internal_revenue_service number release date index numbers -------------------------------------- --------------------------------------------------------------- ------ ------------------------ --------------------------------- ------------------------------------- -------------------------------- 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 plr-122185-09 date date legend x --------------------------------------------------- ---------------------------------------------------------------------- d1 d2 country ----------------------- ---------------------- ---------- dear ----------------- this is in response to a letter dated date 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 on d1 under the laws of country x intended to be treated as a disregarded_entity for federal tax purposes effective d2 however x inadvertently failed to timely file form_8832 entity classification election to be treated as a disregarded_entity for federal tax purposes effective d2 plr-122185-09 law and analysis sec_301_7701-3 provides 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 a foreign eligible_entity with a single owner having limited_liability may elect to be treated as a disregarded_entity pursuant to the rules of sec_301_7701-3 sec_301_7701-3 and iii provides that an entity classification election 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 provides that an election under sec_301_7701-3 must be signed by - 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 organizational documents to make the election and who represents to having such authorization under penalties of perjury sec_301_7701-3 provides that if a purchasing_corporation makes an election under sec_338 regarding an acquired subsidiary an election under sec_301 c i for the acquired subsidiary can be effective no earlier than the day after the acquisition_date within the meaning of sec_338 under sec_301_9100-1 the commissioner may grant a reasonable extension of time to make a regulatory election 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 internal_revenue_code except subtitles e g h and i section b defines the term regulatory election as including an election whose due_date is prescribed by a regulation published in the federal_register sec_301_9100-1 through provide the standards that the commissioner will use to determine whether to grant an extension of time to make an election sec_301_9100-1 plr-122185-09 sec_301_9100-2 provides automatic extensions of time for making certain elections sec_301_9100-3 provides rules for requesting extensions of time for regulatory elections that do not meet the requirements of sec_301_9100-2 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides evidence to establish that the taxpayer acted reasonably and in good_faith and that granting relief will not prejudice the interests of the government conclusion based solely on the facts 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 properly executed form_8832 effective d2 with the appropriate service_center to elect to be classified as a disregarded_entity a copy of this letter should be attached to the form_8832 except as expressly provided herein 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 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 curt g wilson curt g wilson associate chief_counsel passthroughs special industries enclosures copy of this letter copy for sec_6110 purposes cc


t c memo united_states tax_court francis z mischel petitioner v commissioner of internal revenue respondent docket no filed date francis z mischel pro_se pamelya p herndon for respondent memorandum findings_of_fact and opinion dawson judge this case was assigned to special_trial_judge robert n armen jr pursuant to the provisions of sec_7443a of the internal_revenue_code_of_1986 as amended and rule sec_180 sec_181 and sec_183 the court agrees with and adopts the opinion of the special_trial_judge which is set forth below opinion of the special_trial_judge armen special_trial_judge respondent determined a deficiency in petitioner's federal_income_tax for the taxable_year in the amount of dollar_figure and an addition_to_tax under sec_6651 in the amount of dollar_figure in contrast petitioner claims an overpayment in the amount of dollar_figure after concessions by petitioner the issues for decision are as follows whether respondent may in determining the deficiency in income_tax against petitioner disregard the community_property_laws of the state of arizona whether for purposes of determining the applicable tax_rates and standard_deduction petitioner's filing_status is that of a married_person filing jointly a married_person filing separately or a head-of-household whether petitioner is entitled to dependency_exemption deductions for her three children unless otherwise indicated all section references are to the internal_revenue_code in effect for the taxable_year in issue and all rule references are to the tax_court rules_of_practice and procedure petitioner concedes that she worked for sandia oil co and show low gemstones inc in and received wages during that year from those companies in the amounts of dollar_figure and dollar_figure respectively whether petitioner is entitled to an additional exemption for her husband whether petitioner is entitled to an earned_income_credit whether petitioner is liable for an addition_to_tax under sec_6651 for failure_to_file an income_tax return whether petitioner overpaid her income_tax and whether petitioner should be liable for a penalty under sec_6673 findings_of_fact none of the facts have been stipulated petitioner francis z mischel petitioner resided in st johns arizona at the time that her petition was filed with the court a petitioner and her family petitioner was married to le w mischel mr mischel throughout and lived with him during the year mr mischel was not gainfully_employed in and received no income during the year he was also without financial resources petitioner and mr mischel have children andre a son who turned in daphne a daughter who turned in and melody a daughter who turned in andre daphne and melody resided with petitioner and mr mischel in except for that part of the year when daphne or melody may have been away in college b petitioner's employment petitioner worked for sandia oil co sandia and show low gemstones inc show low in during that year petitioner received wages from those companies in the amounts of dollar_figure and dollar_figure respectively for a total of dollar_figure no federal_income_tax was withheld from petitioner's wages by sandia federal_income_tax in the amount of dollar_figure was withheld from petitioner's wages by show low petitioner provided the sole support for herself and her family in c petitioner's form 1040a on date respondent received a form 1040a u s individual_income_tax_return that purported to be an income_tax return for the form 1040a although the form 1040a was signed by petitioner it was prepared by or at the direction of mr mischel the form 1040a disclosed petitioner's filing_status as head-of-household claimed the standard_deduction in the amount appropriate for that filing_status and listed andre daphne and melody as dependents the form 1040a also included the following numerical entries entry amount wages salaries tips etc dollar_figure big_number total income big_number total adjustments to income -0- big_number adjusted_gross_income standard_deduction dollar_figure exemptions dollar_figure ea dollar_figure taxable_income -0- tax -0- total_tax -0- payments tax withheld dollar_figure estimated_tax payment dollar_figure earned_income_credit dollar_figure total payments dollar_figure tax informant fee dollar_figure overpaid refund dollar_figure at trial the entry of dollar_figure big_number was described as consisting of the following items item amount fraudulent irs claim dollar_figure big_number arizona tax based on fraud- ulent irs information big_number subtotal dollar_figure big_number wages sandia show low dollar_figure total dollar_figure big_number the fraudulent irs claim apparently relates to what petitioner regards as a fraudulent assessment s or claim made by respondent against petitioner or mr mischel for tax pertaining to a taxable_year s prior to the taxable_year in issue the arizona tax based on fraudulent irs information apparently relates to what petitioner regards as a fraudulent assessment or claim made by the arizona department of revenue against petitioner or mr mischel for tax pertaining to the taxable_year based on fraudulent information furnished by respondent the entry for tax withheld in the amount of dollar_figure apparently relates principally to what petitioner believes was the fraudulent income amount for the taxable_year that was furnished by respondent to the arizona department of revenue and that led to the arizona tax based on fraudulent irs information described above the entry for estimated_tax payment in the amount of dollar_figure represents the alleged out-of-pocket cost incurred by petitioner and mr mischel in traveling to respondent's service_center in ogden utah in date in order to review their tax records for prior years the entry for tax informant fee in the amount of dollar_figure represent sec_25 percent of dollar_figure this fee was claimed by petitioner on the basis that she and mr mischel exposed the fraudulent irs claim described above respondent did not process the form 1040a as an income_tax return rather respondent treated it as a frivolous_return and assessed the frivolous_return penalty under sec_6702 against petitioner in the amount of dollar_figure d petitioner's form 1040x at trial petitioner tendered to the court a form 1040x amended u s individual_income_tax_return for the form 1040x which mirrored the form 1040a except for the following the form 1040x was signed by both petitioner and mr mischel the form 1040x claimed one additional exemption for mr mischel and the form 1040x claimed the standard_deduction in an amount appropriate to a joint_return petitioner never filed the form 1040x with respondent e respondent's determination by notice_of_deficiency issued date respondent determined that petitioner received income from wages in the total amount of dollar_figure in respondent also determined that petitioner did not file an income_tax return for and is therefore liable for the addition_to_tax under sec_6651 in determining the amount of the deficiency in income_tax respondent treated petitioner as married allowed petitioner the standard_deduction in an amount appropriate to a married_person filing separately applied the tax_rates applicable to that filing_status allowed petitioner an exemption for herself and did not allow any dependency_exemptions or the earned_income_credit further in determining the amount of the deficiency respondent did not make any allowance for the community_property_laws of the state of arizona at trial mr mischel testified that we do not regard the irs as having any jurisdiction over petitioner's taxes at this particular time until the court releases the jurisdiction back to the irs f petitioner's contentions petitioner admits that her wages are taxable however