t c memo united_states tax_court tomoko homza petitioner v commissioner of internal revenue respondent docket nos 10719-06l 3494-07l filed date tomoko homza pro_se terry serena for respondent memorandum opinion chiechi judge the case at docket no 10719-06l is before the court on respondent’s motion for summary_judgment and for imposition of sanctions under sec_6673 the case at docket 1all section references are to the internal_revenue_code in effect at all relevant times all rule references are to the tax_court rules_of_practice and procedure no 3494-07l is before the court on respondent’s motion for summary_judgment we shall refer collectively to respondent’s motion for summary_judgment and for imposition of sanctions under sec_6673 and respondent’s motion for summary_judgment as respondent’s motions we shall grant each of respondent’s motions background the record establishes and or the parties do not dispute the following petitioner’s address shown in the petition in each of these cases was in lewis center ohio case at docket no 10719-06l petitioner’s taxable years and petitioner did not file a federal_income_tax tax_return return for any of her taxable years and respondent prepared a substitute for return for each of those years respondent issued to petitioner notices of deficiency with respect to her respective taxable years and which she received petitioner did not file a petition with the court with respect to those notices consequently respondent assessed on the dates indicated the following tax additions to tax and interest as provided by law for petitioner’s taxable years and year assessment_date tax dollar_figure big_number big_number sec sec additions to tax under sec_6654 interest dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure a dollar_figure dollar_figure dollar_figure a dollar_figure dollar_figure dollar_figure we shall refer to any such unpaid assessed amounts with respect to petitioner’s respective taxable years and as well as interest as provided by law accrued thereafter as petitioner’s unpaid liability petitioner’s unpaid liability and petitioner’s unpaid liability respectively on date respondent issued to petitioner respective notices of balance due with respect to petitioner’s unpaid liability and petitioner’s unpaid liability on date respondent issued to petitioner a notice of balance due with respect to petitioner’s unpaid liability on date respondent issued to petitioner a final notice_of_intent_to_levy and notice of your right to a hearing notice_of_intent_to_levy with respect to petitioner’s unpaid liability notice_of_intent_to_levy with respect to peti- tioner’s unpaid liability on date respondent issued to petitioner a notice_of_federal_tax_lien filing and your right to a hearing under sec_6320 notice of tax_lien with respect to petitioner’s unpaid liability petitioner’s unpaid liability and petitioner’s unpaid liability notice of tax_lien with respect to petitioner’s unpaid liabilities for and on date petitioner timely submitted to respon- dent form request for a collection_due_process_hearing form regarding the notice_of_intent_to_levy with respect to petitioner’s unpaid liability and the notice of tax_lien with respect to petitioner’s unpaid liabilities for and petitioner included as part of that form certain documents that contained statements contentions arguments and or requests that the court finds to be frivolous and or groundless we shall refer to petitioner’s form and those documents as petitioner’s date form in petitioner’s date form petitioner indicated her disagreement with the notice_of_intent_to_levy with respect to petitioner’s unpaid liability and the notice of tax_lien with respect to petitioner’s unpaid liabilities for and and requested a hearing with respondent’s appeals_office appeals_office on date a settlement officer with the appeals_office settlement officer who was assigned petitioner’s febru- ary form first settlement officer sent to petitioner a letter acknowledging receipt of that form that letter stated in pertinent part we have received your request for a collection_due_process cdp hearing the issues you raised in your request for a hearing are issues that the courts have determined to be frivolous or groundless the appeals_office does not provide an in-person hear- ing if the issues you wish to discuss are frivolous or groundless however we can hold the hearing by tele- phone or you can raise relevant issues regarding the filing of a notice_of_federal_tax_lien and the proposed levy by written correspondence if you are interested in having an in-person hearing you must be prepared to discuss issues relevant to paying your tax_liabilities for the periods listed above these include offering other ways to pay the taxes in the meantime i have scheduled a telephone hearing for you on date pincite a m on date petitioner sent to the first settlement officer a document entitled declaration and administrative notice and certain exhibits attached thereto which petitioner represented consisted of pages petitioner’s first date declaration on the same date petitioner sent to the first settlement officer another document entitled declaration and administrative notice and certain exhibits attached thereto which petitioner represented consisted of pages petitioner’s second date declaration petitioner’s first date declaration and petitioner’s second date declara- tion each contained statements contentions arguments and or requests that the court finds to be frivolous and or groundless on date petitioner sent to the first settlement officer another document entitled declaration and administrative notice and certain exhibits attached thereto which petitioner represented consisted of pages petitioner’s first date declaration on the same date petitioner sent to the first settlement officer another copy of that document and certain exhibits attached thereto which petitioner represented consisted of pages petitioner’s second date declara- tion petitioner’s first date declaration and peti- tioner’s second date declaration each contained state- ments contentions arguments and or requests that the court finds to be frivolous and or groundless on date the appeals_office issued to petitioner a notice_of_determination concerning collection action s under sec_6320 and sec_6330 notice_of_determination with respect to petitioner’s taxable years and notice_of_determination with respect to petitioner’s taxable years and that notice stated in pertinent part the determination of the appeals_office is that the filing of a notice_of_federal_tax_lien by the irs was appropriate and that it should not be withdrawn we have further determined that it is appropriate for the irs to collect the unpaid taxes for the period by levy on your property or rights to property the notice_of_determination with respect to petitioner’s taxable years and included an attachment that stated in pertinent part summary and determination the taxpayer requested a hearing with the appeals_office under internal_revenue_code irc sec_6320 relating to a filed notice_of_federal_tax_lien the notice of lien and under sec_6330 relating to a notice_of_intent_to_levy the levy notice the determination of the appeals_office is that the notice of lien should not be withdrawn and that collection of the unpaid taxes for the period by levy is neces- sary and appropriate background the taxpayer did not voluntarily file form sec_1040 for any of the periods as a result the irs prepared the returns under the authority of sec_6020 the irs then made deficiency assessments which remain unpaid the taxpayer did not petition the tax_court for a re-determination of any of the defi- ciencies no payments have been made by the taxpayer the taxpayer has additional unpaid income_tax liabili- ties for the and periods form sec_1040 for these periods were also prepared by the irs under the authority of sec_6020 the taxpayer has not filed an income_tax return for the or periods income information available to the irs reveals that she had income sufficient to require her to file income_tax returns for those peri- ods discussion and analysi sec_1 verification of legal and procedural requirements the information obtained by the appeals_office provides verification that all statutory regulatory and administrative requirements were met before the notice of lien was filed and before the levy notice was mailed to the taxpayer assessments were made on the periods in accordance with sec_6201 there was an unpaid balance due for each period when the notice of lien was filed and when the levy notice was issued sec_6303 provides that the irs shall as soon as practicable and within days after the making of an assessment give notice to the taxpayer stating the amount and demanding payment the notice required by sec_6303 was timely issued to the taxpayer on each of the periods sec_6321 provides a statutory lien when a taxpayer neglects or refuses to pay a tax_liability after notice_and_demand is provided under sec_6303 sec_6320 requires that the irs give notice in writing within five days after the filing of a notice of lien of the taxpayer’s right to request a hearing before the office of appeals the taxpayer must request a hearing during the day period beginning on the day after the five-day period described above a notice of lien was filed on date that included the and periods the notice required by sec_6320 notice was timely mailed to the taxpayer on date the taxpayer submitted form request for a collection_due_process_hearing on date which is within the statutory 30-day period sec_6330 states that no levy may be made until days after the irs provides written notice to a taxpayer of the opportunity for a hearing with the irs office of appeals sec_6330 requires that the taxpayer request a hearing within the 30-day period a levy notice was sent to the taxpayer by certified mail on date that included only the period the taxpayer submitted form on date which is within the statutory 30-day period sec_6330 allows the taxpayer to raise any relevant issue relating to the unpaid tax or the proposed levy at the hearing the issues raised by the taxpayer are addressed below the appeals employee has had no prior involvement with the periods either in a previous appeals hearing or in compliance activities issues raised by the taxpayer the taxpayer raised the following issues in an attachment to form and in subsequent correspondence to the appeals_office a hearing was held with the taxpayer by telephone on date all irs documents are mathematically incorrect consideration of the issue by the appeals_office the appeals_office does not agree with the taxpayer’s position she did not provide any further explanation at the hearing she did not identify the irs documents that allegedly contain errors she did not identify what mathematical errors exist and presented no evidence to support her allegation all irs data and information shown on received irs documents has been successfully rebutted and or proven to be not applicable to me the irs is incorrectly processing and inappro- priately using their documents policies and practices