Court Opinion

ID: 9839967
Source: CourtListenerOpinion
Date Created: 2023-09-14 19:03:15.12714+00
Date Added: 2024-06-11T09:42:44.990401
License: Public Domain

United States Tax Court

                              161 T.C. No. 3

                 PIPER TRUCKING & LEASING, LLC,
                           Petitioner

                                     v.

            COMMISSIONER OF INTERNAL REVENUE,
                        Respondent

                                —————

Docket No. 20468-21L.                          Filed September 14, 2023.

                                —————

            R assessed, through his Combined Annual Wage
      Reporting (CAWR) computer program, an I.R.C. § 6721(e)
      penalty against P for failure to file Forms W–2, Wage and
      Tax Statement, with the Social Security Administration.
      The assessment occurred without human intervention or
      supervisory approval. R filed a Notice of Federal Tax Lien
      and subsequently issued a notice of determination
      sustaining the lien.

            Held: An I.R.C. § 6721(e) penalty assessed through
      R’s CAWR computer program is not subject to the I.R.C.
      § 6751(b)(1) supervisory approval requirement.

                                —————

Steven Piper (an officer), for petitioner.

Kathryn E. Kelly and Justin E. Wayne, for respondent.

                                OPINION

      FOLEY, Judge: This matter is before the Court pursuant to Rule
121 on petitioner’s Motion for Summary Judgment and respondent’s

                             Served 09/14/23
                                            2

Motion for Summary Judgment. 1 The primary issue for decision is
whether a section 6721(e) penalty, assessed through respondent’s
Combined Annual Wage Reporting (CAWR) computer program, requires
supervisory approval pursuant to section 6751(b)(1).

                                     Background

      Petitioner, Piper Trucking & Leasing, LLC, is a single-member
limited liability company. Petitioner’s principal place of business is
Celina, Ohio.

      Employers are required to file Form W–2, Wage and Tax
Statement, and Form W–3, Transmittal of Wage and Tax Statement,
with the Social Security Administration (SSA). The SSA sends two
warning letters to employers that fail to file these forms. The first letter
informs the employer to either respond or file the missing forms. The
second letter warns the employer that the matter will be referred to the
Internal Revenue Service (IRS) to determine whether penalties are
applicable. If an employer fails to respond to both letters, their name is
added to a database. Every year the SSA transfers this database to the
IRS. Following the transfer of the database, the CAWR computer
program automatically sends the employers in the database a Letter
98C asserting a section 6721(e) penalty. If the employer does not
respond to the Letter 98C, the IRS, through the CAWR computer
program and without any human intervention, assesses the section
6721(e) penalty.

       In a Letter 98C dated May 29, 2018, respondent asserted a section
6721(e) penalty. Petitioner did not respond. On March 4, 2019,
respondent assessed, through his CAWR computer program, a section
6721(e) penalty against petitioner for failure to file, with the SSA, Forms
W–2 relating to 2015. Petitioner did not pay the section 6721(e) penalty,
and, on September 17, 2019, respondent sent petitioner a Notice of
Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320
relating to 2015. In a timely filed Form 12153, Request for a Collection
Due Process or Equivalent Hearing, dated October 24, 2019, petitioner
requested a lien withdrawal and submitted a Form 2848, Power of
Attorney and Declaration of Representative.

       1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times, and Rule references are to the Tax
Court Rules of Practice and Procedure.
                                    3

       In a letter dated May 28, 2020, respondent informed petitioner
that its telephonic collection due process (CDP) hearing was scheduled
for June 24, 2020, and requested that petitioner complete Form 433–B,
Collection Information Statement for Businesses, and file its Form 940,
Employer’s Annual Unemployment (FUTA) Tax Return, relating to
2019. Neither petitioner nor its representative attended the June 24
hearing.

      Respondent scheduled a telephonic CDP hearing for June 30,
2020. Petitioner’s representative attended and agreed to send the
required documentation by July 15, 2020. Petitioner did not submit the
documents, and after July 15, 2020, the parties had no further
discussions. Petitioner did not propose a collection alternative or dispute
the underlying liability.

