Court Opinion

ID: 9913793
Source: CourtListenerOpinion
Date Created: 2023-12-28 20:01:33.07353+00
Date Added: 2024-06-11T12:58:30.319607
License: Public Domain

United States Tax Court

                           T.C. Memo. 2023-154

                           DANIEL OLIN NYE,
                               Petitioner

                                   v.

            COMMISSIONER OF INTERNAL REVENUE,
                        Respondent

                               —————

Docket No. 2627-23P.                           Filed December 28, 2023.

                               —————

Daniel Olin Nye, pro se.

Christina L. Holland, for respondent.

                     MEMORANDUM OPINION

       KERRIGAN, Chief Judge: In this passport case petitioner seeks
review pursuant to section 7345(e) of the determination by the
Commissioner of the Internal Revenue Service (IRS or respondent) to
certify to the Secretary of the Treasury that petitioner has a “seriously
delinquent tax debt” related to income tax deficiencies for 2012, 2013,
2014, and 2015 (years at issue), and civil trust fund recovery penalties
pursuant to section 6672 for periods ending 2011, 2012, 2013, 2014,
2015, and 2016 (periods at issue) (collectively, years and periods at
issue). Respondent filed a Motion for Summary Judgment under Rule
121 (Motion), contending that certification was proper and that he is
entitled to judgment as a matter of law. Petitioner did not respond to
the Motion and has not otherwise communicated with the Court.
Finding no error in the Commissioner’s certification, we will grant the
Motion.

      Unless otherwise indicated, statutory references are to the
Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times,

                            Served 12/28/23
                                      2

[*2] and Rule references are to the Tax Court Rules of Practice and
Procedure. All monetary amounts are rounded to the nearest dollar.

                                  Background

      The following facts are derived from the pleadings, respondent’s
Motion, and the Exhibits attached thereto. Petitioner resided in
Colorado when he petitioned this Court.

       Petitioner timely filed tax returns for the periods at issue, but
failed to collect, account for, and pay over Social Security and federal
income taxes withheld from employees. The IRS imposed on petitioner
civil trust fund recovery penalties pursuant to section 6672 for the
periods at issue. Respondent assessed the penalties due plus applicable
interest. Respondent also assessed income tax deficiencies with respect
to petitioner for the years at issue. The assessed deficiencies and civil
penalties for the years and periods at issue, as of February 27, 2023, are
as follows:

          Year or                                       Total Owed
                     Deficiency     Civil Penalty
          Period                                    (Including Interest)
           2011          —                 $3,061                $3,726
           2012         $10,847             3,002                17,896
           2013          14,937             3,825                23,131
           2014          14,530             3,825                22,636
           2015           7,457             3,825                14,026
           2016          —                 14,227                17,806
            Total       $47,771           $31,765               $99,222

       The IRS also filed notices of federal tax lien (NFTLs) covering the
years and periods at issue and sent petitioner Notices of Federal Tax
Lien Filing and Your Right to a Hearing (lien notices). The lien notices
informed petitioner of his right to request a CDP hearing. The IRS sent
petitioner Notices CP523, Notice of Intent to Levy—You Defaulted On
Your Installment Agreement (Notice of Intent to Levy), covering the
years and periods at issue and thereafter made levies. NFTLs were filed
and lien notices were mailed between December 2014 and June 2018 for
each of the years and periods at issue.

      On January 11, 2017, petitioner timely requested a collection due
process hearing (CDP hearing) with respect to the December 15, 2016,
                                    3

[*3] lien notice associated with the 2015 income tax deficiency. The IRS
Office of Appeals (Appeals) resolved petitioner’s CDP hearing in July
2017 and issued a notice of determination. Upon receipt of the notice of
determination, petitioner did not petition the Court. Petitioner did not
request a CDP hearing with respect to any of the other NFTL filings.

        On July 30, 2018, respondent certified petitioner as an individual
owing a seriously delinquent tax debt arising from each of the years and
periods at issue, as well as from deficiencies in income tax for 2008 and
2009.     Petitioner entered into an installment agreement with
respondent on October 3, 2018, and established a monthly payment of
$318. The installment agreement was conditional upon periodic reviews
of petitioner’s current financial condition. See Internal Revenue Manual
5.19.1.6.5.4 (July 1, 2021).          Respondent reversed petitioner’s
certification as an individual owing a seriously delinquent tax debt on
November 12, 2018.

       Payments pursuant to the installment agreement were applied
against petitioner’s tax liabilities for 2008 through 2010, in
chronological order, until the remaining balance for each year was
written off because of the expiration of the period of limitations. From
December 2021 through March 2023, payments made pursuant to the
installment plan were applied against petitioner’s tax liability for 2012.

       Respondent periodically reviewed petitioner’s payment history.
On November 7, 2022, respondent mailed petitioner a Notice of Intent
to Levy for each of the years and periods at issue. The Notices of Intent
to Levy stated that petitioner did not provide updated financial
statements as required under the installment agreement. They notified
petitioner that he could provide the updated financial statements or
request a Collection Appeals Program hearing, but that failure to do
either would result in the termination of his installment agreement.
Petitioner neither requested a Collection Appeals Program hearing nor
provided the requested information.