deceptively consideration of the issue by the appeals_office the taxpayer did not further explain this issue at the hearing it would be mere speculation for the appeals_office to determine what her point is nevertheless the appeals_office has determined that this issue as stated is not relevant to the unpaid tax the notice of lien or the proposed levy the irs has presented their incorrectly processed and unenforceable documents to third parties who are now complicit with the irs in their actions taken to date i have notified these third parties as to their liability in this matter consideration of the issue by the appeals_office the taxpayer did not clarify this issue at the hearing it is unknown what documents or third parties she has referenced further she did not identify what law regulation or procedure has been violated the appeals_office believes that this issue is not relevant to the unpaid tax the notice of lien or the proposed levy the irs has attempted to utilize numerous irs codes which have no applicability to me i have legally documented and proven my exempt status each and every irs notice has been legally rebutted and or responded to in a timely and proper manner consideration of the issue by the appeals_office the taxpayer did not further explain this issue at the hearing the appeals_office believes that the taxpayer’s claim of being exempt from federal income taxes is a frivolous position that warrants no further discussion i have never received a 90-day statutory_notice_of_deficiency signed by an authorized agent which is specific to me this makes sense because all legitimate irs documents indicate that i have never been validly or legally assessed which means there cannot be any penalty or interest charges which means there is no liability the irs’ incorrectly processed documentation has not adhered to all irs regulations and policies and therefore needs to be corrected immediately by an irs acknowledgment of my exempt status and an immediate reversal of all adverse irs actions consideration of the issue by the appeals_office the appeals_office disagrees with the taxpayer’s position that she did not receive a statutory_notice_of_deficiency for the periods irs transcripts for the periods indicate that the taxpayer did not respond to statutory notices of deficiency snd issued for each of the periods that is the taxpayer did not petition the united_states tax_court for a re-determination of the deficiency assessments and did not sign an agreement to the assessments after the snd were issued the transcripts further indicate that the snd for each period were mailed to the correct address moreover the taxpayer presented no evidence to raise any doubt as to whether or not she received the snd and did nor further discuss this issue at the hearing as stated above the appeals_office has verified that all legal and procedural requirements have been met in this case the taxpayer’s request for acknowledgment of her exempt status is a patently frivolous issue and need not be further discussed the taxpayer raised no challenge to the existence or amount of the underlying liability except to assert her claim of exempt status the taxpayer has not identified any items of income deduction or credit or the computations thereof that are incorrect i have never been provided with the specific taxing statute and implementing regulation that the irs legally relies upon to determine that i am a person liable for any specific tax i have provided legally documented and irrefutable evidence of my exempt status numerous times to appropriate irs agents and third parties consideration of the issue by the appeals_office the appeals_office believes that there is no statutory or regulatory requirement or any obligation on the part of the hearing officer to identify what statute makes the taxpayer liable for any specific tax furthermore the appeals officer is not required to prove at the hearing that the taxpayer is liable for the taxes once again the taxpayer’s claim of exempt status is a frivolous position the irs has again inappropriately provided my personal and private social_security data into a publicly displayed environment without my prior written and expressed consent with their incorrectly filed notice_of_federal_tax_lien this also opens a rather serious legal liability for the irs consideration of the issue by the appeals_office the taxpayer did not identify how when or where the irs made any unauthorized disclosure of her tax information the appeals_office believes that her suggestion that the filing of the notice of lien in the required public place of filing has violated her rights to privacy is entirely without merit she owes nothing as evidenced by forms forms are incorrect and should be corrected showing a correct balance of zero consideration of the issue by the appeals_office the appeals_office disagrees with the taxpayer’s position forms for each of the periods clearly show an unpaid balance owed the taxpayer has presented no evidence to show any irregularity in the assessment process the taxpayer did not demonstrate or explain how any incorrect entry on forms result in a finding that the balance of tax is zero the appeals_office believes that forms provide presumptive evidence that the assessments are correct absent any identification of an irregularity in the assessment process penalties shown on forms are not supported by any documented source evidence and therefore are invalid consideration of the issue by the appeals_office the appeals_office disagrees with the taxpayer’s position forms provide presumptive evidence that the penalties were properly assessed and no other source evidence is necessary to confirm a proper assessment the taxpayer presented no evidence to identify any irregularity in the assessment of any penalties the taxpayer raised no other issues relating to the unpaid taxes the notice of lien or the proposed levy and made no offers of collection alternatives the tax_court is empowered to impose monetary sanctions up to dollar_figure for instituting or maintaining an action before it primarily for delay or for taking a position that is frivolous or groundless pierson v commissioner t c no it is the view of the appeals_office that the positions the taxpayer has taken have no merit and are groundless and are intended solely to delay payment of taxes balancing the need for efficient collection with the taxpayer’s concern that the collection action be no more intrusive than necessary sec_6330 requires that the appeals officer consider whether any collection action balances the need for the efficient collection_of_taxes with the taxpayer’s legitimate concern that any collection action be no more intrusive than necessary the taxpayer did not indicate that the notice of lien or the proposed levy is unnecessarily intrusive furthermore the appeals_office believes that any concern the taxpayer may have about the intrusive- ness of the notice of lien or the proposed levy is not a legitimate concern she has demonstrated an intentional disregard for the filing of federal_income_tax returns and for the payment of federal income taxes she has acted upon a conscious and intentional plan to thwart the irs’ ability to enforce the federal tax laws against her her entire objective is to delay collection of any income taxes as long as possible the taxpayer has no intention of paying any federal income taxes willingly therefore the appeals_office believes that the notice of lien must remain filed with respect to the periods and that the irs has no choice but to collect the unpaid taxes for the period by levy on the taxpayer’s property or rights to property reproduced literally on date the court issued an order in which inter alia the court ordered petitioner to file a response to respondent’s motion for summary_judgment and for imposition of sanctions under sec_6673 in that order the court reminded petitioner about sec_6673 and admonished her that in the event that she advanced frivolous and or groundless state- ments contentions and arguments the court would impose a penalty not in excess of dollar_figure on her under that section on date petitioner submitted a document that the court had filed as petitioner’s motion to compel production of documents on date the court issued an order in which inter alia the court stated that some of the documents that petitioner seeks indicate that petitioner intends to advance frivolous and or groundless statements contentions and argu- ments in that order the court again reminded petitioner about sec_6673 and again admonished her that in the event that she advanced frivolous and or groundless statements conten- tions and or arguments the court would impose a penalty not in excess of dollar_figure on her under that section on date petitioner filed a response to respon- dent’s motion for summary_judgment and for imposition of sanc- tions under sec_6673 petitioner’s date re- sponse petitioner’s date response contains statements contentions arguments and or requests that the court finds to be frivolous and or groundless on date petitioner submitted a document that the court had filed as petitioner’s reply to respondent’s reply to petitioner’s response to respondent’s motion for summary_judgment petitioner’s first date reply petitioner’s first date reply contains statements contentions arguments and or requests that the court finds to be frivolous and or groundless case at docket no 3494-07l petitioner’s taxable_year petitioner did not file a return for her taxable_year respondent prepared a substitute for return for that year respondent issued to petitioner a notice_of_deficiency with respect to her taxable_year which she received petitioner did not file a petition with the court with respect to that notice consequently on date respondent assessed tax of dollar_figure additions to tax under sec_6651 and and of dollar_figure dollar_figure and dollar_figure respectively and interest as provided by law of dollar_figure we shall refer to any such unpaid assessed amounts with respect to petitioner’s taxable_year as well as interest as provided by law accrued there- after as petitioner’s unpaid liability on date respondent issued to petitioner a notice of balance due with respect to petitioner’s unpaid liability on date respondent issued to petitioner a notice_of_intent_to_levy with respect to petitioner’s unpaid liability notice_of_intent_to_levy with respect to petitioner’s unpaid liability on date petitioner timely submitted to respon- dent form regarding the notice_of_intent_to_levy with respect to petitioner’s unpaid liability petitioner’s date form in that form petitioner indicated her disagreement with that notice and requested a hearing with the appeals_office petitioner’s date form contained statements contentions and or arguments that the court finds to be frivolous and or groundless on date a settlement officer who was assigned petitioner’s date form second settlement officer sent to petitioner a letter acknowledging receipt of that form second settlement officer’s date letter that letter stated in pertinent part you requested a