Court Opinion

ID: 6327437
Source: CourtListenerOpinion
Date Created: 2022-03-28 19:02:11.880134+00
Date Added: 2024-06-11T09:21:06.201533
License: Public Domain

United States Tax Court

                          T.C. Memo. 2022-25

                      JEREMY EDWIN PORTER,
                            Petitioner

                                    v.

            COMMISSIONER OF INTERNAL REVENUE,
                        Respondent

                               —————

Docket No. 3544-21.                                 Filed March 28, 2022.

                               —————

Jeremy Edwin Porter, pro se.

Rebekah A. Myers and Brenn C. Bouwhuis, for respondent.

       MEMORANDUM FINDINGS OF FACT AND OPINION

       GREAVES, Judge: The Internal Revenue Service (IRS) issued a
notice of final determination denying petitioner’s claim for abatement of
interest on his 2011 and 2012 federal income tax deficiencies. We hold
that the IRS did not abuse its discretion by denying petitioner’s claim,
and we sustain the determination.

                          FINDINGS OF FACT

       The parties filed a First Stipulation of Facts, which we
incorporate by this reference. Petitioner resided in Utah when he
petitioned this Court.

        On or around October 28, 2013, the IRS opened an examination
of the joint federal income tax returns petitioner and his spouse filed for

                            Served 03/28/22
                                            2

[*2] 2011 and 2012. 1 On November 26, 2013, the examiner received
Form 2848, Power of Attorney and Declaration of Representative,
whereby petitioners designated Charlotte Ogorek their representative
to the IRS. The examiner spoke to Ms. Ogorek the same day, scheduling
an initial interview for January 9, 2014, at which Ms. Ogorek left
documents for the examiner to review. On March 5, the examiner
notified petitioners that they needed to provide certain additional
records to substantiate items on their returns, and she spoke to Ms.
Ogorek again on March 11. The examiner closed the case on or around
April 24, 2014, when Ms. Ogorek failed to provide the records by the
agreed deadline of April 16, and the IRS issued a notice of deficiency for
2011 and 2012 on May 13, 2014.

       Petitioners sought redetermination of the deficiency in this Court
on July 21, 2014, see Porter I, No. 16966-14, and the Court initially set
a trial date of April 27, 2015. Upon petitioner’s Motion, the Court
continued the case on April 1, 2015, and later rescheduled the trial for
March 14, 2016. The Court again continued the case on March 1, 2016,
on respondent’s unopposed Motion, which cited the parties’ progress
toward a Stipulation of Settled Issues and petitioners’ pending discovery
Motions. The parties filed the Stipulation of Settled Issues later that
month, but the Court did not rule on petitioners’ Motions, plus another
discovery Motion petitioners filed after the second continuance, until
February 12, 2019. The IRS then reassigned the case to IRS attorney
Briseyda Villalpando, and the parties settled the case by stipulated
decision entered May 29, 2019.

       Petitioner paid $1,720 of interest on the stipulated deficiency for
2011 on or around August 12, 2019, and $1,349 of interest on the
stipulated deficiency for 2012 on or around February 3, 2020, in each
case rounded to the nearest dollar. On or around October 19, 2019,
petitioner filed Forms 843, Claim for Refund and Request for
Abatement, seeking abatement of interest that accrued on both
deficiencies from November 30, 2013, to June 28, 2019. Petitioner
alleged on line 7 of each form that the case would have settled on the
same terms on the former date but for “IRS error and delay.” He made
the following specific complaints.

        1 Although Mr. Porter is the only petitioner in this case, the stipulated decision

referenced infra names both him and his spouse as petitioners. Porter v. Commissioner
(Porter I), No. 16966-14 (T.C. May 29, 2019). References to “petitioner” in this opinion
are to Mr. Porter, and references to “petitioners” are to Mr. Porter and his spouse.
                                           3

[*3]    •   Petitioners received no response to a letter he sent the IRS on
            November 26, 2013, explaining petitioners’ position.

