Court Opinion

ID: 9396826
Source: CourtListenerOpinion
Date Created: 2023-05-23 19:02:14.40856+00
Date Added: 2024-06-11T17:19:20.210618
License: Public Domain

United States Tax Court

                            160 T.C. No. 13

           PRINCE AMUN-RA HOTEP ANKH MEDUTY,
                        Petitioner

                                    v.

           COMMISSIONER OF INTERNAL REVENUE,
                       Respondent

                              —————

Docket No. 32817-21P.                               Filed May 23, 2023.

                              —————

              P owed more than $100,000 in unpaid, legally
      enforceable federal income tax liabilities and frivolous
      return penalties relating to eight taxable years. R was
      unable to collect those liabilities and certified to the
      Secretary of State that P had a “seriously delinquent tax
      debt” within the meaning of I.R.C. § 7345 for the relevant
      years and liabilities. P filed a petition with this Court
      under I.R.C. § 7345(e)(1) to challenge the certification. R
      filed a motion for summary judgment arguing that the
      certification was proper.

              Held: P’s liabilities constitute a “seriously
      delinquent tax debt” under I.R.C. § 7345, and R’s
      certification to the Secretary of State was not erroneous.

             Held, further, the Court lacks jurisdiction under
      I.R.C. § 7345(e) to review challenges to R’s compliance with
      the notification requirement set forth in I.R.C. § 7345(d).

                              —————

Prince Amun-Ra Hotep Ankh Meduty, pro se.

Susan K. Bollman, for respondent.

                           Served 05/23/23
                                         2

                                    OPINION

        URDA, Judge: In this passport case petitioner, Prince Amun-Ra
Hotep Ankh Meduty, seeks review pursuant to section 7345(e) 1 of the
certification by the Commissioner of the Internal Revenue Service (IRS)
to the Secretary of State that Mr. Meduty has a “seriously delinquent
tax debt” for his 2003, 2004, 2005, 2006, 2007, 2008, 2009, and 2012 tax
years. The Commissioner has filed a motion for summary judgment
under Rule 121, contending that his certification was proper and that
he is entitled to judgment as a matter of law. Seeing no error, we will
grant the Commissioner’s motion.

                                   Background

       The following facts are based on the parties’ pleadings and motion
papers, including the attached declarations and exhibits. See Rule
121(c). The exhibits included the relevant portions of the administrative
record that formed the basis of the certification. Mr. Meduty lived in
Georgia when he timely filed his petition.

       Mr. Meduty (formerly known as Steven Bell) failed to file timely
tax returns for the 2003–07, 2009, and 2012 tax years. For each of these
years except 2007, the IRS prepared a substitute for return under
section 6020(b) and later assessed the tax shown on the substitute for
return with penalties and interest. Mr. Meduty filed a belated tax
return for 2007, and the IRS assessed the amount shown on that return.
The IRS also assessed frivolous tax return penalties against Mr. Meduty
with respect to his 2005–08 tax years.

        In an effort to collect these liabilities, the IRS levied against Mr.
Meduty’s right to receive his state income tax refunds through an
automated levy process known as the State Income Tax Levy Program.
These levies took place on a rolling basis from 2012 through 2018 as
liabilities for various periods were assessed.

       On July 3, 2018, the IRS sent via certified mail to Mr. Meduty’s
last known address a notice of intent to levy with respect to his
outstanding liabilities. Although the IRS received a signed return
receipt three days later, Mr. Meduty did not request a collection due

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

Revenue Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, and all Rule
references are to the Tax Court Rules of Practice and Procedure. All monetary
amounts are rounded to the nearest dollar.
                                    3

process (CDP) hearing or otherwise contest the levy (and the time for
doing so has long since expired). The IRS recorded an “initial levy”
transaction code with respect to each of the periods and liabilities at
issue on August 31, 2018.

       On October 1, 2018, the IRS certified Mr. Meduty as an individual
owing a seriously delinquent tax debt arising from tax years 2003, 2004,
2005, 2006, 2007, 2008, 2009, and 2012. The IRS concurrently sent Mr.
Meduty, at his last known address, a Notice CP508C, Notice of
Certification of Your Seriously Delinquent Federal Tax Debt to the State
Department. At that point, Mr. Meduty’s assessed liabilities totaled
$106,346.