       Respondent terminated the installment agreement on or about
January 9, 2023. On February 27, 2023, respondent recertified
petitioner as an individual owing a seriously delinquent tax debt arising
from the years and periods at issue. The IRS concurrently sent
petitioner a Notice CP508C, Notice of Certification of Your Seriously
Delinquent Federal Tax Debt to the State Department (Passport
Notice). At this time petitioner’s assessed tax liabilities for the years
and periods at issue totaled $99,222 (including interest of $19,685).
                                     4

[*4] On March 5, 2023, petitioner petitioned this Court disputing the
Passport Notice pursuant to section 7345(e)(1). He asserted in the
Petition that he has complied with the terms of the installment
agreement, has timely provided financial documentation, and has
continued making monthly payments of $318.

                                Discussion

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); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), aff’d, 17 F.3d 965 (7th Cir. 1994).
In cases that are decided on the administrative record, this Court
ordinarily decides the issues raised by the parties by reviewing the
administrative record using a summary adjudication procedure. See
Van Bemmelen v. Commissioner, 155 T.C. 64, 78–79 (2020) (discussing
the relationship between the scope and standard of review and the
standard of summary adjudication).

       The Court has not yet decided the scope and standard of review
for cases arising under section 7345. As in Rowen v. Commissioner, 156
T.C. 101, 106 (2021), we need not decide in this case the applicable scope
or standard of review. 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 respondent’s certification de novo or for abuse of discretion.

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.” The
Commissioner is required to contemporaneously notify the individual
upon making that certification. § 7345(d).

        Generally, a “seriously delinquent tax debt” is a federal tax
liability that (1) has been assessed, (2) exceeds $59,000 (after adjusting
for inflation), (3) is unpaid and legally enforceable, and (4) is the subject
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[*5] of a completed levy or a filed lien notice with all administrative
rights exhausted or lapsed. § 7345(b)(1), (f); see Rev. Proc. 2022-38,
§ 3.59, 2022-45 I.R.B. 445, 456; see also Garcia v. Commissioner, 157
T.C. 1, 7 (2021). If a certification is found to be erroneous, or if the
certified debt is fully satisfied or ceases to be seriously delinquent by
reason of subsection (b)(2), the IRS must reverse its certification and
notify the Secretary of State and the taxpayer. § 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
Commissioner 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.” § 7345(e)(2). The statute specifies no other form of relief
that we may grant. Garcia, 157 T.C. at 7.

Whether the Certification of Seriously Delinquent Tax Debt Was
Erroneous

       The record shows that respondent met the criteria to certify that
petitioner has a “seriously delinquent tax debt.” Respondent has
supplied the account transcripts for petitioner’s income tax and civil
penalty accounts for the years and periods at issue, as well as Notices of
Intent to Levy. The account transcripts provide substantially the same
information as Forms 4340, Certificate of Assessments, Payments, and
Other Specified Matters. They reflect assessments for each of the years
and periods at issue and show that as of May 2023, petitioner had
assessed, unpaid, and legally enforceable federal tax liabilities of
$99,222. The Notices of Intent to Levy notified petitioner of the pending
termination of his installment agreement and his remedy through a
Collection Appeals Program hearing. Petitioner did not request a
Collection Appeals Program hearing.

       The record also establishes that, for each of the years and periods
at issue, an NFTL (with all administrative rights exhausted or lapsed)
has been filed. See § 7345(b)(1)(C). Between December 2016 and June
2018 respondent filed NFTLs with respect to petitioner’s income tax and
civil penalty liabilities for the years and periods at issue. To
demonstrate the filing of NFTLs and exhausted or lapsed rights,
respondent relies on the account transcripts. Nothing in the account
transcripts suggests any defect with respect to the notices, nor does
petitioner allege that there were any defects. The account transcripts
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[*6] also show that petitioner’s administrative rights under section 6320
have been exhausted or have lapsed. With respect to petitioner’s income
tax liability for 2015, he timely requested a CDP hearing on January 11,
2017. The transcript states that on July 14, 2017, the CDP hearing was
resolved by Appeals, a notice of determination was issued, and
petitioner “waived judicial review or withdrew the hearing request.” No
such request was made with respect to petitioner’s other tax liabilities.

       This is sufficient to establish that respondent satisfied the
requirements of section 7345(b)(1)(C)(i) for each of the years and periods
at issue. Belton v. Commissioner, T.C. Memo. 2023-13 at *13; see
generally 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.”). On
the record before us, at the time of certification petitioner’s liabilities
met the statutory definition of “seriously delinquent tax debt.”

Petitioner’s Remaining Argument

       Petitioner contends that when the IRS issued the Notices of
Intent to Levy and requested additional documents, he provided the
documents within the allowed timeframe. Petitioner further asserts
that he has not defaulted on the installment agreement, and he
continued making monthly payments of $318 until petitioning the
Court.

       The account transcript for petitioner’s 2012 income tax liability
confirms the continued payments. The Court has seen no evidence from
either party in support of petitioner’s claim that he submitted
documentation following the issuance of the Notices of Intent to Levy.
Petitioner has not submitted evidence either in support of his claim or
in objection to respondent’s Motion. The account transcripts likewise
provide no evidence of additional documentation. Petitioner rests on the
mere allegation of sufficient documentation from his pleadings but fails
to set forth specific facts even upon Order by the Court. Petitioner has
failed to establish this argument as a disputed material fact.

Conclusion

       We hold that the certification of petitioner as a taxpayer owing a
“seriously delinquent tax debt” was not erroneous. We will grant
summary judgment for respondent.
                                   7

[*7]   To reflect the foregoing,

       An appropriate order and decision will be entered.