petitioner contends that she reported her wages on the form 1040a which she further contends is a valid income_tax return in the alternative petitioner contends that she should not be held liable for an addition_to_tax under sec_6651 because the frivolous_return penalty under sec_6702 has already been assessed against her petitioner also contends her tax_liability should be computed by reference to the rates applicable to married individuals filing jointly she is entitled to the standard_deduction in an amount appropriate to that filing_status she is entitled to a total of exemptions for her children and one each for herself and mr mischel she is entitled to the earned_income_credit and she is entitled to a refund in the amount claimed on the form 1040a issue community_property split opinion we begin with an issue not raised by the parties but which we think must be addressed as a fundamental matter ie whether respondent may disregard community_property_laws in determining a deficiency in this regard we recall that respondent did not make any allowance for the community_property_laws of the state of arizona in determining the deficiency in income_tax against petitioner sec_66 authorizes the commissioner to disallow the benefits of any community_property law to a taxpayer with respect to any income if the taxpayer acted as if solely entitled to such income and the taxpayer failed to notify the taxpayer's spouse before the due_date for filing the return for the taxable_year in which the income was earned of the nature and amount of such income at trial respondent was unable to offer any persuasive reason why respondent was authorized to disregard the community_property_laws of the state of arizona petitioner did not act as if she were solely entitled to her wage income and she did not fail to notify mr mischel of such income indeed petitioner's wages provided the support for petitioner and her family and petitioner's wages were part of the computation on the form 1040a which was prepared by or at the direction of mr mischel arizona law provides that the wages of a spouse represent community_property and that each spouse has an equal one-half interest in those earnings ariz rev stat ann sec west 282_us_118 accordingly each spouse must report one-half of such income when a separate_income tax_return is filed 403_us_190 we have found as a fact that petitioner was married to mr mischel throughout and lived with him during the year this finding which is based on the evidence adduced at trial is supported by respondent's determination made in the notice_of_deficiency regarding petitioner's marital status in in view of the foregoing we hold that petitioner is taxable on only one-half of the wages received from sandia and show low in ie one-half of dollar_figure or dollar_figure as reflected in the computation infra on p see schramm v commissioner tcmemo_1991_523 affd without published opinion 988_f2d_121 9th cir issue petitioner's filing_status on the form 1040a petitioner claimed head-of-household filing_status on the form 1040x petitioner claimed that she was entitled to file as a married individual filing jointly in contrast respondent determined that petitioner must file as a married individual filing separately we agree with respondent petitioner does not qualify as a head-of-household because petitioner was married to mr mischel throughout and lived with him during the year sec_2 requires inter alia that a head_of_household not be married at the close of his or her taxable_year cf sec_2 petitioner does not qualify as a married individual filing jointly for the simple reason that petitioner did not file a joint_return with mr mischel see sec_1 see 86_tc_433 n affd in part and revd in part on other issues 851_f2d_1492 d c cir in view of the foregoing we sustain respondent's determination that petitioner's tax_liability must be computed by reference to the rates applicable to married individuals filing separately and that petitioner is only entitled to a standard_deduction in the amount applicable to that filing_status issue claimed dependency_exemption deductions for petitioner's children respondent does not contend that as a matter of law petitioner is not entitled to claim her children as dependents rather respondent contends that petitioner failed to demonstrate during the examination stage of this case whether or not these dependents were truly under her care and entitled to dependent_exemption the record demonstrates and we have found as a fact that petitioner provided the sole support for herself and her family in the record also demonstrates that andre daphne and melody resided with petitioner and mr mischel in except for that part of the year when daphne or melody may have been away in college under these circumstances and in view of mr mischel's lack of financial resources we hold that petitioner is entitled to dependency_exemption deductions for her children issue additional exemption for mr mischel if a joint_return is not filed an exemption for a taxpayer's spouse is allowable under sec_151 only if the spouse has no gross_income and is not the dependent of another taxpayer for the reasons discussed in issue infra the issue regarding the exemption for mr mischel is moot issue earned_income_credit as relevant herein sec_32 provides that a married individual is entitled to the earned_income_credit only if a joint_return is filed because petitioner did not file a joint_return she is not entitled to an earned_income_credit issue addition_to_tax under sec_6651 sec_6651 imposes an addition_to_tax if a taxpayer fails to file a timely return unless the taxpayer's failure is due to reasonable_cause and not due to willful neglect the addition is based on the amount_required_to_be_shown_as_tax on the return petitioner is not liable for the addition_to_tax under sec_6651 because the amount_required_to_be_shown_as_tax on her return was zero the following calculation shows why this is true income dollar_figure less standard_deduction -dollar_figure dollar_figure less personal_exemption -dollar_figure dollar_figure less dependency_exemptions -dollar_figure taxable_income -0- tax -0- issue petitioner's claim for overpayment based on the foregoing calculation and recalling that dollar_figure was withheld from petitioner's wages by show low we hold that petitioner overpaid her tax by dollar_figure we reject petitioner's claim for an overpayment in an amount greater than the amount of her withholding the full dollar_figure claim made in the form 1040a is whimsical if not capricious negative gross_income is not a concept that the federal tax law recognizes and the amounts claimed by petitioner as tax withheld estimated_tax payment and tax informant fee are simply not payments of tax that could give rise to an overpayment issue penalty under sec_6673 respondent has not moved for the imposition of a penalty under sec_6673 nevertheless we think it appropriate to consider the matter see schramm v commissioner tcmemo_1991_523 affd without published opinion 988_f2d_121 9th cir as relevant herein sec_6673 authorizes the tax_court to require a taxpayer to pay to the united_states a penalty not in excess of dollar_figure whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for whether or not the form_1040 constitutes a valid return an issue we do not and need not reach we think that it constitutes a valid claim_for_refund cf commissioner v lundy 516_us_116 s ct delay or that the taxpayer's position in such proceeding is frivolous or groundless although it might seem odd to consider imposing a penalty under sec_6673 when we have not sustained respondent's determination regarding the deficiency and addition_to_tax we note the following first petitioner prevailed in this case only because the court not petitioner raised the community_property issue second petitioner's interest in this case has been principally if not exclusively to pursue matters pertaining to prior taxable years that have absolutely no relevance to the taxable_year in issue the form 1040a submitted by petitioner reflects a fanciful approach to her federal_income_tax responsibilities and the contentions made in support of that form are without merit notwithstanding the foregoing we have decided not to exercise our discretion to impose a penalty under sec_6673 in part because of our concern that petitioner may be acting at the misguided direction of mr mischel nevertheless petitioner should understand that persistence in this court in pursuing the overpayment claimed in the form 1040a in a subsequent case may result in the imposition of a penalty under sec_6673 to give effect to the foregoing a decision for petitioner will be entered that there is no deficiency and no addition_to_tax under sec_6651 and that there is an overpayment in the amount of dollar_figure for the taxable_year


internal_revenue_service number release date index number 2032a ------------------------ ---------------- -------------------------------- ------------------------------ -------------------------- ------------------------------ legend property taxpayer land trust father date date date a b dear ----------------- 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-112932-07 date date ---------------------------------------------------------------------- ---- -------------------------------------------------- --------------------------------------- --------------------------- --------------------------- ------------------- -------------------- ------------------ -------------- this is in response to your date letter and other correspondence concerning the application of sec_2032a of the internal_revenue_code to the proposed sale of a qualified_conservation_easement by taxpayer to land trust the facts submitted are as follows property was owned by father through a living_trust property was used primarily as a farm the primary activities of the farm include but are not limited to the milking feeding breeding and otherwise supervising and managing of the dairy herd managing all pastures and feeding caring for and otherwise supervising and managing the beef cattle herd and sheep flock father died on date the executor filed a form_706 united_states and generation-skipping_transfer_tax return on date for the estate of father and on schedule a-1 elected under sec_2032a to value property based on its use as a farm plr-112932-07 rather than its highest_and_best_use the adjusted_value of property was dollar_figurea and the special-use value of property was dollar_figureb upon father’s death property passed to taxpayer since father’s death taxpayer has continued the operation of the farm on property on date taxpayer sold the dairy portion of the farm but continued to operate all other aspects of the farm including supervising and managing the beef cattle herd and the sheep flock taxpayer proposes to sell a qualified_conservation_easement on property to land trust the primary purpose of the easement is to protect the agricultural soils agricultural viability and agricultural productive capacity of property in perpetuity land trust is a public charity described in sec_501 you have requested a ruling that the