correspondence hearing this will be your primary opportunity to discuss with me the reasons you disagree with the collection action and or to discuss alternatives to the collection action the issues you raise in your cdp request are those that courts have determined are frivolous or appeals does not consider before you decide whether to petition a notice_of_determination you should know that the tax_court is empowered to impose monetary sanctions up to dollar_figure for instituting or maintaining an action before it primarily for delay or for taking a position that is frivolous or groundless 115_tc_576 forbes v commissioner t c memo dollar_figure penalty imposed aston v commis- sioner t c memo dollar_figure penalty im- posed on date in response to the second settlement officer’s date letter petitioner sent to the second settlement officer a letter in which she requested a copy of the complete administrative file not just the collection file petitioner’s date letter on date in response to petitioner’s date letter the second settlement officer sent to petitioner a letter second settlement officer’s date letter that letter stated in pertinent part i sent you a letter dated date offering you a correspondence hearing per your request you responded to the letter requesting a complete copy of the administrative file the appeals_office is not required to provide you with such a file please be advised that we will make a determination in the collection_due_process_hearing you requested by reviewing the collection administrative file and what- ever information you have already provided if you would like to provide information for our con- sideration please do so by date on date in response to the second settlement officer’s date letter petitioner sent to the second settlement officer a letter that letter stated in pertinent part i clearly must object to your denial of my right to review the entire administrative file clearly you are stating that you are biased and prejudicial by the mere fact that you will not review all the facts as they relate to this case on date the appeals_office issued to petitioner a notice_of_determination with respect to petitioner’s taxable_year notice_of_determination with respect to petitioner’s taxable_year that notice stated in pertinent part appeals’ determination is to sustain the proposed levy action the assessment at issue is valid and you have not offered a collection alternative before you decide whether to petition this notice_of_determination you should know that the tax_court is empowered to impose monetary sanctions up to dollar_figure for instituting or maintaining an action before it primarily for delay or for taking a position that is frivolous or groundless pierson v commissioner t c no it is our view that the positions you have taken have no merit and are groundless the notice_of_determination with respect to petitioner’s taxable_year included an attachment that stated in pertinent part summary and determination you requested a collection_due_process cdp hearing under internal_revenue_code irc section in response to a final notice notice_of_intent_to_levy and notice of your right to a cdp hearing your request for a cdp hearing was timely since it was received within the 30-day time period as set in the statute appeals’ determination is that the proposed levy action is appropriate for the reasons discussed below brief background the cdp_notice was for the unpaid income_tax_liability covering the period listed above the return was prepared under the internal revenue service’s substitute-for-return sfr procedures sec_6020 gives the irs authority to file a return if any person fails to file a return required by any internal revenue law or regulation a notice_of_intent_to_levy was issued to your current address on date the settlement officer sent you a letter dated date offering you a correspondence hearing per your request on form request for a collection_due_process_hearing discussion and analysis sec_6320 sec_6330 taken together require the service to a verify at the hearing that the requirements of legal and administrative procedures have been met b adequately review specific issues raised by a taxpayer at a hearing and c balance the needs of the service to efficiently collect the tax with the taxpayer’s expectation that the proposed actions be no more intrusive than necessary verification of legal and administrative procedural requirements n the assessment was made on the applicable due process notice periods per sec_6201 n the notice_and_demand for payment letter was mailed to your last_known_address within days of the assessment as required by sec_6303 n there was a balance due when the collection_due_process_notice was issued per sec_6322 and sec_6331 there remains an amount due and owing n sec_6331 provides that if any person liable to pay any_tax neglects or refuses to pay such tax within days after notice_and_demand for payment the secretary is authorized to collect such tax by levy on the person’s property n sec_6331 requires that the service notify a taxpayer at least days before a notice_of_levy can be issued the transcripts of the account and the administrative file show that this notice was mailed to you by certified mail n sec_6330 generally provides that no collection by levy may be made unless the commissioner notifies a taxpayer of the opportunity for an administrative review of the matter in the form of an appeals_office hearing and if dissatisfied with judicial review of the administrative determination a final notice notice_of_intent_to_levy and notice of your right to a hearing was sent to you by certified mail n you were given the opportunity to raise any relevant issues relating to the unpaid tax or the proposed levy action at the hearing in accordance with sec_6330 n the settlement officer requested and reviewed detailed computer transcripts of each of the years in question n the settlement officer was provided various documents from the administrative collection files and reviewed the provided information n it appears that the service met the requirements of all applicable laws regulations and administrative procedures during the assessment and collection phases of this investigation n the collection_period allowed by statute to collect these taxes had been suspended by the appropriate computer code for the periods at issue n this appeals employee has had no prior involvement with the case concerning the applicable tax period issues raised by the taxpayer challenges to the existence or amount of the liability issue in your appeal you stated you never received a legally valid statutory_notice_of_deficiency and no evidence of a signed sfr per the specific requirements of sec_6020 you stated the notice_of_intent_to_levy is unauthorized response appeals disagree s with your position sec_6020 gives the irs authority to file a return if any person fails to file a return required by any internal revenue law or regulation the settlement officer determined the issues you raised are frivolous and do not require a response the settlement officer sent you a letter dated date requesting you to provide form 433a collection information statement as well as filed signed copies of your returns for tax periods ending date and by date you responded with a letter dated date requesting appeals to provide you with the entire administrative file the settlement officer sent you another letter dated date explaining that appeals is not required to provide you with the entire administrative file the letter also requested you to provide information for consideration by date as of this date you have not provided the information requested collection alternatives offered by the taxpayer you offered no collection alternatives other issues raised by the taxpayer you raised no other non-frivolous issues balancing the need for efficient collection with taxpayer concerns that the collection action be no more intrusive than necessary the proposed levy is the appropriate action given the facts and circumstance of this particular case in balancing the least intrusive method of collection with the need to efficiently collect taxes the balance favors the proposed levy as you presented no informa- tion or collection alternative that would weigh against the need for efficient collection the proposed levy is sustained on date the court issued an order in which inter alia it ordered petitioner to file a response to respon- dent’s motion for summary_judgment in that order the court reminded petitioner about sec_6673 and admonished her that in the event that she advanced frivolous and or groundless statements contentions and arguments the court would impose a penalty not in excess of dollar_figure on her under that section on date petitioner submitted a document that the court had filed as petitioner’s motion to compel production of documents on date the court issued an order in which inter alia the court stated that some of the documents that petitioner seeks indicate that petitioner intends to advance frivolous and or groundless statements contentions and argu- ments in that order the court again reminded petitioner about sec_6673 and again admonished her that in the event that she advanced frivolous and or groundless statements conten- tions and or arguments the court would impose a penalty not in excess of dollar_figure on her under that section on date petitioner filed a response to respon- dent’s motion for summary_judgment petitioner’s date response petitioner’s date response contains statements contentions arguments and or requests that the court finds to be frivolous and or groundless on date petitioner submitted a document that the court had filed as petitioner’s reply to respondent’s reply to petitioner’s response to respondent’s motion for summary_judgment petitioner’s second date reply petitioner’s second date reply contains statements contentions arguments and or requests that the court finds to be frivolous and or groundless discussion the court may grant summary_judgment where there is no genuine issue of material fact and a decision may be rendered as a matter of law rule b 98_tc_518 affd 17_f3d_965 7th cir we conclude that there are no genuine issues of material fact regarding the questions raised in respondent’s motion petitioner did not file a petition with the court with respect to the respective notices of deficiency that respondent issued to her regarding her taxable years through where as is the case here the validity of the underlying tax_liability is not properly placed at issue the court will review the determination of the commissioner of internal revenue for abuse_of_discretion 114_tc_604 114_tc_176 as was true of petitioner’s position before the appeals_office we find that petitioner’s position in these cases is frivolous and groundless based upon our examination of the entire record before us we find that respondent did not abuse respondent’s discretion in making the determinations in the notice_of_determination with respect to petitioner’s taxable years and and the notice_of_determination with respect to petitioner’s taxable_year