       Approximately three years later, Mr. Meduty petitioned this
Court to review the section 7345 certification under section 7345(e)(1).
He asserted in his petition, inter alia, that the Commissioner had failed
to cite any “authority implementing regulations published in the
Federal Register for Code § 7345,” that a levy is restricted to “salary or
wages of an officer, employee or elected official of the United States or
District of Columbia,” and that “value of $10,000,000 was sent for
acceptance[,] approval[, and] discharge of any debt.”

                               Discussion

I.    Background Law

      A.     Scope and Standard of Review Under Section 7345

       The purpose of summary judgment is to expedite litigation and
avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp.
v. Commissioner, 90 T.C. 678, 681 (1988). In cases that are subject to a
de novo scope of review, we may grant summary judgment when there
is no genuine dispute as to any material fact and a decision may be
rendered as a matter of law. Rule 121(a)(2); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).

       In cases in which the Court “must confine [itself] to the
administrative record to decide whether there has been an abuse of
discretion,” the ordinary “summary judgment standard is not generally
apt.” Van Bemmelen v. Commissioner, 155 T.C. 64, 78 (2020). In those
cases, “summary judgment serves as a mechanism for deciding, as a
matter of law, whether the agency action is supported by the
administrative record and is not arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” Id. at 79.
                                           4

      We need not decide in this case either the applicable scope or
standard of review. See, e.g., Rowen v. Commissioner, 156 T.C. 101, 106
(2021). As to the scope of review, there is no material dispute between
the parties regarding the evidence we should consider. As to the
standard of review, our decision would be the same whether we reviewed
the Commissioner’s certification de novo or for abuse of discretion.

        B.      Section 7345 Overview

        If the Commissioner certifies that a taxpayer has “a seriously
delinquent tax debt,” section 7345(a) provides that the certification shall
be transmitted “to the Secretary of State for action with respect to
denial, revocation, or limitation of [the taxpayer’s] passport.” 2 The
Commissioner is responsible for notifying the taxpayer of the
certification. I.R.C. § 7345(d).

        Generally, a “seriously delinquent tax debt” is a federal tax
liability that has been assessed, exceeds $50,000 (adjusted for inflation),
and is unpaid and legally enforceable. I.R.C. § 7345(b)(1), (f). 3 In
addition, to prevail on his motion for summary judgment, the
Commissioner must demonstrate that either “(i) a notice of lien has been
filed pursuant to section 6323 and the administrative rights under
section 6320 with respect to such filing have been exhausted or have
lapsed, or (ii) a levy is made pursuant to section 6331.” I.R.C.
§ 7345(b)(1)(C). As relevant here, section 6331 requires that the
Secretary provide the taxpayer a “brief statement” describing, inter alia,
levy procedures, administrative appeal rights, and collection
alternatives at least 30 days before the issuance of the levy. I.R.C.
§ 6331(d).

       If a certification is found to be erroneous, or if the certified debt is
fully satisfied or ceases to be seriously delinquent, the IRS must reverse
its certification and notify the Secretary of State and the taxpayer.

        2 Section 7345 outlines a two-step procedure whereby the Commissioner sends
certification to the Secretary of the Treasury, who then transmits the certification to
the Secretary of State. In practice, the IRS follows a one-step procedure whereby the
Commissioner, as the Secretary’s delegate, transmits the certification directly to the
State Department. See I.R.C. § 7701(a)(11); Internal Revenue Manual (IRM)
5.1.12.27.1, .6, .8 (Dec. 20, 2017).
        3 The inflation-adjusted amount for 2018, the year of the certification here, was

$51,000. See Rev. Proc. 2017-58, § 3.53, 2017-45 I.R.B. 489, 499. Although
section 7345(b)(2) sets forth certain exceptions to the term “seriously delinquent tax
debt,” Mr. Meduty does not argue that any applies. We thus will not tarry over them.
                                          5

I.R.C. § 7345(c)(1), (d). Section 7345(e)(1) permits a taxpayer who has
been certified as having a “seriously delinquent tax debt” to petition this
Court to determine “whether the certification was erroneous or whether
the [IRS] has failed to reverse the certification.” If we find that a
certification was erroneous, we “may order the Secretary [of the
Treasury] to notify the Secretary of State that such certification was
erroneous.” I.R.C. § 7345(e)(2). The statute specifies no other form of
relief that we may grant. Adams v. Commissioner, No. 1527-21P, 160
T.C., slip op. at 8 (Jan. 24, 2023).