sec_2032a exception to sec_2032a will apply to the proposed sale of a qualified_conservation_easement on property by taxpayer to land trust law and analysis sec_2033 provides that the gross_estate shall include the value of all property to the extent of the interest therein of the decedent at the time of his death sec_2032a provides that if the decedent at the time of his death was a citizen or resident_of_the_united_states and the executor elects the application of this section and files the agreement referred to in sec_2032a then for purposes of the estate_tax the value of qualified_real_property shall be its value for the use under which it qualifies under sec_2032a as qualified_real_property sec_2032a provides in relevant part that qualified_real_property means real_property located in the united_states which was acquired from or passed_from_the_decedent to a qualified_heir of the decedent and which on the date of the decedent's death was being used for a qualified_use by the decedent or a member_of_the_decedent’s_family sec_2032a provides that the term qualified_use means the devotion of the property to use as a farm for farming_purposes or use in a trade_or_business other than the trade_or_business_of_farming sec_20_2032a-3 of the estate_tax regulations provides that real_property valued under sec_2032a must pass from the decedent to a qualified_heir or be acquired from the decedent by a qualified_heir sec_2032a provides that if within years after the decedent's death and before the death of the qualified heir- a the qualified_heir disposes of any interest plr-112932-07 in qualified_real_property other than by a disposition to a member of his family or b the qualified_heir ceases to use for the qualified_use the qualified_real_property which was acquired or passed_from_the_decedent then there is hereby imposed an additional estate_tax emphasis added sec_2032a provides that a qualified_conservation_contribution as defined in sec_170 by gift or otherwise shall not be deemed a disposition under sec_2032a sec_2032a was enacted by the taxpayer_relief_act_of_1997 pub_l_no and is effective for easements granted after date sec_170 provides in relevant part that the term charitable_contribution means a contribution or gift to or for_the_use_of a corporation trust or community chest fund or foundation organized and operated exclusively for charitable purposes under sec_170 a qualified_conservation_contribution means a contribution-- a of a qualified_real_property_interest b to a qualified_organization c exclusively for conservation purposes revrul_59_121 1959_1_cb_121 as clarified by revrul_68_291 1968_1_cb_351 holds that the consideration received for the granting of an easement with respect to land constitutes the proceeds from a sale of an interest_in_real_property in 161_f3d_242 3rd cir the taxpayer inherited a dairy farm upon the death of taxpayer’s father in in the taxpayer filed an estate_tax_return on behalf of his father’s estate in that return pursuant to sec_2032a the taxpayer elected to value the real_property component of the farm based on its special use value as farmland instead of its highest_and_best_use for development on date the taxpayer and the state of new jersey executed a deed of easement pursuant to which new jersey received a development easement in the farmland and the taxpayer received approximately dollar_figure million the court_of_appeals for the third circuit held that the taxpayer’s conveyance of a development easement in a farm he inherited was a disposition of an interest in the farmland triggering the recapture_tax under sec_2032a while the court’s decision in estate of gibbs was based upon the plain meaning of the statute the court also noted the relevant portion of the house committee report addressing the need for the recapture_tax provision as follows also your committee believes it would be inequitable to discount speculative value if the heirs of the decedent realize these speculative values by selling the property within a short time after the decedent’s death h_r rep no pincite 1976_3_cb_756 plr-112932-07 prior to the effective date of sec_2032a it was the service’s position that any conveyance of a conservation_easement including a charitable_contribution would be considered a disposition under sec_2032a sec_2032a was enacted by congress to ensure that the grant of a conservation_easement after date would not trigger the recapture_tax under sec_2032a the legislative_history of sec_2032a is silent regarding the meaning of the phrase by gift or otherwise in the statute however the term otherwise does not necessarily include sales and exchanges of conservation easements for valuable consideration under sec_2032a a recapture_tax is not imposed in the event of a qualified_conservation_contribution as defined in sec_170 h sec_170 defines a qualified_conservation_contribution as a contribution of a qualified_real_property_interest to a qualified_organization exclusively for conservation purposes the sale_or_exchange of a conservation_easement is not contemplated by sec_170 furthermore even though the easement in estate of gibbs was sold prior to the effective date of sec_2032a the court_of_appeals in estate of gibbs stated in dicta that sec_2032a would only apply to charitable_contributions of conservation easements and not sales of easements for valuable consideration estate of gibbs f 3d pincite fn therefore the statute the legislative_history and case law do not extend the exception of sec_2032a to sales accordingly based on the facts presented and the representations made we conclude that the sec_2032a exception to sec_2032a does not apply to the proposed sale of a qualified_conservation_easement on property by taxpayer to land trust in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to your authorized representatives except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter 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 plr-112932-07 this ruling is directed only to the taxpayer requesting it sec_6110 provides that it may not be used or cited as precedent sincerely lorraine e gardner senior counsel branch office of the associate chief_counsel passthroughs special industries enclosures copy for sec_6110 purposes copy of this letter


t c summary opinion united_states tax_court angela rae zachry petitioner and curtis carlin intervenor v commissioner of internal revenue respondent docket no 317-04s filed date angela rae zachry pro_se curtis carlin pro_se monica d armstrong for respondent couvillion special_trial_judge this case was heard pursuant to sec_7463 in effect when the petition was filed the decision to be entered is not reviewable by any other court and this opinion should not be cited as authority petitioner 1unless otherwise indicated subsequent section references are to the internal_revenue_code in effect for the year at issue and all rule references are to the tax_court rules_of_practice and procedure seeks a review under sec_6330 of respondent’s decision to proceed with collection of petitioner’s portion of a federal_income_tax liability for the tax_year some of the facts were stipulated those facts with the exhibits annexed thereto are so found and made part hereof petitioner’s legal residence at the time the petition was filed was douglasville georgia petitioner and her former husband curtis carlin intervenor were married in date at that time petitioner was and intervenor wa sec_29 they immediately settled in florida where they rented a house petitioner has a high school education and worked as a hair stylist and intervenor worked for both show tech support inc and acc productions inc managing props on motion picture sets in date petitioner gave birth to a son as a result petitioner worked only intermittently throughout approximately weeks before petitioner’s son was born intervenor’s mother ms carlin died intervenor was the sole descendant and inherited ms carlin’s estate shortly thereafter petitioner moved to georgia with her parents and intervenor remained in florida to settle his mother’s affairs intervenor later joined petitioner in georgia where the couple subsequently purchased land during the latter part of intervenor received dollar_figure in a distribution from ms carlin’s sec_401 retirement account intervenor also received proceeds from the sale of ms carlin’s home in florida petitioner and intervenor filed their joint federal tax_return timely on the return they reported total income of dollar_figure but included only dollar_figure in gross pension income and dollar_figure in taxable pension income respondent issued a notice proposing changes cp-2000 on date to petitioner and intervenor stating information reported on their return did not match what was reported by their employers banks and or other payers intervenor did not respond to this notice on date petitioner filed form_8857 request for innocent spouse relief it was subsequently denied on date respondent issued a notice_of_deficiency to petitioner and intervenor for their tax respondent determined petitioner and intervenor underreported the wages from show tech support inc and pension income paid to intervenor and failed to report nonemployee compensation paid to intervenor from acc productions inc the entire deficiency was based on the payments made to intervenor as noted on the various forms a timely petition was filed in this court in the names of both intervenor and petitioner because the petition was imperfect and an amended petition was never filed as ordered by the court the case was dismissed for lack of jurisdiction petitioner and intervenor separated during on date their divorce became final in the divorce agreement intervenor acknowledged receiving dollar_figure from his mother’s estate of which only dollar_figure remained petitioner and intervenor agreed that petitioner would be responsible for one- third of the tax_liability while intervenor would be responsible for the remaining two-thirds on date respondent issued a final notice_of_intent_to_levy to petitioner on date respondent filed a notice_of_federal_tax_lien against petitioner respondent then issued the notice_of_federal_tax_lien to petitioner on date petitioner thereafter filed a timely form request for a collection_due_process_hearing on date petitioner raised the innocent spouse issue as her sole defense at the subsequent hearing before an irs settlement officer on date the settlement officer issued a notice_of_determination sustaining the lien and levy and denying petitioner’s request for relief from joint liability 2the parties stipulated that petitioner did not petition the tax_court for a redetermination for the deficiency asserted by respondent for the taxable_year petitioner did in fact petition this court however since the petition was dismissed for lack of jurisdiction the stipulation is technically correct petitioner moreover does not challenge the underlying deficiency but only seeks relief from joint liability petitioner filed a timely petition in this court appealing the appeals officer’s decision on date intervenor filed a timely notice of intervention the court must decide whether petitioner is entitled