in respondent’s motion for summary_judgment and for imposi- tion of sanctions under sec_6673 in the case at docket no 10719-06l respondent requests that the court require petitioner to pay a penalty to the united_states pursuant to sec_6673 although respondent does not ask the court in respondent’s motion for summary_judgment in the case at docket no 3494-07l to impose a penalty under that section the court considers sua sponte whether it should impose such a penalty on petitioner sec_6673 authorizes the court to require a tax- payer to pay to the united_states a penalty in an amount not to exceed dollar_figure whenever it appears to the court inter alia that a proceeding before it was instituted or maintained primarily for delay sec_6673 or that the taxpayer’s position in such a proceeding is frivolous or groundless sec_6673 in the notice_of_determination that respondent issued to petitioner in each of these cases respondent warned petitioner that the court is empowered to impose a penalty in an amount not to exceed dollar_figure for instituting and maintaining an action before it primarily for delay or for advancing a position that is frivolous or groundless in various orders that the court issued in each of these cases the court reminded petitioner about sec_6673 and admonished her that in the event that she advanced frivolous and or groundless statements contentions and or arguments the court would impose a penalty not in excess of dollar_figure on her under that section despite the admonitions in the notice_of_determination issued in each of these cases and in the court’s various orders issued in each of these cases we have found that petitioner advanced frivolous and or groundless statements contentions arguments and requests in petitioner’s date re- sponse and petitioner’s first date reply in the case at docket no 10719-06l and petitioner’s date response and petitioner’s second date reply in the case at docket no 3494-07l as a result petitioner has caused the court to waste its limited resources we believe that petitioner instituted and maintained these cases primarily for delay we have found that petitioner’s position in these cases is frivolous and groundless we shall impose a penalty on petitioner pursuant to sec_6673 in the case at docket no 10719-06l and the case at docket no 07l in the amounts of dollar_figure and dollar_figure respectively we have considered all of petitioner’s statements conten- tions arguments and requests that are not discussed herein and to the extent we have not found them to be frivolous and or groundless we find them to be without merit and or irrelevant on the record before us we shall grant each of respondent’s motions to reflect the foregoing appropriate orders and decisions for respondent will be entered in docket no 10719-06l and docket no 3494-07l


internal_revenue_service number release date index number ------------------------------------- ---------------------------------- ---------------------------------- ------------------------------------------------------ legend department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------- id no ---------------- telephone number -------------------- refer reply to cc psi b01 plr-116291-14 date september x ------------------------------------------------- ----------------------------------- country date date --------------------------- ------------------ -------------------------- dear ----------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to file an election under sec_301_7701-3 to be treated as a disregarded_entity for federal tax purposes facts according to the information submitted x was formed under the laws of country x represents that it is a foreign eligible_entity eligible to elect to be disregarded as a separate_entity for federal tax purposes x intended to elect to be treated as a disregarded_entity for federal tax purposes effective date however x inadvertently failed to timely file form_8832 entity classification election x represents that it acted in good_faith and reasonably further x represents that the interests of the government will not be prejudiced for all taxable years affected by the election including tax years up through date by granting the relief sought law and analysis plr-116291-14 sec_301_7701-3 provides in part that a business_entity that is not classified as a corporation under sec_301_7701-2 or an eligible_entity can elect its classification for federal tax purposes an eligible_entity with a single owner can elect to be classified as an association or to be disregarded as an entity separate from its owner sec_301_7701-3 provides guidance on the classification of a foreign eligible_entity for federal tax purposes generally a foreign eligible_entity is treated as an association if all members have limited_liability unless the entity makes an election to be treated otherwise sec_301_7701-3 provides that an entity classification election or change in entity classification must be filed on form_8832 and can be effective up to days prior to the date the form is filed or up to months after the date the form is filed sec_301_7701-3 states in part if an eligible_entity makes an election to change its classification the entity cannot change its classification by election again during the sixty months succeeding the effective date of the election an election by a newly formed eligible_entity that is effective on the date of formation is not considered a change for purposes of this paragraph c iv sec_301_7701-3 provides that such an election must be signed by either a each member of the electing entity who is an owner at the time the election is filed or b any officer manager or member of the electing entity who is authorized under local law or the entity’s organization documents to make the election and who represents to having such authorization under penalties of perjury sec_301 c iii provides in part if an election is made to change the classification of an entity each person who was an owner on the date that any transactions under sec_301_7701-3 are deemed to occur and who is not an owner at the time the election is filed must also sign the election sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-1 defines the term regulatory election as an election whose due_date is prescribed by a regulation published in the federal_register or a revenue_ruling revenue_procedure notice or announcement published in the internal_revenue_bulletin sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make the election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides the standards the commissioner will use to determine whether to grant an extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 under sec_301_9100-3 a plr-116291-14 request for relief will be granted when the taxpayer provides evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the granting relief will not prejudice the interests of the government conclusion based solely on the information submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied as a result x is granted an extension of time of days from the date of this letter to file a form_8832 entity classification election with the appropriate service_center to elect to be treated as a disregarded_entity for federal tax purposes effective date a copy of this letter should be attached to the form_8832 a copy is enclosed for that purpose this ruling is contingent on the owner of x filing within days of this letter all required returns for all open years consistent with the requested relief being effective date these returns must include but are not limited to forms information_return of u s persons with respect to foreign disregarded entities a copy of this letter should be attached to any such returns except as specifically set forth above no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent pursuant to a power_of_attorney on file with this office a copy of this letter is being sent to x’s authorized representative sincerely laura c fields laura c fields senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy of this letter for sec_6110 purposes cc


internal_revenue_service number release date index number ------------------------------------ ------------------------------------------------------------ ------------------------------------------------------ -------------------- -------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact --------------------- id no ---------------- telephone number ------------------ refer reply to cc psi b3 plr-140104-13 date date dear ------------------ x a ----------------------------------------- ------------------------- state ------------ date ------------------ date --------------------- year ------ year ------ year ------ dear ------------------ this letter responds to a letter dated date submitted on behalf of x by its authorized representative requesting a ruling that x be granted an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an election under sec_754 of the internal_revenue_code code for year plr-140104-13 facts x is a limited_partnership organized under the laws of state on date on date a a partner of x died x intended to make an election under sec_754 for year the year in which a died x’s accountant who was responsible for filing the sec_754 election for year inadvertently failed to file the election x’s partnership returns including any amended returns for year year and year were timely filed and reflected adjustments to the basis of x’s property as if a sec_754 election was in effect law sec_743 provides in pertinent part that in the case of a transfer of an interest in a partnership by sale_or_exchange or upon the death of a partner a partnership with respect to which an election provided in sec_754 is in effect shall increase the adjusted_basis of the partnership property by the excess of the basis to the transferee partner of his interest in the partnership over his proportionate share of the adjusted_basis of the partnership property or decrease the adjusted_basis of the partnership property by the excess of the transferee partner’s proportionate share of the adjusted_basis of the partnership property over the basis of his interest in the partnership sec_743 further provides that such increase or decrease shall constitute an adjustment to the basis of partnership property with respect to the transferee partner only sec_743 provides that the allocation_of_basis among partnership properties where sec_743 is applicable shall be made in accordance with the rules provided in sec_755 sec_754 provides that if a partnership files an election in accordance with regulations prescribed by the secretary the basis of partnership property is adjusted in the case of a transfer of a partnership_interest in the manner provided in sec_743 sec_1_754-1 of the income_tax regulations provides that an election under sec_754 and sec_1_754-1 to adjust the basis of partnership property under sec_734 and sec_743 with respect to a distribution_of_property to a partner or a transfer of an interest in a partnership shall be made in a written_statement filed with the partnership