II.    Analysis

       A.      Whether the Certification of Seriously Delinquent Tax Debt
               Was Erroneous

        The record shows that the Commissioner met the criteria to
certify that Mr. Meduty has a “seriously delinquent tax debt.” The
Commissioner has supplied Forms 4340, Certificate of Assessments,
Payments, and Other Specified Matters, for Mr. Meduty’s income tax
liabilities for 2003, 2004, 2005, 2006, 2007, 2009, and 2012, as well as
Forms 4340 related to the frivolous return penalties for 2005 through
2008. These Forms 4340 reflect assessments for each of the years and
liabilities at issue and show that as of October 2018, Mr. Meduty had
assessed, unpaid, and legally enforceable federal tax liabilities of
$106,346. Although Mr. Meduty contests the validity of the underlying
liabilities (primarily referencing run-of-the-mill tax-protester
arguments), “we do not have jurisdiction to review the liabilities
underlying the certification of a seriously delinquent tax debt.” See
Adams, 160 T.C., slip op. at 12–13 (citing Ruesch v. Commissioner, 154
T.C. 289, 295–98 (2020), aff’d in part, vacated in part and remanded per
curiam, 25 F.4th 67 (2d Cir. 2022)); see also Belton v. Commissioner, T.C.
Memo. 2023-13, at *13. 4

         4 We recognize that, after certification, the collection period of limitations

expired for the 2003, 2004, 2005, 2006, and 2007 federal income tax liabilities and the
2005, 2006, 2007, and 2008 frivolous return penalty liabilities, and the balances due
were written off. The total amount of Mr. Meduty’s tax liabilities thus dipped below
the 2018 threshold amount after the date of the certifications. This change in
circumstances does not suggest that the certification should be reversed. Once a valid
certification is made, section 7345(c)(1) and (2) provides that a debt “ceases to be a
seriously delinquent debt” only if the debt “has been fully satisfied or has become
legally unenforceable.” (Emphasis added.) Since at least some of the debt remains
outstanding and legally enforceable, this requirement has not been satisfied. See
Belton, T.C. Memo. 2023-13, at *16 n.17.
                                           6

        The record also establishes, with respect to each year and type of
liability, that a “levy [has been] made pursuant to section 6331.” See
I.R.C. § 7345(b)(1)(C)(ii).      To demonstrate levies pursuant to
section 6331, the Commissioner relies on both the Forms 4340 and the
declaration of a senior program analyst overseeing passport
certifications, who was familiar with the Integrated Data Retrieval
System (IDRS). 5

       The Forms 4340 for each of the periods and tax liabilities at issue
reflect that the IRS (1) issued a notice of intent to levy via certified mail
on July 3, 2018, (2) received a signed return receipt on July 6, 2018, and
(3) made an initial levy 6 on August 31, 2018. For his part, the senior
program analyst declared that he had reviewed Mr. Meduty’s IDRS
transcripts and that those transcripts displayed action code “TC 971 AC
640.” This code “has been created to identify tax periods for which levy
action has occurred.” IRM 5.19.1.5.19.5(1) (Dec. 26, 2017); see also
Belton, T.C. Memo. 2023-13, at *22.

       “[B]earing the presumption of regularity in mind, we agree that,
absent any allegations or evidence that the levies were improper, action
code[] . . . 640 would usually suffice to show that the Commissioner
properly levied . . . the taxpayer[] . . . .” Belton, T.C. Memo. 2023-13,
at *22; see also United States v. Chem. Found., Inc., 272 U.S. 1, 14–15
(1926) (“The presumption of regularity supports the official acts of public
officers, and, in the absence of clear evidence to the contrary, courts
presume that they have properly discharged their official duties.”). Mr.
Meduty challenges neither his receipt of the notice of intent to levy with
respect to each period nor that the IRS properly levied upon his right to
receive any state income tax refund by providing notice to the
appropriate state official. See Belton, T.C. Memo. 2023-13, at *22. We

        5 As we recently explained, IDRS is a computer interface that allows the IRS
to retrieve a portion of the data it possesses regarding each taxpayer’s federal tax
obligations and generate transcripts with respect to such information. See, e.g., Belton,
T.C. Memo. 2013-13, at *14.
        6 The senior program analyst explained that the transcripts showed numerous

levies against Mr. Meduty’s state tax refunds through the automatic State Income Tax
Levy Program starting in 2012. As the IRS acknowledges, such automatic levies are
subject to a postlevy CDP proceeding under section 6330(c)(2) and plainly do not
comport with the section 6331 requirement of notice before levy. See also IRM
5.1.12.27.5(3) (Dec. 20, 2017) (flush language) (“For purposes of passport certification,
a state income tax refund levy will not be recognized as a levy until CDP notification
is provided.”).
                                     7

thus conclude that the IRS satisfied the requirement that the levy be
made pursuant to section 6331.