to relief from joint liability in lieu of the appeals officer’s determination where the underlying tax_liability is properly at issue before the appeals officer this court reviews that issue on a de novo basis 114_tc_176 however where the underlying tax_liability is not at issue as in this case this court reviews the determination on the basis of whether there was an abuse_of_discretion by respondent 114_tc_604 an abuse_of_discretion is defined as any_action that is unreasonable arbitrary or capricious clearly unlawful or lacking sound basis in law taking into account all the facts and circumstances e g 439_us_522 121_tc_111 married persons who file a joint federal_income_tax return generally are jointly and severally liable for the payment of the tax_shown_on_the_return or found to be owing sec_6013 115_tc_183 affd 282_f3d_326 5th cir furthermore agreements between spouses with respect to how liability is shared on tax deficiencies are not binding on this court 78_tc_100 citing 39_tc_534 13_tc_397 affd per curiam 200_f2d_560 2d cir 12_tc_224 bonner v commissioner tcmemo_1979_435 ballenger v commissioner t c memo relief from joint_and_several_liability is available to certain taxpayers under sec_6015 there are three avenues for relief available under this section-- sec_6015 c f in reaching the decision at the administrative level in this case the appeals officer denied relief under subsections b and c finding that petitioner had actual knowledge the appeals officer also denied relief under subsection f noting while no formal request under f was received during the cdp process the taxpayer’s statements all concerned the inequity of holding her liable and her inability to pay the taxpayer provided no financial information so appeals could make no determination as to the hardship provisions of f appeals considered the taxpayer’s statements about the inequity of holding her liable but her bare statements alone were insufficient to overcome the prior denial of relief both the taxpayer and her poa were given time to supply additional supporting documentation and chose not to do so the appeals officer sustained the levy action this court will reverse the appeals officer’s finding only if petitioner establishes there was an abuse_of_discretion the court first examines the appeals officer’s determination that petitioner had actual knowledge of the unreported pension distribution if petitioner had actual knowledge she cannot be afforded relief under sec_6015 or c under sec_6015 the taxpayer must not have known or had any reason to know that the other spouse understated that spouse’s tax_liability on the return sec_6015 relief under sec_6015 is not available to a taxpayer if it is shown that the taxpayer had actual knowledge when signing the return of any item giving rise to a deficiency sec_6015 the appeals officer met with petitioner before issuing a notice_of_determination because the appeals officer was unable to retrieve the case file of petitioner’s settlement hearing resulting from her date petition for relief from joint liability petitioner was afforded time to provide information to the appeals officer to support her claim in the notice_of_determination the appeals officer stated 3although generally the burden is on the commissioner to prove that a taxpayer had actual knowledge under sec_6015 the court is evaluating this case under an abuse_of_discretion standard therefore the issue before the court is not whether petitioner had actual knowledge as to the pension distribution but whether the appeals officer abused her discretion in deter- mining such as a result petitioner need not prove she had no actual knowledge rather petitioner need only show the appeals officer abused her discretion in determining petitioner had actu- al knowledge and thereby denying relief the only information received was a statement documenting petitioner’s testimony at the conference and some child_support checks issued by her ex-husband in subsequent discussions with the taxpayer and her power_of_attorney did not result in any further documentation the taxpayer has raised no other collection alternatives the decision on the appropriateness of the proposed collection action was made based on the information in the case file the information available in the master_file account the assessment information and on information submitted by the taxpayer no financial information was provided to allow a decision based on financial circumstances because petitioner presented no additional information to establish she had no knowledge of intervenor’s underreporting of the pension distribution the appeals officer found no basis for overturning the denial of the original request for relief on the basis of knowledge petitioner asserts she did not know of the tax understatement attributable to the distribution to intervenor of his deceased mother’s pension because she was told that intervenor’s sole inheritance was from the sale of ms carlin’s residence petitioner readily admitted she was aware intervenor received approximately dollar_figure after ms carlin passed away however petitioner contended she believed the entire amount came from the sale of ms carlin’s residence and had no reason to believe otherwise the knowledge standard for purposes of sec_6015 is an actual and clear awareness as opposed to reason to know of the existence of an item that gives rise to the deficiency cheshire v commissioner supra pincite petitioner offered extensive testimony regarding her lack of knowledge about the source of intervenor’s inheritance however intervenor also offered extensive testimony that petitioner knew the exact nature of his inheritance as a result of the conflicting testimony and the lack of documentation supporting either testimony the court finds neither party’s testimony credible to determine whether petitioner had actual knowledge of the pension distribution to intervenor the court looks beyond the testimony of petitioner and intervenor and relies principally on the stipulation of facts and the admitted evidence petitioner and intervenor filed their joint federal_income_tax return with the assistance of a tax preparer at h_r block on line a of form_1040 u s individual_income_tax_return the tax_return listed dollar_figure as gross pension annuity amount and then listed dollar_figure as the taxable pension annuity amount regardless of whether petitioner was present during the return preparation to discuss the pension distribution she nonetheless willingly signed the return and a simple review of the return would have alerted petitioner to the existence of a pension distribution petitioner contends she signed the return 4petitioner and intervenor’s testimony as to whether petitioner was present while their tax_return was being prepared is contradictory petitioner testified she was at work while intervenor met with the h_r block representative however intervenor testified she was present the entire time the return was being prepared without reviewing it when questioned by counsel for respondent whether she had an opportunity to review the return petitioner responded she could have but thought there was no reason to petitioner offered no evidence other than her testimony to substantiate her claim of lack of knowledge her testimony alone is not enough to show that the appeals officer abused her discretion in finding petitioner had actual knowledge of the pension distribution therefore respondent’s denial of relief under sec_6015 and c due to petitioner’s actual knowledge of the pension distribution is sustained lastly the court reviews the appeals officer’s denial of relief under sec_6015 sec_6015 more broadly confers on the secretary discretion to grant equitable relief for taxpayers who otherwise do not qualify for relief under sec_6015 or c as directed by sec_6015 the commissioner has prescribed guidelines in revproc_2003_61 2003_2_cb_296 that the commissioner will consider in determining whether an individual qualifies for relief under sec_6015 the taxpayer may present evidence of factors like abuse economic hardship or lack of knowledge to show it would be inequitable 5rev proc 2003_2_cb_296 not revproc_2000_ c b applies to this case because revproc_2003_61 supersedes revproc_2000_15 for requests still pending on date for which no preliminary determination_letter had been issued as of date the appeals officer issued petitioner’s notice_of_determination on date for the taxpayer to be held liable for a portion of the understatement as previously discussed other than the blanket statement that it would be inequitable to make her pay petitioner submitted no evidence to the appeals officer to support her claim for relief under sec_6015 petitioner bears a heavy burden_of_proof and respondent’s position deserves the court’s deference this court does not interfere unless respondent’s determination is arbitrary capricious clearly unlawful or without sound basis in fact or law 122_tc_32 petitioner presented no additional evidence at trial to support her claim for relief under sec_6015 therefore the court finds there was no abuse_of_discretion by the appeals officer in denying her claim for equitable relief under sec_6015 petitioner received an appropriate hearing for purposes of sec_6330 day v commissioner tcmemo_2004_30 leineweber v commissioner tcmemo_2004_17 sec_301 d q a-d6 proced admin regs respondent properly verified that the requirements of applicable law and administrative procedures were met and balanced the need for efficient collection_of_taxes with the legitimate concern of petitioner that the collection action be no more intrusive than necessary on this record the court holds that there was no abuse_of_discretion in sustaining the notice_of_intent_to_levy respondent therefore is sustained reviewed and adopted as the report of the small_tax_case division decision will be entered for respondent


