 29, 2012, in Philadelphia, Pennsylvania. The firm was represented by Marinos as a corporate officer. Ms. Jayne M. Wessels appeared on behalf of the espondent, the IRS. Opinion: . Refusal t The Appeals Office determined to proceed with its levy against the firm, and did not entertain an installment agreement or other collection alternatives, because the firm failed to fulfill two prerequisites for consideration of such alternatives: it failed to submit financial information sufficient to enable the IRS to evaluate its collection potential; and it failed to show that it was in compliance with its obligation to file tax returns. The issue the firm raises is whether the Appeals Office abused its discretion by not allowing the firm more time to submit the financial information and returns. However, on the facts of this caseA f ind that the Appeals Of f ice ' s decision was reasonable and that therefore there was no abuse of discretion in denying the firm's request for more time. Heritage Reporting Corporation (202) 628-4888 5 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 The Appeals Office originally notified the firm, by letter of November 17, 2010, that the firm needed to provide, by December 8, 2010, (i) a collectionAinformation statement and accompanying documents, and (ii) various tax returns. Marinos responded in a fax of January 3, 2011, that he did not receive the letter until January 3, 2011, because he gwas on vacation. The fax also explained that he needed 30 days to complete and submit the requested documents. On January 6, 2011, the Appeals Office called Marinos and granted the firm only 14 additional days to submit the requested documents. The Appeals Office also informed Marinos that the telephone conference would be rescheduled for January 20, 2011. On January 19, 2011, Marinos faxed the Appeals Office explaining that he had been ill during the last week. He stated that some of the requested tax returns had been completed and "may" be delivered to the Appeals Office on January 28. Marinos stated that his accountant would be unable to attend a telephone conference on January 20, 2011. At the conference call on January 20, 2011, the Appeals Office refused to grant the firm any additional time to submit the requested documents and 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 stated that it would sustain the proposed levy. We find that the Appeals Office did not abuse its discretion in refusing to extend the document deadline beyond January 20, 2011. The Internal Revenue Manual directs that only 14 days be extended to a taxpayer for such documents. See Shanlev v. Commissioner, T.C. Memo. 2009-17. Marinos gave reasons that should ordinarily be considered in determining whether to grant additional time: first, Marinos had been sick; and second, the firm needed its . bookkeeper and accountant to submit the requested documents. The bookkeeper was needed for the Forms 941, Employer's Quarterly Federal Tax Return, and the accountant for the firm's income tax returns and for the f inancial inf ormation.47 7 7 C' . The Appeals Office was seemingly unswayed by these reasons for granting additional time. The refusal to extend the. deadline further, the firm argues, resulted in being unable to provide the requested documents. In our view, however, Marinos was to blame for the firm's failure because he did not take steps to ensure that correspondence from the IRS would be processed while he was on vacation. He instructed his staff not to open any mail from the IRS. 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 Having represented the firm at a prior collection review hearing involving the establishment of an installment agreement, Marinos should have realized that it was possible that the Appeals Office would request documents from the firm as a precondition.for the consideration of an installment agreement. Under the circumstances, we do not hold that the length of the 14-day extension was an abuse of discretion on the part of the Appeals Office. In addition, the firm's failure to file the requested tax returns demonstrates that a remand of this case to the Appeals Office would be a futile action. The firm argues that it did not file the returns because it knew that, as of January 20, 2011, the Appeals Office had already determined not to enter into an installment agreement.. But the firm knew that filing the retur would be of at least some assistance in resolving its tax proble$ with the IRS. The tax returns were also required by law. We will not order a remand of a collection review case when we think that a new hearing on remand would not achieve anything. 2 . Failure to extend hearing date to accommodate schedule of accountan. Although the Appeals Office's policy is 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 8 schedule hearings expeditiously, the scheduling of the collection review hearing should take into account the work schedule of the taxpayer and those assisting the taxpayer. The firm advised the Appeals Office that its accountant could not appear on January 20, 2011. The Appeals Office held the teleconference on that date anyway. We consider whether this decision was an abuse of discretion. We are convinced that the presence of the accountant at the teleconference would not have achieved anything. The firm has thus far refused to file the requested tax returns, a precondition imposed by the Appeals Office for the consideration of an installment agreement. Furthermore, even at trial the firm failed to demonstrate any errors related to the proposed levy, including the miscalculation of the amount of unpaid tax. The Appeals Office's failure to accommodate the schedule of the accountant was not an abuse of discretion. Furthermore, we do not believe that the presence of the accountant at a new hearing on remand would achieve a different result. We decline to order such a remand. 4 , 3. Application (Crediting) of Payments In its request for a hearing, the firm attached two notices of levy showing account balances 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 9 for periods other than those at issue. At the collection review hearing the firm told the Appeals Office that it did not believe that several $1,500 installment paymen had been properly credited the two quarters at issue. The IRS contends that the firm did not properly raise the issue of crediting before the Appeals Office. We need not resolve whether the issue was properly raised. Even if crediting was properly raised, the firm was given the opportunity at trial to present evidence as to why any payments were not properly credited to the two quarters at issue. The firm presented no evidence on this issue. For example, it did not introduce the installment agreement, which could have contained instructions to the IRS on how to apply the installment payments, d$r-, The IRS counsel presented records showing how the IRS had applied payments that it had received from the firm for various quarters. Nothi $n these record -- r in the entire trial recor -- hows that there was a miscrediting of payments. Therefore, we hold that there was no error in the determination of the Appeals Office regarding the application of payments to the two quarters at issue. We reach this conclusion whether we apply a de novo or abuse of Heritage Reporting Corporation (202) 628-4888 1 discretion standard of review. 2 4------ 4 . Re as onable Caus e 10 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The firm contends that it had reasonable cause for failing to pay the employment taxes that the IRS seeks to collect by levy, and that therefore the firm is not liable for failure to pay penalties that are also part of the amounts sought to be collected by levy. The IRS does not contend that the firm was barred from contesting the penalties with the Appeals Office. However, the IRS contends that the firm presented so little information to the Appeals Office that it is now barred from contesting penalties at the trial level. Even if the firm is permitted to sentent-9- the penalties at the trial level, we sustain the Appeals Office's determination. The standard for evaluating the firm's claim of reasonable cause are discussed in Concert Staging Inc. v. Commissioner, T.C. Memo. 2011-231, 2011 Tax Ct. Memo LEXIS 225. Reasonable cause for failing to pay a tax exists only if the failure to pay occurred despite the exercise by the taxpayer of ordinary care and prudence. Id. at *13. Thus, it is not enough that the taxpayer was unable to pay. At trial Marinos testified that the firm could not pay its taxes, but did not explain how its 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 failure to pay occurred despite the exercise of ordinary care and prudence. On a preponderance of the evidence, we find that the firm did not exercise ordinary care and prudence. We therefore hold that the Appeals Office did not err in refusing to abate penalties. In sustaining the determination of the Appeals Office, we have considered all the firm's arguments. To the extent not discussed.here, we conclude they are irrelevant, moot, or without merit. To reflect the foregoing, an appropriate decision will be entered for-K'espondent. This concludes the Court's Oral Findings of Fact and Opinion in this case. The Court is adjourned. (Whereupon at 5:22 p.m., the bench opinion in the above-entitled matter was concluded.) // // // // // // // // Heritage Reporting Corporation (202) 628-4888