        On the record before us, at the time of certification Mr. Meduty’s
liabilities met the statutory definition of “seriously delinquent tax debt.”

      B.     Mr. Meduty’s Remaining Arguments

       In his objection to motion for summary judgment and his
supplement thereto, Mr. Meduty raises a panoply of silly and frivolous
arguments, including that (1) section 7345 was ineffective without
implementing regulations, but see Int’l Multifoods Corp. & Affiliated
Cos. v. Commissioner, 108 T.C. 579, 587 (1997) (“It is well established
that the absence of regulations is not an acceptable basis for refusing to
apply the substantive provisions of a section of the Internal Revenue
Code.”); Trans City Life Ins. Co. v. Commissioner, 106 T.C. 274, 300
(1996) (“The Constitution does not require that the Commissioner
prescribe regulations . . . [and i]n the absence of regulations, the
statutory text may be interpreted in light of all the pertinent evidence,
textual and contextual, of its meaning.”); (2) levies under section 6331
are only proper against an “officer, employee, or elected official, of the
United States or District of Columbia,” but see Pierson v. Commissioner,
115 T.C. 576, 578–80 (2000) (finding an identical argument frivolous and
without merit); and (3) he has fully satisfied his debt through the posting
of a “bonded promissory note” for $10,000,000, but see Goff v.
Commissioner, 135 T.C. 231, 236 (2010) (“Simply put, neither the note
nor anything in connection with the note constitutes payment of [a
taxpayer’s] liabilities.”). We will give no longer shrift to these
contentions. Wnuck v. Commissioner, 136 T.C. 498, 501 (2011).

       Mr. Meduty raises one nonfrivolous argument that implicates the
scope of our jurisdiction under section 7345(e). Specifically, he contends
that the IRS did not send him proper notice of the certification consistent
with section 7345(d).

       The jurisdiction Congress conferred in section 7345(e) does not
extend to the review of the IRS’s compliance with section 7345(d).
Section 7345(e)(1) provides that after certification, “the taxpayer may
bring a civil action . . . against the Commissioner in the Tax Court, to
determine whether the certification was erroneous or whether the
Commissioner has failed to reverse the certification.” “The text of
section 7345(e) focuses exclusively on the Commissioner’s actions
certifying seriously delinquent tax debts and authorizes our Court (and
                                    8

the district courts) to determine whether those actions are erroneous.”
Adams, 160 T.C., slip op. at 16.

        As the U.S. District Court for the District of Columbia recently
noted, “§ 7345 does not say that a flawed or failed notice renders a
certification erroneous.” McNeil v. United States, No. CV 20-329 (JDB),
2021 WL 1061221, at *5 (D.D.C. Mar. 18, 2021), aff’d per curiam sub
nom. McNeil v. U.S. Dep’t of State, No. 21-5161, 2022 WL 4349598 (D.C.
Cir. Sept. 20, 2022). And the structure of section 7345 belies such a
conclusion. Subsections (a) and (b) describe when the Secretary of the
Treasury must transmit certification to the Secretary of State and
identify which debts qualify as “seriously delinquent tax debt.” Neither
suggests that notice is a prerequisite to a proper certification by the IRS
of a “seriously delinquent tax debt.” See McNeil, 2021 WL 1061221,
at *5. To the contrary, “subsection (d) says that notice to the taxpayer
should be ‘contemporaneous[]’ with certification to State, so it logically
cannot be a prerequisite to that certification.” Id.

        Like the District Court for the District of Columbia, we struggle
to see any prejudice adhering to a taxpayer who does not receive proper
notice of the certification contemplated in subsection (d). Subsection (e)
supplies no period of limitations, and a taxpayer such as Mr. Meduty
who does not receive proper notice (accepting his factual allegations in
their most favorable light) is nonetheless able to challenge a
certification. See I.R.C. § 7345(e); see also McNeil, 2021 WL 1061221,
at *5.

       In short, we do not believe that our jurisdiction to determine
whether a certification is erroneous encompasses patrolling compliance
with the requirement to provide notice to a taxpayer “in simple and
nontechnical terms of the right to bring a civil action under subsection
(e).” See I.R.C. § 7345(d).

III.   Conclusion

       We hold that the certification of Mr. Meduty as a taxpayer owing
a “seriously delinquent tax debt” was not erroneous. We will grant
summary judgment for the Commissioner.

       To reflect the foregoing,

       An appropriate order and decision will be entered.