        •   The Court set a trial date of April 27, 2015, but had to continue
            the case because “the assigned [IRS] attorney was unable to
            respond to taxpayers for a variety of reasons.”

        •   The Court again continued the case per the IRS’s request
            dated February 26, 2016, whereafter the case was not
            scheduled for trial.

        •   Petitioners received no response to the settlement offer they
            tendered to the IRS on November 5, 2017, and learned that
            the assigned IRS attorney had been transferred off the case
            and had not been replaced.

        •   Petitioner alleged that he and Ms. Villalpando resolved the
            case amicably in two phone calls and a four-hour meeting.

        The IRS denied petitioner’s interest abatement claim in a final
determination letter issued September 15, 2020. Revenue Agent and
Interest Abatement Coordinator Lindsay O’Neil (RA O’Neil) prepared
Form 886-A, Explanation of Items, which explains the basis for the
determination.      With respect to interest accrued during the
examination, Form 886-A points out that section 7602 authorizes the
IRS to examine documents for purposes of ascertaining the correctness
of any return or determining the liability of any person for any internal
revenue tax. 2 The delay caused by petitioners’ failure to provide such
documents, RA O’Neil explains, “is not attributable to the [IRS].” As for
the litigation phase of the case, she notes that the parties agreed to both
continuances and that the IRS was not responsible for the Tax Court’s
delayed action on petitioners’ discovery Motions.

        2Unless otherwise indicated, all statutory references are to the Internal
Revenue Code (Code), Title 26 U.S.C., and all regulation references are to the Code of
Federal Regulations, Title 26 (Treas. Reg.), in each case as in effect at all relevant
times.
        Section 7602 grants authority to “the Secretary,” which section 7701(a)(11)(B)
defines as the Secretary of the Treasury or his delegate. The regulations confirm that
the Secretary of the Treasury has delegated such authority to the IRS. See, e.g., Treas.
Reg. § 301.7602-1(a).
                                            4

[*4] On February 2, 2021, petitioner sought review in this Court of the
IRS’s determination not to abate interest, and the case proceeded to trial
on January 24, 2022.

                                      OPINION

I.      Interest Abatement Process

       As relevant to this case, interest on a federal income tax
deficiency begins to accrue on the tax return due date and continues to
accrue, compounding daily, until payment is made. See §§ 6151(a),
6601(a), 6622(a). Section 6621(a)(2) imposes interest at the federal
short-term rate, determined under subsection (b), plus three percentage
points. Section 6404(e)(1) provides in pertinent part that the IRS may
abate the assessment of interest on any payment of tax to the extent
that any unreasonable error or delay in payment is attributable to an
IRS officer or employee being erroneous or dilatory in performing a
ministerial or managerial act. 3 For purposes of section 6404(e)(1), an
error or delay is taken into account only if no significant aspect of such
error or delay can be attributed to the taxpayer. See Lee v.
Commissioner, 113 T.C. 145, 148–49 (1999).

       This Court reviews a denial of interest abatement for abuse of
discretion, § 6404(h)(1), 4 which occurs only if the IRS bases its denial
“on an erroneous view of the law or on a clearly erroneous assessment of
the evidence,” King v. Fleming, 899 F.3d 1140, 1147 (10th Cir. 2018)
(quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990));
see also Woodral v. Commissioner, 112 T.C. 19, 23 (1999). We can
uphold the determination only on the grounds the IRS invoked in
denying the abatement, see SEC v. Chenery Corp., 318 U.S. 80, 93–95
(1943), and the IRS must clearly set forth these grounds so the Court
does not have to guess how the IRS arrived at its decision, see SEC v.
Chenery Corp., 332 U.S. 194, 196–97 (1947); see also Kasper v.