return for the taxable_year during which the distribution or transfer occurs for the election to be valid the return must be filed not later than the time prescribed by sec_1 e including extensions thereof for filing the return for that taxable_year sec_301_9100-1 provides that the commissioner may grant a reasonable extension of time to make a regulatory or a statutory election but no more than six months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-1 provides that a regulatory plr-140104-13 election includes an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards the commissioner will use to determine whether to grant an extension of time to make a regulatory election sec_301_9100-2 provides the rules governing automatic extensions of time for making certain elections sec_301_9100-3 provides extensions of time for making regulatory elections that do not meet the requirements of sec_301_9100-2 sec_301_9100-3 provides that requests for relief subject_to sec_301_9100-3 will be granted when the taxpayer provides the evidence including affidavits described in sec_301_9100-3 to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and the grant of relief will not prejudice the interests of the government conclusion based on the facts submitted and representations made we conclude that the requirements of sec_301_9100-1 and sec_301_9100-3 have been satisfied accordingly x is granted an extension of time of days from the date of this letter to make an election under sec_754 effective for its year taxable_year and thereafter the election should be made in a written_statement filed with the appropriate service_center for association with x’s year tax_return a copy of this letter should be attached to the statement filed except as specifically set forth above we express or imply no opinion concerning the federal tax consequences of the facts described above under any other provision of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent plr-140104-13 in accordance with a power_of_attorney on file with this office we are sending a copy of this letter to your authorized representative the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the ruling_request it is subject_to verification on examination sincerely associate chief_counsel passthroughs and special industries by __________________________ mary beth carchia senior technician reviewer branch office of the associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


internal_revenue_service number release date index number ------------------------------ ---------------------- ---------------------------------------- department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------------- id no ---------------- ----------------- telephone number ---------------------- refer reply to cc psi b04 plr-123601-16 date date re ---------------------------------------- legend ---------------------------------------------------- ----------------------------- settlor children ---------------------------------------- ----------------------------------------- trust law firm date date date date year --------------------------------------------------------------------------- ---------------------------------------- ---------------------- ------------------------ -------------------- -------------------- ------- dear ------------ this letter responds to your authorized representative's letter dated date requesting an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-1 of the procedure and administration regulations to allocate settlor’s gst_exemption to a transfer to a_trust facts the facts and representations submitted are summarized as follows on date settlor created and funded trust an irrevocable_trust for the benefit of children and settlor’s descendants settlor also made transfers to trust on date and later in the same year on date date is in year a year prior to date settlor failed to file a timely form_709 united_states gift and generation-skipping_transfer_tax return to report the date sec_2 and transfers because settlor relied on tax plr-123601-16 professionals for estate_planning advice and to prepare all necessary tax returns the failure to allocate settlor’s gst_exemption was discovered by law firm when reviewing the gst status of trust a form_709 was filed on date by settlor and an election under sec_2513 to split the gift was made it is represented that no additions constructive or actual were made to trust after date and that settlor has sufficient gst_exemption to allocate to the date sec_2 and transfers you request an extension of time pursuant to sec_2642 and sec_301_9100-3 to allocate settlor’s gst_exemption to the date sec_2 and transfers to trust that the gst_exemption allocated to the date sec_2 and transfers will be effective as of the date of the transfers law and analysis sec_2601 imposes a tax on every generation-skipping_transfer a generation- skipping transfer is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2602 provides that the amount of the tax imposed by sec_2601 is the taxable_amount multiplied by the applicable_rate sec_2641 defines the term applicable_rate with respect to any gst transfer as the product of the maximum_federal_estate_tax_rate and the inclusion_ratio with respect to the transfer sec_2642 provides that the inclusion_ratio with respect to any property transferred in a generation-skipping_transfer is the excess if any of over the applicable_fraction under sec_2642 the applicable_fraction is defined as a fraction the numerator of which is the amount of the gst_exemption allocated to the trust or to property transferred in a direct_skip and the denominator of which is the value of the property transferred to the trust or involved in the direct_skip reduced by the sum of any federal estate_tax or state death_tax actually recovered from the trust attributable to such property and any charitable deduction allowed under sec_2055 or sec_2522 with respect to such property sec_2631 as in effect for year provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed plr-123601-16 for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the generation-skipping_transfer_tax regulations provides in part that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provides in part that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 and such allocation will be effective on and after the date of such transfer sec_2642 provides that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute notice_2001_50 2001_2_cb_189 provides in part that under sec_2642 the time for allocating the gst_exemption to lifetime transfers is to be treated as if not expressly prescribed by statute and taxpayers may seek an extension of time to make an allocation described in sec_2642 or b under the provisions of sec_301_9100-3 sec_301_9100-1 provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the code except subtitles e g h and i sec_301_9100-3 provides that in general requests for extension of time for regulatory elections that do not meet the requirements of sec_301_9100-2 must be made under the rules of sec_301_9100-3 plr-123601-16 sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute in accordance with sec_2642 and notice_2001_50 taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore settlor is granted an extension of time of days from the date of this letter to allocate settlor’s available gst_exemption to the date sec_2 and transfers to trust the allocation will be effective as of the respective date of the transfers to trust and the value of the transfers to trust as determined for federal gift_tax purposes will be used in determining the amount of settlor’s gst_exemption to be allocated to trust this allocation should be made on an amended form_709 and filed with the cincinnati service_center at the following address internal_revenue_service cincinnati service_center - stop cincinnati oh a copy of this letter should be attached to the supplemental form sec_709 the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code plr-123601-16 in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely associate chief_counsel passthroughs special industries melissa liquerman melissa liquerman branch chief branch office of the associate chief_counsel passthroughs and special industries enclosures copy of this letter copy for sec_6110 purposes


id office uilc cca_2009043009154737 -------------- number release date from ------------------- sent thursday date am to -------------------- cc -------------------------------- subject re nbap issued to non-notice partners it depends on why they are non-notice partners if they have less than a one percent interest in a partnership with more than partners then we don't need to send them direct notice of the fpaa since they get such notice through the tmp see sec_6223 and e b i if they are non-notice partners because they hold an interest in the partnership through another passthrough_entity then we should send them the fpaa because they have been identified in accordance with sec_6223 and sec_301_6223_c_-1 entitling them to direct notice


number release date id office uilc cca_2010012117593232 -------------- from ---------------------- sent thursday date pm to ---------------------- cc subject re privacy_act issue we would probably say that it does but i would think that most congressional responses could be done without disclosure of documents if it's absolutely necessary maybe going back to the tp or having the congressman's office do so for more explicit authorization might not be a bad idea in this context documents are always potentially troublesome because of the possibility of their being misplaced inappropriately copied etc and most importantly separated from our transmittal so to be on the safe side try to make do without any disclosure of documents or if necessary try to get more explicit authorization hope this helps ------