t c memo united_states tax_court paul j kennedy petitioner v commissioner of internal revenue respondent docket no 10139-07l filed date paul j kennedy pro_se gordon p sanz for respondent memorandum opinion goeke judge this collection review case is before the court on respondent’s motion to dismiss for lack of jurisdiction respondent submits that there is no notice_of_determination which this court has jurisdiction to review petitioner however argues that no valid notice_of_federal_tax_lien nftl filing nor final notice_of_intent_to_levy and notice of the right to a hearing notice_of_intent_to_levy was sent to his proper address because we find that respondent has not issued a valid nftl or a valid notice_of_intent_to_levy we shall dismiss this case for lack of jurisdiction background at the time this petition was filed petitioner resided pincite kost road in alvin texas the kost road address it appears that petitioner has not filed income_tax returns since according to respondent petitioner’s last_known_address was rr box alvin texas the box address while petitioner did in fact reside at this address at some point the parties agree that petitioner has not lived there for some time on date respondent’s collection branch sent a letter addressed to petitioner at the kost road address the letter asked petitioner to verify that the kost road address was his correct address petitioner checked the box indicating that the kost road address was in fact his correct address petitioner then mailed the completed letter back to respondent by certified mail according to the return receipt respondent received the completed letter on date in ogden utah on or about date respondent issued the nftl with respect to petitioner’s tax_liabilities for the years and to petitioner at the box address on or about date respondent also issued a notice_of_intent_to_levy to petitioner at the box address respondent now concedes that this final notice_of_intent_to_levy was not sent by certified mail petitioner did not receive either of the collection notices respondent mailed petitioner became aware of respondent’s collection attempts only when he discovered that his bank account had been emptied respondent has since refunded the money that was levied upon in the light of his concession that he had not sent the notice_of_intent_to_levy by certified mail petitioner eventually obtained a copy of the notice_of_intent_to_levy from his bank and on or about date sent form request for a collection_due_process_hearing to respondent’s appeals_office on date respondent’s appeals_office sent petitioner a letter informing him that the levy was valid on date petitioner timely filed a petition contesting respondent’s determination discussion the tax_court is a court of limited jurisdiction and we may exercise that jurisdiction only to the extent authorized by congress 85_tc_527 the court’s jurisdiction under sec_6320 and sec_6330 depends upon the issuance of a valid notice_of_determination and the filing of a timely petition for review see 123_tc_1 affd 412_f3d_819 7th cir 117_tc_122 116_tc_263 114_tc_492 see also rule b in the absence of a notice_of_determination this court lacks jurisdiction it is clear respondent did not issue a notice_of_determination in respect of petitioner's outstanding tax_liabilities for the years at issue a necessary predicate for the issuance of a notice_of_determination however is the issuance of a final notice_of_intent_to_levy or an nftl sent to the taxpayer at the taxpayer’s last_known_address see sec_6330 thus while it is clear the court does not have jurisdiction we must still decide the proper basis for dismissal 116_tc_255 in our recent memorandum opinion buffano v commissioner tcmemo_2007_32 we dismissed a collection review petition for lack of jurisdiction because the secretary did not send a valid final notice_of_intent_to_levy to the taxpayer’s last_known_address we reasoned that sec_6331 provides that at least days before an enforced collection action by levy the secretary is obligated to provide the taxpayer with a final notice_of_intent_to_levy including notice of the administrative appeals available to the taxpayer id citing 115_tc_35 and 114_tc_176 further sec_6330 provides that the notice_of_intent_to_levy must be given in person left at the person’s dwelling or usual place of business or sent by certified or registered mail to the person’s last_known_address thus because the taxpayer’s last_known_address was not used we found the final notice_of_intent_to_levy invalid buffano v commissioner supra while respondent concedes that the final notice_of_intent_to_levy was invalid because it was not sent via certified mail respondent has also filed liens against petitioner’s property sec_6321 imposes a lien in favor of the united_states on all property and rights to property of a taxpayer liable for taxes when a demand for payment of the taxes has been made and the taxpayer has failed to pay those taxes sec_6320 provides that the secretary shall furnish the taxpayer with a written nftl within business days after the nftl is filed including notice of the administrative appeals available to the taxpayer like the final notice_of_intent_to_levy sec_6320 provides that the notice of filing of a lien must be given in person left at the person’s dwelling or usual place of business or sent by certified or registered mail to the person’s last_known_address however in contrast to a levy the secretary need not provide notice before the filing of a lien instead the secretary must only provide notice of having already filed a lien within days of doing so sec_6320 further the lien exists regardless of whether it has been filed by the secretary sec_6321 accordingly the regulations provide a nftl becomes effective upon filing the validity and priority of a nftl is not conditioned on notification to the taxpayer pursuant to sec_6320 therefore the failure to notify the taxpayer concerning the filing of a nftl does not affect the validity or priority of the nftl when the irs determines that it failed properly to provide a taxpayer with a cdp_notice it will promptly provide the taxpayer with a substitute cdp_notice and provide the taxpayer with an opportunity to request a cdp hearing sec_301_6320-1 q a-12 proced admin regs while the validity or priority of a lien may not be affected by the secretary’s failure to provide proper notice within days sec_6320 makes clear that a taxpayer is entitled to a valid notice and an administrative hearing upon the secretary’s filing of a lien thus the secretary must send the nftl filing to the taxpayer’s last_known_address sec_301_6212-2 and b proced admin regs applies to all notices and documents whenever the term last_known_address is used sec_301_6212-2 proced admin regs the regulation provides the general_rule a taxpayer’s last_known_address is the address that appears on the taxpayer’s most recently filed and properly processed federal tax_return unless the internal_revenue_service irs is given clear and concise notification of a different address sec_301_6212-2 proced admin regs see also kennedy v commissioner supra pincite n 62_tc_367 affd without published opinion 538_f2d_334 9th cir an inquiry into a taxpayer’s last_known_address is based on the relevant facts and circumstances 74_tc_430 if the government has become aware of a change_of address the commissioner may not rely on the address listed on the last-filed tax_return but must exercise reasonable care to discern the taxpayer’s correct address see eg 83_tc_626 we examine what respondent knew at the time the notice was issued attributing ‘to respondent information which respondent knows or should know with respect to a taxpayer’s last_known_address through the use of its computer system ’ buffano v commissioner supra quoting 91_tc_1019 respondent’s collection branch sent petitioner a letter requesting petitioner’s assistance in updating its records while petitioner may not have been the most diligent taxpayer--having not filed returns since 1996--the record reflects that petitioner did respond to respondent’s request upon receipt of the letter petitioner checked the box to indicate that the kost road address was his correct address petitioner then sent the letter back to respondent by certified mail the return receipt reflects that respondent received the completed letter on date in ogden utah accordingly we find that respondent knew or at the very least should have known on the basis of information mailed to him that petitioner’s address was the kost road address in sum we find that the final notice_of_intent_to_levy as well as the nftl respondent issued with respect to petitioner’s and tax years were not mailed to petitioner’s last_known_address and are therefore invalid for this reason we will dismiss this case for lack of jurisdiction to reflect the foregoing an appropriate order will be entered dismissing this case for lack of jurisdiction on the ground that respondent did not send petitioner valid collection notices to his last_known_address


number release date department of the treasury internal_revenue_service washington d c date cc el gl br1 tl-n-7164-98 uilc memorandum for assistant district_counsel kansas-missouri from subject michael r arner senior technician reviewer warning of enforcement actions against corporations significant service_center advice this responds to your request for significant advice dated date initially we responded in a memorandum dated date service_center advisory number the date memorandum contained an inadvertent error this memorandum corrects the error and rescinds the date memorandum accordingly our views are provided below with respect to the positions stated in your date memorandum issue whether the notice_of_intent_to_levy required by sec_6331 must be issued to the corporation rather than a person holding a power_of_attorney when the corporation has authorized a person to represent the corporation conclusion the notice_of_intent_to_levy required by sec_6331 must be issued to the corporation and a person holding a power_of_attorney when the corporation has authorized a person to represent the corporation in your memorandum you requested our advice as to whether the internal_revenue_service service should issue a notice_of_intent_to_levy upon a corporate officer rather than a person holding a power_of_attorney for the corporation you concluded that sec_6331 of the internal_revenue_code code requires the service to give the notice_of_intent_to_levy to a corporate officer rather than the power_of_attorney and further that sec_6304 does not require the service to give the notice to the power_of_attorney in our date memorandum we inadvertently stated that a notice_of_intent_to_levy required by sec_6331 must be issued to a corporate officer there is no such requirement tl-n-7164-98 facts the corporation has authorized a person holding a power_of_attorney to represent the corporation in accordance with sec_6331 a notice_of_intent_to_levy is to be issued to the corporation for an unpaid tax_liability discussion a a notice_of_intent_to_levy must be issued to the corporation the treasury regulations regulations and case law support the conclusion that a notice_of_intent_to_levy must be issued to the corporation sec_6331 of the code provides that the service may levy upon property of any person only after the secretary has notified such person in writing of his intention to make such levy sec_6331 states the following the notice required under paragraph shall be- a given in person b left at the dwelling or usual place of business of such person or c sent by certified or registered mail to such person’s last know address no less than days before the day of the levy emphasis added the regulations unambiguously state that the notice_of_intent_to_levy must be sent to the taxpayer sec_301_6331-2 of the regulations provides that the service may levy on the property of a taxpayer after the director has notified the taxpayer in writing of the intent to levy the notice must be given in person be left at the dwelling or usual place of business_of_the_taxpayer or be sent by registered or certified mail to the taxpayer’s last know address thus the commissioner the term person shall be construed to mean and include an individual company or corporation sec_7701 the term taxpayer means any person subject_to any internal revenue tax sec_7701 in your memorandum you concluded that as applied to a