       Respondent, on April 30, 2021, issued petitioner a Notice of
Determination Concerning Collection Actions under IRC Sections 6320
or 6330 sustaining the lien filing. On June 4, 2021, petitioner timely
filed its Petition with the Court. On May 19, 2022, the Court filed
respondent’s first Motion for Summary Judgment. Petitioner did not file
a response. By order dated September 27, 2022, the Court denied
respondent’s first Motion for Summary Judgment because respondent
failed to produce evidence that the underlying section 6721(e) penalty
met the section 6751(b)(1) supervisory approval requirement. On
November 9, 2022, the Court filed respondent’s second Motion for
Summary Judgment. On December 5, 2022, the Court filed petitioner’s
Motion for Summary Judgment.

                               Discussion

       Section 6751(b)(1) provides that no penalty shall be assessed
unless the initial determination to assert penalties is approved in
writing by the immediate supervisor of the person making the
determination. Section 6751(b)(2)(B) provides that penalties
“automatically calculated through electronic means” are not subject to
the section 6751(b)(1) supervisory approval requirement.

      Because petitioner failed to respond to the Letter 98C, the
underlying section 6721(e) penalty was determined through
respondent’s CAWR computer program and did not involve human
intervention. Therefore, the underlying section 6721(e) penalty was
“automatically calculated through electronic means.” See Walquist v.
Commissioner, 152 T.C. 61, 70 (2019) (concluding that an accuracy-
                                    4

related penalty issued without human intervention through the IRS’s
Correspondence Examination Automated Support computer program
was automatically calculated through electronic means). Thus, section
6751(b)(2) dictates, and we hold, that a section 6721(e) penalty assessed
through respondent’s CAWR computer program is not subject to the
section 6751(b)(1) supervisory approval requirement. See Jimenez v.
Quarterman, 555 U.S. 113, 118 (2009) (“It is well established that, when
the statutory language is plain, we must enforce it according to its
terms.”).

       Section 6330 provides that during a CDP hearing a taxpayer may
raise relevant issues such as spousal defenses, the appropriateness of
the proposed collection action, and possible collection alternatives. See
§ 6330(c)(2)(A); see also § 6320(c). The Court cannot consider issues that
were not raised during a CDP hearing. See Giamelli v. Commissioner,
129 T.C. 107, 114 (2007). Because petitioner failed to dispute the
underlying liability, the underlying liability is not at issue. See
§ 6330(c)(2)(B); Giamelli, 129 T.C. at 113–14. Accordingly, we review the
Commissioner’s administrative determinations for abuse of discretion.
See Pough v. Commissioner, 135 T.C. 344, 351 (2010); Goza v.
Commissioner, 114 T.C. 176, 182 (2000).

       Petitioner did not propose a collection alternative, failed to
provide the requested financial information, and was not current on its
filing obligations. Therefore, petitioner was not eligible for collection
alternatives or withdrawal of the lien. See McLaine v. Commissioner,
138 T.C. 228, 243 (2012); Pough, 135 T.C. at 351. The underlying penalty
did not require section 6751(b)(1) supervisory approval. Accordingly,
respondent’s Appeals officer was not required to verify approval of the
underlying penalty prior to issuing the notice of determination. See
§ 6330(c)(3)(A). The Appeals officer met the requirements of section
6330(c), and respondent did not abuse his discretion. See Nestor v.
Commissioner, 118 T.C. 162, 166 (2002); Lunsford v. Commissioner, 117
T.C. 183, 187–88 (2001).

       Respondent has established that there is no genuine dispute
relating to any material fact and that he is entitled to judgment as a
matter of law. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520
(1992), aff’d, 17 F.3d 965 (7th Cir. 1994). Accordingly, pursuant to Rule
121, summary judgment in favor of respondent is appropriate.

      An appropriate order and decision will be entered.