internal_revenue_service number release date -------------------- ------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ----- ----------------- --------------------------- - department of the treasury washington dc third party communication none date of communication not applicable_person to contact -------------------- id no ------------- telephone number --------------------- refer reply to cc tege eb hw plr-119471-06 date date legend employer ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- ----------------------------- -------------------------------------------------------------- trust dear -------------- this responds to your letter of date and subsequent correspondence requesting rulings concerning the proper federal_income_tax treatment under sec_105 and sec_106 of the internal_revenue_code code of retiree health benefits provided to management employees their spouses and dependents you represent that employer established the trust for the benefit of eligible management employees their spouses and dependents trust funds are used to pay for retiree health benefits payable under the employer’s retiree health care policy the policy under the policy retiree health benefits are limited to management employees who meet certain service requirements retire on a voluntary basis and are covered by the employer’s health plan at anytime in the months preceding retirement eligible management employee upon reaching retirement an eligible management employee’s accumulated and unused sick and vacation_leave accrued on the date of plr-119471-06 retirement is paid into the trust and used for the payment of the premiums for the employer’s health policy and other health insurance covering the retiree his or her spouse and dependents including premiums under medicare you represent that once an eligible management employee reaches retirement retiree health coverage is automatic and mandatory for the retiree his or her spouse and dependents and that an eligible management employee cannot elect in or out of coverage if an eligible management employee dies before retirement and is survived by a spouse or dependents retiree health_insurance_coverage is extended to a surviving_spouse and any dependents at the time of the employee’s death after the death of the surviving_spouse or dependents the remaining value of the accumulated and unused sick and vacation_leave will be applied to any unreimbursed medical_expenses of the employee’s spouse or dependents incurred at any time in the months prior to the death of the employee’s spouse or dependents with any remaining balance being forfeited if the eligible management employee dies before retirement and is not survived by a spouse or any dependents then the accumulated and unused sick and vacation_leave will be applied to any unreimbursed medical_expenses of the employee incurred at any time in the months prior to the death of the employee with any remaining balance being forfeited you represent that under no circumstance may the retired eligible management employee or the retired eligible management employee’s spouse or dependents receive any unused amounts at any time in cash or other_benefits any amounts not applied to health insurance or to reimburse medical_expenses will be forfeited sec_61 of the code and sec_1_61-21 of the income_tax regulations provide that except as otherwise provided in subtitle a gross_income includes compensation_for services including fees commissions fringe_benefits and similar items sec_106 of the code provides that the gross_income of an employee does not include employer-provided coverage under an accident_or_health_plan sec_1_106-1 of the regulations states that the gross_income of an employee does not include contributions which his employer makes to an accident_or_health_plan for compensation through insurance or otherwise to the employee for personal injuries or sickness incurred by the employee the employee’s spouse or the employee’s dependents as defined in sec_152 of the code the employer may contribute to an accident_or_health_plan either by paying the premium on a policy of accident_or_health_insurance covering one or more of the employees or by contributing to a separate trust or fund which provides accident or health benefits directly or through insurance to one or more of the employees however if the insurance_policy trust or fund provides other_benefits in addition to accident or health sec_106 applies only to the portion of the contributions allocable to accident or health benefits plr-119471-06 sec_105 provides that except as otherwise provided in sec_105 amounts received by an employee through accident_or_health_insurance for personal injuries or sickness shall be included in gross_income to the extent such amounts are attributable to contributions by the employer which were not includible in the gross_income of the employee or are paid_by the employer sec_105 states that except in the case of amounts attributable to and not in excess of deductions allowed under sec_213 relating to medical_expenses for any prior taxable_year gross_income does not include amounts referred to in subsection a if such amounts are paid directly or indirectly to the taxpayer to reimburse the taxpayer for expenses_incurred by the taxpayer for the medical_care as defined in sec_213 of the taxpayer or the taxpayer's spouse or dependents as defined in sec_152 sec_1_105-2 of the regulations provides that only amounts that are paid specifically to reimburse the taxpayer for expenses_incurred by the taxpayer for the prescribed medical_care are excludable from gross_income thus sec_105 does not apply to amounts that the taxpayer would be entitled to receive irrespective of whether or not the taxpayer incurs expenses for medical_care in situation of revrul_2005_24 2005_16_irb_892 an employer sponsors a reimbursement plan that reimburses the substantiated medical_care expenses of both current and former employees including retired employees their spouses and dependents under no circumstances may an employee receive taxable or nontaxable benefits under the plan other the reimbursement of medical_care expenses_incurred by the employee and his or her spouse and dependents when an employee retires the employer automatically and on a mandatory basis as determined under the plan contributes an amount to the reimbursement plan equal to the value of all or a portion of the retired employee’s accumulated unused vacation and sick leave under no circumstances may the retired employee or the retired employee’s spouse or dependents receive any of the designated amount in cash or other_benefits the ruling concludes that coverage and reimbursements made under the plan described in situation are excludable from gross_income under sec_106 based on the information submitted and the representations made we conclude that for periods on or after date amounts paid to the trust and amounts paid from the trust which are used exclusively to pay for health insurance premiums and other medical_expenses of retired eligible management employees and retired eligible management employees’ spouses and dependents as defined in sec_152 determined without regard to sec_152 b and d b are excludable from gross_income under sec_105 and sec_106 of the code the trust will be classified as a_trust within the meaning of sec_301_7701-4 because the principal and income of the trust may be applied in plr-119471-06 discharge of legal obligations of the employer under sec_677 employer shall be treated as the owner of the trust accordingly under sec_677 there shall be included in computing employer’s taxable_income and credits those items of income deductions and credits against tax of the trust subject_to the provisions of the code applicable to sec_501 organizations no opinion is expressed concerning whether the policy satisfies the nondiscrimination requirements of sec_105 of the code and sec_1_105-11 of the regulations in addition no opinion is expressed concerning the federal tax consequences of the policy under sec_83 sec_409a sec_457 or any other provision of the code other than those specifically stated herein this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely harry beker chief health and welfare branch office of division counsel associate chief_counsel tax exempt government entities


department of the treasury washington dc third party communication none date of communication not applicable_person to contact ------------------------ id no ------------- telephone number --------------------- refer reply to cc psi b02 plr-136428-08 date date internal_revenue_service number release date index number ------------------------------ ---------------------------- ---------------------------------- ------------------------------ legend x ----------------------------- ------------------------------------ state -------- date ---------------------- dear -------------- this responds to a letter dated date and subsequent correspondence submitted on behalf of x requesting relief under sec_1362 of the internal_revenue_code the information submitted states that x was formed on date under the laws of state it was intended for x to be an s_corporation effective date however no form_2553 election by a small_business_corporation was timely filed for x sec_1362 provides that a small_business_corporation may elect to be an s_corporation sec_1362 provides the rule on when an s election will be effective sec_1362 provides in relevant part that if an s election is made within the first two and one-half months of a corporation’s taxable_year then the corporation will be treated as an s_corporation for the year in which the election is made under sec_1362 however if an s election is made after the first two and one-half months of a corporation’s taxable_year then that corporation will not be treated as an s_corporation until the taxable_year after the year in which the s election is filed plr-136428-08 sec_1362 provides that if a an election under sec_1362 is made for any taxable_year after the date prescribed by sec_1362 for making such election for such taxable_year or no such election is made for any taxable_year and b the secretary determines that there was reasonable_cause for the failure to timely make such election then the secretary may treat such an election as timely made for such taxable_year based solely on the facts submitted and the representations made we conclude that x has established reasonable_cause for failing to make a timely election to be an s_corporation effective date accordingly provided that x makes an election to be an s_corporation by filing a complete form_2553 effective date along with a copy of this letter with the appropriate service_center within days from the date of this letter then such election will be treated as timely made for date except as expressly provided herein no opinion is expressed or implied concerning the federal_income_tax consequences of the facts described above under any other provision of the code including whether x was or is a small_business_corporation under sec_1361 of the code this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representative sincerely bradford r poston senior counsel branch office of associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


number release date id office uilc cca_2010060716083241 ----------------------------- from --------------- sent monday june pm to ----------------------------- cc --------------------------------------- subject re question -------- --my answer is that state law does not dictate application of federal employment_taxes while it is relevant to look at the type of entity involved and how they conduct their business and state law provisions may shed some light on those facts the state laws do not dictate whether the workers are employees or not if you want to discuss a specific case please let me know