corporation this regulation requires the notice to be delivered in person to a corporate officer left at the corporation’s usual place of business or mailed to the corporation’s last know address emphasis added there is no requirement in the code regulations or internal_revenue_manual that requires a notice that is delivered in person be given exclusively to a corporate officer tl-n-7164-98 has by regulation construed sec_6331 of the code to require that a notice_of_intent_to_levy be issued to the taxpayer furthermore case law strongly supports that the notice_of_intent_to_levy must be served upon the taxpayer the fourth circuit noted the following sec_6331 provides that the government can make a levy upon a person’s property subject_to a tax_lien only after the secretary has notified such person in writing of his intention to make such a levy see sec_6331 and such notice must be served on the person upon whose property levy is intended no less than days before the day of the levy see sec_6331 emphasis added see 841_f2d_97 4th cir see eg 970_f2d_750 10th cir haggert v philips medical systems inc 39_f3d_1166 1st cir moreover courts have held that strict compliance with this procedure is ‘necessary to effect a valid levy and seizure ’ potemken f 2d pincite quoting matter of 40_br_201 n d ga see also james f 2d pincite b a copy of the notice_of_intent_to_levy must be sent to the power_of_attorney the regulations require that a copy of the notice_of_intent_to_levy be sent to a person holding a power_of_attorney for the corporation sec_601_502 et seq provides the rules for powers of attorney sec_601_501 states that t hese rules as to the power_of_attorney apply to all offices of the internal_revenue_service in all matters therefore the power_of_attorney rules must apply to the service’s notice_of_intent_to_levy sec_601_506 provides that a ny notice or other written communication or copy thereof required or permitted to be given to a taxpayer in any matter must be given to the taxpayer and to the representative however failure to give notice or other written communication to the recognized representative of a taxpayer will not affect the validity of any notice sec_601_506 thus a person holding a power_of_attorney for a since congress has delegated to the commissioner the power to promulgate all needful rules and regulations for the enforcement of the internal_revenue_code sec_7805 the courts will defer to the regulatory interpretations of the code so long as they are reasonable cottage sav ass’n v c i r 111_sct_1503 see also national muffler dealers assn inc v united_states 99_sct_1304 a person holding a power_of_attorney for a taxpayer must be a recognized representative of the taxpayer in accordance with sec_601_502 et seq tl-n-7164-98 taxpayer must receive a copy of the notice_of_intent_to_levy see also irm c sec_6304 does not require that a notice_of_intent_to_levy be sent to the power_of_attorney sec_6304 does not require that the service send a notice_of_intent_to_levy to the power_of_attorney sec_6304 of the code provides that the service may not communicate with the taxpayer in connection with the collection of any unpaid tax if the service knows the taxpayer is represented by any person authorized to practice before the internal_revenue_service with respect to such unpaid tax sec_6304 is not limited in application to individual taxpayers but applies to all taxpayers with respect to any unpaid tax including corporate tax the congressional intent of sec_6304 was to address the concerns regarding abusive or harassing contact with taxpayers see s rep no pincite we believe that a notice_of_intent_to_levy does not have the potential to harass a taxpayer to the contrary strict compliance with this procedure is necessary to effect a valid levy and seizure in order ‘to give the taxpayer a last chance to avoid the drastic consequences of seizure by payment of the tax_liability ’ 815_fsupp_1444 n d fla quoting potemken f 2d pincite moreover sec_6304 is currently substantially codified in off-code provisions and is in the internal_revenue_manual see irm therefore we believe it does not significantly impact current business practices with regard to notices of intent to levy see internal_revenue_service u s dep’t of the treasury pub no irs restructuring and reform act of conduct provisions accordingly we agree with your position that statutorily required notices such as the notice_of_intent_to_levy do not come within the purview of sec_6304 in sum we conclude that a notice_of_intent_to_levy must be issued to the corporation and a person holding a power_of_attorney when the corporation has authorized a person to represent the corporation if you have any further questions please call


internal_revenue_service department of the treasury number release date index number 468a washington dc person to contact telephone number refer reply to cc psi 6-plr-117033-03 date date in re revised schedule of ruling amounts legend plant taxpayer parent commission a commission b order a b c d e f g h i j k l m n o plr-117033-03 dear this letter responds to a request for private_letter_ruling dated date and subsequent submissions filed on behalf of the above taxpayer pursuant to the elective provisions of sec_1_468a-3 of the income_tax regulations requesting a schedule of ruling amounts relating to plant's qualified nuclear decommissioning fund fund taxpayer is requesting this schedule because commission a in order decreased the amount of decommissioning costs to be included in cost of service for plant taxpayer previously received a schedule of ruling amounts pertaining to plant on a information was submitted pursuant to sec_1_468a-3 taxpayer a regulated_public_utility is a wholly owned subsidiary of parent taxpayer directly owns a b percent interest in the plant commission a and commission b have regulatory jurisdiction over the rates charged by taxpayer with respect to plant however taxpayer is only seeking a ruling_amount for the c percent portion of taxpayer’s operations allocable to commission a’s jurisdiction taxpayer joins parent in filing a consolidated tax_return and both are under the audit jurisdiction of the industry director natural_resources and construction lm nrc the estimated cost of decommissioning the plant is dollar_figured commission a in order provided for decommissioning costs for the plant to be included in taxpayer's cost of service for ratemaking purposes the level_funding limitation period and the funding_period are e through f the assumed after-tax rate of return to be earned by the assets of the fund is g percent the rate of escalation to determine the future cost of decommissioning the plant is h percent the proposed method for decommissioning the plant is safe storage with deferred decontamination approximate years dormancy followed by the prompt removal dismantlement method taxpayer has determined the estimated period for which the fund is to be in effect is i years j through k and the estimated_useful_life of the plant is l years m through n therefore the qualifying percentage is o percent sec_468a of the code provides that a taxpayer may elect to deduct the amount of payments made to a qualified decommissioning fund however sec_468a limits the amount_paid into such fund for any taxable_year to the lesser_of the amount of nuclear decommissioning costs allocable to this fund which is included in the taxpayer's cost of service for ratemaking purposes for the tax_year or the ruling_amount applicable to this year sec_468a of the code provides that no deduction shall be allowed for any payment to the nuclear decommissioning fund unless the taxpayer requests and receives from the secretary a schedule of ruling amounts the ruling_amount for any_tax year is plr-117033-03 defined under sec_468a as the amount which the secretary determines to be necessary to fund that portion of nuclear decommissioning costs which bears the same ratio to the total nuclear decommissioning costs with respect to the nuclear power plant as the period for which the nuclear decommissioning fund is in effect bears to the estimated_useful_life of the plant this term is further defined to include the amount necessary to prevent excessive funding of nuclear decommissioning costs or funding of these costs at a rate more rapid than level_funding taking into account such discount rates as the secretary deems appropriate sec_468a of the code provides that a taxpayer shall be deemed to have made a payment to the nuclear decommissioning fund on the last day of a taxable_year if the payment is made on account of such taxable_year and is made within ½ months after the close of the tax_year sec_1_468a-1 of the regulations provides that an eligible_taxpayer may elect to deduct nuclear decommissioning costs under sec_468a of the code an eligible_taxpayer as defined under sec_1_468a-1 of the regulations is a taxpayer that has a qualifying interest in among other things a direct ownership_interest including an interest as a tenant in common or joint tenant sec_1_468a-2 of the regulations provides that the maximum amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year shall not exceed the lesser_of i the cost of service amount applicable to the nuclear decommissioning fund for such tax_year or ii the ruling_amount applicable to the nuclear decommissioning fund for such tax_year if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b the excess is not deductible by the electing taxpayer in addition under sec_1_468a-5 there are rules which provide that the internal_revenue_service may disqualify a nuclear decommissioning fund if the amount of cash payments made or deemed made to a nuclear decommissioning fund during any_tax year exceeds the limitation of paragraph b sec_1_468a-3 of the regulations provides that in general a schedule of ruling amounts for a nuclear decommissioning fund is a ruling specifying annual payments that over the tax years remaining in the funding_period as of the date the schedule first applies will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding_period equal to and in no event more than the amount of decommissioning costs allocable to the fund sec_1_468a-3 of the regulations provides that to the extent consistent with the principles and provisions of this section each schedule of ruling amounts shall be based on the reasonable assumptions and determinations used by the applicable public_utility commission in establishing or approving the amount of decommissioning costs to be included in the cost of service for ratemaking purposes under sec_1_468a-3 the internal_revenue_service shall provide a schedule of ruling amounts identical to the plr-117033-03 schedule proposed by the taxpayer but no such schedule shall be provided by the service unless the taxpayer's proposed schedule is consistent with the principles and provisions of that section sec_1_468a-3 of the regulations provides that in general the amount for any_tax year in the level_funding limitation period shall not be less than the ruling_amount for any earlier tax_year under sec_1_468a-3 the level_funding limitation period begins on the first day of the first tax_year for