        3Section 6404(e)(1) grants this authority to the Secretary of the Treasury or
his delegate, and the Secretary of the Treasury has delegated interest abatement
authority to the IRS. See supra note 2, second paragraph; see also Treas. Reg.
§ 301.6404-2(a)(1).
        4 Section 6404(h)(1) grants the Tax Court jurisdiction to review a failure to

abate interest only if the taxpayer satisfies section 7430(c)(4)(A)(ii), which pertains to
the taxpayer’s net worth. See also the first sentence of 28 U.S.C. § 2412(d)(1)(B) (1988),
which section 7430(c)(4)(A)(ii) cross-references, and 28 U.S.C. § 2412(d)(2)(B) (1988),
which establishes the net worth requirement. Respondent does not deny that
petitioner meets this requirement.
                                    5

[*5] Commissioner, 150 T.C. 8, 23 n.17 (2018) (explaining that the
Chenery doctrine applies where the Court reviews an IRS determination
for abuse of discretion). We consider only arguments the taxpayer
brought to the IRS’s attention when it was considering the abatement
claim. See Wright v. Commissioner, T.C. Memo. 2004-69, slip op. at 8
(citing Magana v. Commissioner, 118 T.C. 488, 493 (2002)), aff’d per
curiam, 125 F. App’x 547 (5th Cir. 2005). Although neither Congress
nor this Court has established what evidence we should examine in an
interest-abatement case, our practice has been to make our
determination after providing an opportunity for a trial de novo. See
Ewing v. Commissioner, 122 T.C. 32, 38 (2004) (citing examples),
vacated, 439 F.3d 1009 (9th Cir. 2006).

II.    Petitioner’s Motion to Shift Burden of Proof

        Petitioner begins by moving the Court to shift the burden of proof
to respondent pursuant to section 7491. We will deny this Motion
because section 7491(a) by its terms can shift the burden of proof only
with respect to any factual issue relevant to ascertaining the taxpayer’s
liability for tax imposed by subtitle A or B of the Code. The Code
imposes interest under section 6601, which is not part of subtitle A or B;
accordingly, section 7491 does not apply to petitioner’s interest-
abatement claim. See Kansky v. Commissioner, T.C. Memo. 2007-40,
slip op. at 13–14.

III.   Exercise of Discretion by the IRS

       The IRS did not abuse its discretion by denying petitioner’s
interest abatement claim. Petitioners delayed the examination by
failing to provide the records the examiner requested and did not
provide any such records in the letter petitioner claimed to have sent
the IRS on November 26, 2013. During litigation, petitioner himself
requested the first continuance the Court granted and did not object to
the second. See Adams v. Commissioner, T.C. Memo. 2019-99, at *13
n.7 (explaining that section 6404(e)(1) prohibits abatement where the
purported delay was attributable to the taxpayer’s reasonable requests
for continuances), aff’d per curiam, 811 F. App’x 276 (5th Cir. 2020). The
Tax Court did not rule on petitioner’s discovery Motions until February
2019, after which petitioner concedes that Ms. Villalpando resolved his
case in short order. See Lee, 113 T.C. at 150 (explaining that the “mere
passage of time in the litigation phase of a tax dispute does not establish
error or delay” under section 6404(e)). Such delays are not grounds for
interest abatement because either they are not attributable to an IRS
                                   6

[*6] officer or employee, or a significant aspect of the delay can be
attributed to the taxpayer.

       Petitioner complained at trial about RA O’Neil’s delay in
processing his interest abatement claim. We need not evaluate any such
delay because petitioner sought abatement of interest accrued through
June 28, 2019. Any delay after that date, including any delay in
processing the Forms 843 petitioner submitted on or around October 19,
2019, is not germane to this case.

       Petitioner also asks us to abate the interest assessment on
equitable grounds. This we cannot do because the Tax Court is a court
of law, not equity. Stovall v. Commissioner, 101 T.C. 140, 149–50 (1993).
Petitioner failed to establish that the IRS abused the discretion granted
by section 6404. We therefore sustain respondent’s determination.

      To reflect the foregoing,

     An order will be issued denying petitioner’s Motion to Shift
Burden of Proof, and decision will be entered for respondent.