t c memo united_states tax_court khadija duma petitioner v commissioner of internal revenue respondent docket no filed date khadija duma petitioner anne w bryson douglas dahl and scott hovey for respondent memorandum findings_of_fact and opinion gustafson judge this case is before the court on petitioner khadija duma’s petition pursuant to sec_6213 1except as otherwise noted all section references are to the internal_revenue_code u s c and all rule references are to the tax_court rules_of_practice and procedure for redetermination of her federal_income_tax deficiencies for and which the internal_revenue_service irs determined to be as follows additions to tax_deficiency sec_6651 sec_6651 sec_6654 dollar_figure big_number dollar_figure big_number dollar_figure big_number dollar_figure year respondent has conceded certain issues that contributed to those deficiencies and ms duma has conceded others so that the remaining issues we must decide are whether in ms duma received wages from her employer in the amount of dollar_figure rather than dollar_figure as she alleges we find that she received wages in the larger amount 2respondent concedes that ms duma is entitled to mortgage interest deductions of dollar_figure in and dollar_figure in that she is not liable for the sec_6654 estimated_tax addition_to_tax for that she paid dollar_figure in student_loan interest for and that in she received social_security_benefits of dollar_figure not the dollar_figure determined in the notice_of_deficiency nor a larger amount of dollar_figure which respondent’s records allegedly stated 3ms duma does not dispute that in she received dollar_figure in interest_income from her credit_union that in she received dividends of dollar_figure that in she received pension annuity payments of dollar_figure from fidelity investments that in she received wages of dollar_figure from her employer and that in she received disability_income of dollar_figure from the social_security administration at one point during the pendency of this case ms duma expressed an intention to prove medical_expenses related to her disability for which she would be entitled to claim itemized_deductions but at trial she stated that she would not attempt such proof whether in ms duma received dollar_figure in proceeds from sales of stock rather than dollar_figure as she alleges we find that she received proceeds in the larger amount whether ms duma filed tax returns for and as she alleges we find that she did not file returns and that she is therefore liable for the failure-to-file addition_to_tax under sec_6651 for both years whether ms duma is liable for the addition_to_tax for failure to pay under sec_6651 we find that she is liable for both years whether ms duma is liable for the addition_to_tax for failure to pay estimated_tax under sec_6654 for we find that she is findings_of_fact the parties have stipulated some of the facts and we incorporate by this reference the stipulation of facts filed date and the attached exhibits at the time ms duma filed her petition she resided in washington d c ms duma’s employment before and during the years in issue and ms duma was employed by federal_national_mortgage_association fnma commonly called fannie_mae at some point in the years in issue she became disabled and stopped working she testified about a particular date in being her last day but she presented no corroborating evidence and fnma reported paying wages to her in we are therefore unable to find precisely when she stopped working compensation paid_by fnma fnma paid ms duma wages and other_benefits for her work fnma direct-deposited her wages into her account at the fnma employees’ credit_union pursuant to her employment arrangement with fnma ms duma was entitled to and eventually received first short-term disability std and then long-term disability ltd benefits the record does not show the dates that she received such payments ms duma did not offer plan documents for either of these benefits but she testified that fnma itself paid the std benefits and that a third party unum paid the long-term the record does not include reliable information about the nature or source of the payments fnma also had a program by which it lent money to employees for home purchases and then forgave the loans ms duma did not present any documentation to describe the terms of this program she testified that fnma made such a loan to her that she had not reported the loan proceeds as income that fnma had later 4ms duma testified that she received short-term disability benefits from her last day at fnma in through some time in and implied that the fnma payments reported as wages in may have been disability payments but she did not introduce any further evidence to clarify this question forgiven the loan pursuant to the program and that she did not report the forgiven amount as income she initially testified that the forgiveness occurred in the years in issue but then testified that it must have been in a later year the record does not show whether in or fnma forgave loans it had made to ms duma fnma paid compensation to ms duma in the amounts of dollar_figure for and dollar_figure for ms duma did not prove her fnma wage amount to be lower than dollar_figure in and she did not dispute the dollar_figure amount in fnma reported those amounts to the irs and the irs used those figures in determining ms duma’s income_tax_liability stock benefit payments from equiserve ms duma received an fnma stock benefit through what was apparently an employee stock_option plan she presented no plan documents or other written explanation of this benefit she testified that shares awarded through this plan could be taken either as stock or as cash at some point or points during and she received a stock benefit and elected the cash_option when an employee elected the cash_option payments were made by equiserve inc which fnma had retained to manage the benefit in equiserve made four payments to ms duma in the amounts of dollar_figure dollar_figure dollar_figure and dollar_figure which totaled dollar_figure ms duma did not prove that her income in from this stock benefit was lower than dollar_figure equiserve reported those payments to the irs and the irs included that total in income when determining ms duma’s income_tax_liability ms duma’s filings with the irs the record does not show whether ms duma filed a return for the year immediately preceding the years in issue and there is some evidence that she did not do so the irs’s substitute for return for each of the years and contains an entry that reads prior year return on the due dates for the and returns at issue in this case--ie on date and 2005--ms duma left her home boarded a bus and rode to the local irs office where she completed and filed a form to receive an automatic four-month extension to file her tax_return the irs’s records show timely filings of requests for extensions and thus corroborate ms duma’s testimony to this effect however ms duma did not prove by a preponderance_of_the_evidence that she filed her tax_return for or the irs’s records reflect no such filings and ms duma has no copy of the returns and no mailing receipt we find that she did not file a tax_return for or irs action when the irs did not receive returns for ms duma the irs prepared pursuant to sec_6020 a substitute for return sfr for each of the years and using the information provided to it by third-party payors the irs then issued to ms duma on date two statutory notices of deficiency--one each for the years and 2004--determining deficiencies in her income_tax for both those years and determining additions to tax for failure_to_file under sec_6651 for failure_to_pay_tax under sec_6651 and for failure to make estimated_tax payments under sec_6654 pretrial proceedings on date ms duma timely filed her petition commencing this case the case was set for trial at the calendar commencing eleven months later on date in washington d c but when ms duma appeared at that calendar call she requested a continuance so she could have more time to assemble additional information the court granted a continuance on date ms duma filed a bankruptcy petition in the u s bankruptcy court for the district of columbia and shortly thereafter proceedings in this case were stayed pursuant to u s c sec_362 on date the bankruptcy court granted ms duma a discharge and proceedings here resumed on date on date the court issued its notice that this case was set for trial at a calendar commencing five months later on date--ie two years and five months after ms duma first filed her petition--and issued its standing_pretrial_order directing both parties to among other things exchange exhibits and submit pretrial memoranda no later than days before the calendar call by date the court had received respondent’s pretrial memorandum but none from ms duma respondent’s report stated that ms duma was not cooperating in providing to respondent the information that she would rely on at trial on that day the court initiated a telephone conference with the parties to discuss the case the court told ms duma that she was overdue for exchanging exhibits and should do so immediately she responded that her disability made it difficult to do so and the court ordered her to be sure to bring her exhibits to the calendar call ms duma spoke of the unavailability of some documents that she might want to present and the court suggested that she consider what alternative documents might serve mentioning in particular bank statements credit card statements calendars log books or day books ms duma appeared at the calendar call on date apparently carrying with her some documents which she showed to respondent’s counsel and she asked for more time to obtain information at her request the court scheduled her trial for the afternoon of the last day of the calendar--friday date when ms duma appeared at that time however she had no documents with her neither the documents she had brought to the calendar call nor the additional documents she had hoped to obtain the only documents offered into evidence at the trial were exhibit no year description 1-j 2-j 3-r 4-r 5-r 6-r notice_of_deficiency notice_of_deficiency form_4340 certificate of assessments payments and other specified matters form_4340 certificate of assessments payments and other specified matters proposed individual income_tax assessment 30-day_letter with attached sec_6020 certification and return proposed individual income_tax assessment 30-day_letter with attached sec_6020 certification and return opinion i income issues a burden_of_proof the irs’s deficiency determinations are generally presumed correct and ms duma as the petitioner in this case has the burden of establishing that the determinations in the notices of deficiency are erroneous see rule a 290_us_111 ms duma had two and a half years between petition and trial to assemble her evidence in a pretrial telephone conference the court reminded her of her burden and suggested to her the types of information she might consider bringing as proof of her contentions when at the calendar call she requested additional time to find information the court allowed her the latest trial time in the week-long calendar despite all that she produced no documents whatsoever to corroborate any aspect of her testimony on the disputed issues she thus failed to carry her burden_of_proof b ms duma’s liability fnma compensation the irs received information from fnma showing wages of dollar_figure ms duma gave oral testimony that she received less than that total but she did not