which a deductible payment is made to the nuclear decommissioning fund and ends on the last day on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes sec_1_468a-3 of the regulations provides that the amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant multiplied by the qualifying percentage sec_1_468a-3 of the regulations provides that in general the total estimated cost of decommissioning a nuclear power plant is the reasonably estimated cost of decommissioning used by the applicable public_utility commission in establishing or approving the amount of these costs to be included in cost of service for ratemaking purposes sec_1_468a-3 of the regulations provides that a taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such plant multiplied by the taxpayer's qualifying interest in the plant under sec_1_468a-3 the qualifying percentage for any nuclear decommissioning fund is equal to a fraction the numerator of which is the number of tax years in the estimated period for which the nuclear decommissioning fund is to be in effect and the denominator of which is the number of tax years in the estimated_useful_life of the applicable plant sec_1_468a-3 of the regulations provides that the estimated period for which a nuclear decommissioning fund is to be in effect begins on the later of the first day of the first taxable_year for which a deductible payment is made to the nuclear decommissioning fund or deemed made or the first day of the taxable_year that includes the date that the nuclear power plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base plr-117033-03 sec_1_468a-3 of the regulations provides that the estimated_useful_life of a nuclear power plant begins on the first day of the taxable_year that includes the date that the plant begins commercial operations as determined by the applicable public_utility commission at the time the plant was first included in the taxpayer's rate base and ends on the last day of the taxable_year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes according to sec_1_468a-3 the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes is determined under the ratemaking assumptions used by the applicable public_utility commission in establishing or approving rates during the first ratemaking proceeding in which the nuclear power plant was included in the taxpayer's rate base sec_1_468a-3 of the regulations provides that the internal_revenue_service shall not provide a taxpayer with a schedule of ruling amounts for any nuclear decommissioning fund unless the public_utility commission that establishes or approves the rates for electric energy generated by the plant has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes and has disclosed the after-tax rate of return and any other assumptions and determinations used in establishing or approving the amount we have examined the representations and the data submitted by the taxpayer in relation to the requirements set forth in the code and the regulations based solely upon these representations of the facts we reach the following conclusions for the period covered by this schedule of ruling amounts taxpayer had a qualifying interest in the plant and was therefore an eligible_taxpayer under sec_1_468a-1 of the regulations commission a has determined the decommissioning costs to be included in taxpayer's cost of service for ratemaking purposes as required by sec_1_468a-3 of the regulations taxpayer has proposed a schedule of ruling amounts which meets the requirements of sec_1_468a-3 and of the regulations the annual payments specified in the proposed schedule of ruling amounts are based on the reasonable assumptions and determinations used by commission a and will result in a projected fund balance at the end of the funding_period equal to or less than the amount of decommissioning costs allocable to the fund taxpayer has determined under sec_1_468a-3 of the regulations that the qualifying percentage is o percent plr-117033-03 the maximum amount of cash payments made or deemed made to the fund during any_tax year is restricted to the lesser amount of the cost of service amount applicable to the fund or the ruling_amount applicable to the fund as set forth under sec_1_468a-2 of the regulations based solely on the determinations above we conclude that the taxpayer's proposed schedule of ruling amounts in regard to commission a satisfies the requirements of sec_468a of the code accordingly the schedule of ruling amounts requested by the taxpayer under sec_468a is approved as follows approved schedule of ruling amounts allocable to the taxpayer year amount approval of the schedule of ruling amounts is contingent on there being no change in the facts and circumstances known or assumed at the time the current ruling is issued except as specifically determined above no opinion is expressed or implied concerning the federal_income_tax consequences of the transaction described above the approved schedule of ruling amounts is relevant only to those payments made to the fund payments allocable to any funds other than the fund cannot qualify for purposes of the deduction under the provisions of sec_468a of the code payments made to such fund can qualify only to the extent that they do not exceed the lesser_of the decommissioning costs applicable to such fund or the ruling amounts applicable to this fund in the tax_year this ruling is directed only to the taxpayer who requested it sec_6110 of the code provides it may not be used or cited as precedent in accordance with the powers of attorney we are sending this letter to the taxpayer’s authorized representative and are sending copies of this letter to the taxpayer and an additional authorized representative we are also sending a copy of this letter_ruling to the industry director natural_resources and construction lm nrc pursuant to sec_1 the ruling_amount for this year is a blended amount with a portion of the amount based upon an earlier schedule of ruling amounts and therefore is not a violation of the level_funding requirement in sec_1_468a-3 of the regulations plr-117033-03 468a-7 a of the regulations a copy of this letter must be attached with the required election statement to the taxpayer's federal_income_tax return for each tax_year in which the taxpayer claims a deduction for payments made to the fund sincerely yours peter c friedman senior technician reviewer branch office of associate chief_counsel passthroughs and special industries


t c memo united_states tax_court regina bruce petitioner v commissioner of internal revenue respondent docket no filed date regina bruce pro_se brianna b taylor for respondent memorandum opinion couvillion special_trial_judge respondent determined the following deficiencies and sec_6651 and 1unless otherwise indicated all section references are to the internal_revenue_code in effect for the years at issue and all rule references are to the tax_court rules_of_practice and procedure additions to tax for petitioner’s and taxable years year deficiency sec_6651 sec_6654 dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure dollar_figure the issues for decision are whether petitioner received taxable_income during those years and if so whether she is liable for the tax and additions to tax determined by respondent for such years some of the facts were stipulated and those facts with the annexed exhibits are so found and are incorporated herein by reference at the time the petition was filed petitioner’s legal residence was lake city georgia petitioner did not file federal_income_tax returns for any of the years at issue she did not file for extensions of time to file for those years nor did she make any estimated payments toward her tax_liabilities respondent prepared substitutes for return for each of the subject years and issued a notice_of_deficiency for each year based on wage and dividend information reported by six different third party payers the third party payers who reported paying petitioner wages or dividends were minolta business systems inc minolta ikon office solutions west inc ikon pfs shareholder services s b money fund oce usa inc carmax auto superstores inc carmax and primerica shareholder services based on the information returns respondent determined that petitioner earned the following in wage and dividend income for said years year amount dollar_figure big_number big_number big_number the notices of deficiency were issued date petitioner is a part-time consultant in sales and marketing during the years in question petitioner also sold copiers on behalf of minolta and ikon and automobiles on behalf of carmax petitioner reluctantly admitted she was paid_by each of the companies for her services but maintains that such payments do not constitute taxable_income at trial petitioner argued that the notices of deficiency were invalid however she offered no evidence to substantiate that claim petitioner’s testimony throughout trial was limited to legal arguments that respondent had failed to provide her with full disclosure pursuant to sec_6303 and accusations that this court and the laws of the united_states are unduly prejudiced against her and were seeking to enslave her furthermore petitioner claimed that the notices of deficiency for the subject years were officially dead and mute because the department of the treasury had refused to submit a sworn affidavit disclosing who made the determination of deficiency was it the secretary who made the determination if it was not the secretary then who and was that person authorized to make the determination and by whom was that person authorized to make the determination of deficiency petitioner bore the burden of proving the determinations by respondent were incorrect she did nothing to advance her position or fulfill the burden_of_proof in fact when the court sought to elicit from her whether she might be entitled to dependency_exemptions or deductions for charitable_contributions petitioner refused to answer stating it’s not relevant if someone doesn’t have taxable_income why would it be relevant the court therefore sustains respondent on the determinations for and 2generally the determinations of the commissioner in a notice_of_deficiency are presumed correct and this presumption places the burden on the taxpayer to show that the determinations are incorrect rule a 503_us_79 290_us_111 sec_7491 under certain circumstances alters the burden_of_proof with respect to a taxpayer’s liability for taxes in court proceedings arising in connection with examinations commencing after date although this examination commenced after date petitioner does not satisfy the requirements of sec_7491 not only did petitioner not produce credible factual evidence that she was not liable for the tax but also she did not cooperate with respondent before trial therefore petitioner bears the burden_of_proof at trial with respect to the sec_6651 addition_to_tax a taxpayer is subject_to an addition_to_tax for failure_to_file a timely return unless the taxpayer can establish that such failure is due to reasonable_cause and not willful neglect sec_6651 willful neglect is defined as a conscious intentional failure