corroborate her recollection with any statements from fnma any records from her credit_union account into which the amounts would have been deposited or any other records of any sort at a calendar call in this court held date ms duma stated for my annual income was over dollar_figure by the time of the trial in date however ms duma was disputing the figure for and said it was not dollar_figure but only approximately dollar_figure at some point before trial she showed to respondent’s counsel several pay stubs and a printout of some sort that showed the smaller figure but respondent’s counsel stated that he had not been able to identify or authenticate the printout and ms duma did not offer the printout or the pay stubs at trial she testified that she probably had somewhere amid voluminous records her employee copy of her form_w-2 wage and tax statement issued by fnma for but she did not find it before trial ms duma’s testimony indicated two possible reasons that the correct amount might be larger than she supposed it is possible that the disputed income figure for includes std payments that she received but that were not on her printout that she showed to respondent’s counsel and it is also possible that some of the income amounts reported by fnma for or were for loan forgiveness in any event she did not prove that her compensation was less than fnma reported stock benefit the irs received information from equiserve showing stock proceeds of dollar_figure ms duma disputes the figure and says it was instead approximately dollar_figure she presented no documentation--neither statements from fnma or equiserve nor records from her account at the credit union--to corroborate the lower amount ms duma speculates and it is possible that some of the difference between equiserve’s total and her lower figure is accounted for by the stock’s being attributed to her on a date when the value of the stock was higher but then being sold and cash paid to her on a later date when the value had fallen even if her uncorroborated explanation were correct and accounted for the entire difference it appears on the record before us that the stock itself would have been income to her when it was initially awarded and in the amount of its then value and she neither argued for nor established any entitlement to a deduction for any loss on the sales however it seems more likely that her impression of having received approximately dollar_figure is the result of her recalling the fourth equiserve payment of dollar_figure and forgetting the other three in any event she did not prove that she received less than dollar_figure in stock proceeds from equiserve ii addition-to-tax issues a burden of production sec_7491 provides that the commissioner shall have the burden of production with respect to the liability of any individual for any addition_to_tax the commissioner’s burden of production under sec_7491 is to produce evidence that it is appropriate to impose the relevant addition_to_tax 118_tc_358 see also 116_tc_438 if a taxpayer files a petition alleging some error in the determination of an addition_to_tax the taxpayer’s challenge will succeed unless the commissioner produces evidence that the addition_to_tax is appropriate swain v commissioner supra pincite b ms duma’s liability additions to tax for failure_to_file sec_6651 imposes an addition_to_tax i n case of failure_to_file any return we have found that ms duma failed to file her returns for and she did file requests for extensions but her uncorroborated testimony that she filed returns was not persuasive ms duma claims that late in the day on date after having made her first trip to the irs to file the extension form she finished filling out her tax returns for and but made no copy of the returns for herself because she had no spare blank forms she says that the returns she prepared showed that she was entitled to small refunds she says that she stapled together the two returns for and and put them into a single envelope for mailing she testified that on date she made a second bus trip to the same neighborhood where the irs office is near the post office at the post office there last-minute filers of tax returns walk and drive by and mail their returns by dropping them in a bucket that a postal worker holds out for that purpose she testified that she mailed her and returns in that fashion ms duma’s testimony is problematic her disability she seems to say made it difficult for her to run the errand of photocopying the return or to obtain a second blank return she could complete and keep as her copy and yet she went to the substantial trouble of making two separate bus trips to the same neighborhood on the same day--the first in order to file the request for an extension just in case she did not finish the return on time and the second in order to file her returns for both and given ms duma’s condition this elaborate effort is unlikely and if she did make a first trip to file her extension request with an expectation of filing the returns that day then it would seem she could have obtained the spare blank forms that she now claims she did not have the irs’s transcripts of ms duma’s accounts for and do not show the filing of any returns she claims that when she later made inquiries with the irs personnel told her that her returns had been rejected because they had been stapled and because she had used white-out fluid to make corrections on them she says that those personnel told her to submit duplicate originals but that she did not do so it is difficult to account for her refusal to file a duplicate original after that alleged conversation it is not impossible that ms duma’s account is true but she did not prove it by a preponderance_of_the_evidence we therefore find that she did not file her returns sec_6651 provides that the addition will not be due if the failure_to_file is due to reasonable_cause and not due to willful neglect the commissioner does not have the obligation to introduce evidence regarding reasonable_cause or substantial_authority higbee v commissioner supra pincite- ms duma does not allege any reasonable_cause excuse and we find here no circumstances that would constitute reasonable_cause the amount of the failure-to-file addition i sec_5 percent of the amount_required_to_be_shown_as_tax for each month of the delinquency not exceeding percent in the aggregate sec_6651 the specific amount of ms duma’s failure-to-file addition for each year will be calculated after the amount of her tax_liability has been redetermined taking into account the parties’ concessions see supra note sec_2 and and our findings sec_6651 limits the sec_6651 failure- to-file addition_to_tax by subtracting the sec_6651 failure-to-pay addition percent which is discussed below in part ii b from the sec_6651 failure-to-file addition percent for any month that additions to tax apply under both sec_6651 and a additions to tax for failure to pay sec_6651 imposes an addition_to_tax i n case of failure to pay the amount shown as tax on any return including an income_tax return this addition does not accrue unless a tax amount is shown on a return so the commissioner must introduce evidence that the tax was shown on a federal_income_tax return to satisfy his burden of production under sec_7491 120_tc_163 when a taxpayer has not filed a return the sec_6651 addition_to_tax may be imposed if the irs prepared an sfr that meets the requirements of sec_6020 127_tc_200 affd 521_f3d_1289 10th cir in this case the irs satisfied its burden by offering the sfr for each year along with a signed sec_6020 asfr certification and ms duma suggests no defect in the agency’s procedure as with the failure-to-file addition the statute provides that the addition for failure to pay will not be due if the failure is due to reasonable_cause and not due to willful neglect sec_6651 however ms duma has not alleged any reasonable_cause for her failure to pay and we find none the amount of the failure-to-pay addition is one-half of percent of the amount shown as tax for each month of the delinquency not exceeding percent in the aggregate the specific amount of ms duma’s failure-to-pay addition for each year will be calculated according to this formula after the amount of her tax_liability has been redetermined taking into account the parties’ concessions see supra note sec_2 and and our findings addition_to_tax for failure to pay estimated_tax sec_6654 imposes an addition_to_tax in the case of any underpayment of estimated_tax by an individual a taxpayer has an obligation to pay estimated_tax for a particular year if she has a required_annual_payment for that year sec_6654 a required_annual_payment is defined in sec_6654 as-- the lesser of-- i percent of the tax_shown_on_the_return for the taxable_year or if no return is filed percent of the tax for such year or ii percent of the tax_shown_on_the_return of the individual for the preceding_taxable_year clause ii shall not apply if the individual did not file a return for such preceding_taxable_year emphasis added thus respondent’s burden of production under sec_7491 requires him to produce for each year for which the addition is asserted evidence that the taxpayer had a required_annual_payment under sec_6654 and in order to do so he must demonstrate the tax shown on the taxpayer’s return for the preceding year unless he can show that the taxpayer did not file a return for that preceding year wheeler v commissioner supra pincite for the record establishes that ms duma did not file a return for such preceding_taxable_year --ie 2003--so respondent has shown a required_annual_payment for equal to percent of the liability for that year 6notwithstanding sec_6020 which provides that an sfr prepared and executed by the irs pursuant to sec_6020 shall be prima facie good and sufficient for all legal purposes an sfr is not a return of the individual emphasis added for purposes of sec_6654 cf 121_tc_111 an sfr prepared under sec_6020 does not constitute a return of the taxpayer for purposes of u s c sec a b citing 949_f2d_341 10th cir 118_tc_155 a return made by the taxpayer under sec_6211 does not include an sfr executed under sec_6020 91_tc_926 to give a rational meaning for the word ‘individual’ in sec_6013 an sfr prepared under sec_6020 is not a separate_return under sec_6013 at trial ms duma indicated that she did not know about an obligation to pay estimated_tax however the sec_6654 addition_to_tax is mandatory and must be imposed unless a statutory exception applies and there is no exception provided for ignorance see 91_tc_874 reasonable_cause is not an excuse for underpayment of estimated_tax sec_1_6654-1 income_tax regs sec_6654 does provide that a taxpayer may avoid this addition if she can show that by reason of casualty disaster or other unusual circumstances the imposition of such addition_to_tax would be against equity and good conscience but ms duma made no such showing consequently the addition_to_tax for failure to pay estimated_tax is sustained for in an amount yet to be determined to reflect the foregoing decision will be entered under rule