or reckless indifference 469_us_241 petitioner was required to file a timely federal_income_tax return for each of the years at issue sec_6012 petitioner offered no other excuse for not filing timely returns for the years at issue other than the blanket statement that she did not earn taxable_income and therefore was not required to file returns petitioner earned_taxable_income during and and should have filed a timely income_tax return for each of the years petitioner’s reasons for not filing amount to willful neglect sec_6651 united_states v boyle supra pincite respondent is therefore sustained on this issue respondent also determined a sec_6654 addition_to_tax against petitioner a taxpayer is subject_to this addition_to_tax in the case of any underpayment of estimated_tax by an 3under sec_7491 respondent first must produce evidence that petitioner meets the factual requirements of any penalty or addition_to_tax before the burden shifts to the taxpayer respondent satisfied his burden by producing evidence that petitioner did not file a timely return during the years at issue therefore burden has shifted to petitioner to show there was reasonable_cause for her delay in filing individual sec_6654 subject_to certain statutory exceptions the addition_to_tax is applied if the amount of withholding and estimated_tax payments does not equal statutorily designated amounts 99_tc_202 the sec_6654 addition_to_tax is mandatory unless the taxpayer comes within one of the limited statutory exceptions sec_6654 see 91_tc_874 petitioner’s only argument as to why she did not make any estimated payments was that she did not earn taxable_income petitioner does not qualify for any of the listed exceptions sec_6654 she is therefore liable for the sec_6654 addition_to_tax for each of the years at issue at trial respondent filed a written motion for the penalty under sec_6673 sec_6673 allows the court to impose a penalty in an amount up to dollar_figure on a taxpayer if the position or positions asserted by the taxpayer in the case are frivolous or groundless sec_6673 petitioner’s positions were those of a classic tax_protester before during and after trial petitioner flooded respondent and this court with exhibits and inflammatory affidavits advancing her position that the u s tax system is unlawful and the irs is abusive furthermore her conduct at trial was highly improper she refused to answer factual questions during trial about how much money she earned whether she had ever filed a tax_return or whether she obtained tax_advice from anyone instead petitioner persisted in repeating her statements about the illegality of the internal_revenue_code and the oppression of the irs toward her and all fellow citizens when the court reprimanded her for wasting time on frivolous arguments petitioner simply restated her beliefs and accused the court of trying to silence her finally when the court denied her objections as to the relevancy of respondent’s routine questions and ordered her to answer petitioner answered each question with i have amnesia i don’t know petitioner was warned repeatedly that her arguments were frivolous and that if she continued in that vein she would be subject_to an additional penalty furthermore when respondent moved to impose the penalty the court gave petitioner an opportunity to file a reply brief petitioner’s reply brief however simply reiterated the protester arguments she advanced at trial on this record the court grants respondent’s motion 4for example petitioner attached a computer cd entitled a disturbing expose’ of the united_states income_tax system to many of her letters and affidavits and imposes a sec_6673 penalty of dollar_figure for instituting and maintaining a frivolous and groundless petition an appropriate order and decision will be entered for respondent


tcmemo_2011_270 united_states tax_court david c waring petitioner v commissioner of internal revenue respondent docket no 1599-10l filed date david c waring pro_se james r bamberg for respondent memorandum findings_of_fact and opinion paris judge on date respondent mailed to petitioner a notice_of_determination concerning collection action s under sec_6320 and or notice_of_determination which sustained the filing of a notice_of_intent_to_levy for taxable years and in response to that notice and pursuant to sec_6330 petitioner timely petitioned this court for review of respondent’s refusal to consider the underlying tax_liabilities and denial of petitioner’s offer-in-compromise oic in a collection_due_process cdp hearing the issues for decision are whether petitioner was provided the opportunity to challenge the underlying tax_liabilities for taxable years and and whether respondent’s determination to sustain the collection by levy was an abuse_of_discretion findings_of_fact some of the facts and exhibits have been stipulated and are incorporated herein by reference at the time the petition was filed petitioner resided in florida petitioner timely filed his taxable_year and federal_income_tax returns on date respondent mailed to petitioner a notice_of_deficiency determining income_tax deficiencies for taxable years and and accuracy- related penalties under sec_6662 petitioner received the 1all section references are to the internal_revenue_code as amended and all rule references are to the tax_court rules_of_practice and procedure unless otherwise indicated notice_of_deficiency but failed to contest or pay the outstanding tax_liabilities on date respondent sent to petitioner a notice_of_intent_to_levy and notice of your right to a hearing for the unpaid income_tax and penalties for taxable years and on date petitioner submitted a form request for a collection_due_process or equivalent_hearing with respect to the proposed collection by levy in his request petitioner requested an oic and disagreed with the levy because of economic hardship on date settlement officer so latorre sent to petitioner a letter which scheduled a date cdp hearing the letter further advised petitioner that in order for an oic to be considered he had to provide so latorre within days of the letter with the following signed federal tax returns for taxable periods ended date and a completed form 433-a collection information statement for wage earners and self-employed individuals and a proposal for repayment 2some time after the 90-day window to file a petition with the court petitioner did prepare and submit a form 1040x amended u s individual_income_tax_return and contact respondent’s audit_reconsideration unit unfortunately petitioner did not simultaneously file a timely petition with the court therefore documents and arguments related to this are not relevant on date petitioner contacted so latorre and requested a face-to-face cdp hearing which so latorre denied as petitioner was not in compliance with filing_requirements on date respondent agreed to petitioner’s request to reschedule the cdp hearing until date to allow petitioner further time to collect documentation on date so latorre held a telephone cdp hearing with petitioner petitioner challenged the underlying tax_liabilities for the periods at issue and challenged the levy as inappropriate because of petitioner’s financial hardship on date respondent mailed to petitioner a notice_of_determination upholding the levy action denying petitioner’s oic as petitioner had had a previous opportunity to contest the underlying liabilities he was not able to contest them at the cdp hearing further while petitioner orally mentioned an oic petitioner never filed documentation supporting the offer in response petitioner timely filed a petition with this court opinion where the validity of the underlying tax_liability is properly at issue the court will review the matter de novo 3the outstanding tax_liabilities for both taxable years stem from petitioner’s attempt to form a sec_501 charitable_organization unfortunately petitioner did not file the application_for tax-free status until date after the taxable years at issue 115_tc_35 where the underlying tax_liability is not properly at issue the court will review the commissioner’s administrative determination for abuse_of_discretion 114_tc_604 114_tc_176 petitioner may prove abuse_of_discretion by showing that respondent exercised his discretion arbitrarily capriciously or without sound basis in fact or law see 129_tc_107 underlying liability generally sec_6330 provides protections for taxpayers in tax collection matters under sec_6330 a taxpayer is given notice of the government’s intent to levy and the right to an administrative collection hearing and judicial review of that proposed levy goza v commissioner supra pincite a taxpayer may dispute the underlying tax_liability at the administrative hearing if two requirements have been satisfied the taxpayer did not receive a notice_of_deficiency for that tax_liability and the taxpayer did not otherwise have an opportunity to dispute that tax see 131_tc_197 petitioner was sent a notice_of_deficiency on date which informed him that he had until date to file a petition with the court petitioner failed to file a petition with the court before the period to file expired therefore petitioner had an opportunity to dispute the tax and the standard of review for the denial of his oic is abuse_of_discretion abuse_of_discretion petitioner contends that respondent’s refusal to consider a collection alternative because he had not filed a formal oic was an abuse_of_discretion taxpayers who wish to propose an oic must submit a form_656 offer_in_compromise see goodwin v commissioner tcmemo_2003_289 affd 132_fedappx_785 11th cir the court has held that there is no abuse_of_discretion when appeals fails to consider an oic when a form_656 was not filed with appeals see 135_tc_344 124_tc_69 cf 133_tc_392 petitioner did not submit a form_656 or propose defined settlement terms the court finds that so latorre did not abuse her discretion in rejecting petitioner’s proposed collection alternative balancing test under sec_6330 an so’s review of a taxpayer’s oic must include verification that the requirements of any applicable law or administrative procedure have been met consideration of any allowance issues raised by the taxpayer and review of whether the proposed collection action balances the need for the efficient collection_of_taxes with the legitimate concern that any collection action be no more intrusive than necessary sec_6330 so latorre met all of these requirements she reviewed the internal revenue service’s transcripts and computer records of petitioner’s account to determine that the requirements of applicable law and administrative procedure had been met see hill v commissioner tcmemo_2002_272 so latorre considered the issues petitioner raised but determined that he could not contest the validity or amount of his underlying tax_liabilities because he had had a prior opportunity to do so so latorre also rejected petitioner’s oic as he failed to file a form_656 so latorre performed the balancing test finding that the levy balanced the need for collection with the concerns of petitioner to reflect the foregoing decision will be entered for respondent