Court Opinion

ID: 9403814
Source: CourtListenerOpinion
Date Created: 2023-06-21 19:02:45.288232+00
Date Added: 2024-06-11T17:19:15.786083
License: Public Domain

United States Tax Court

                               T.C. Memo. 2023-76

                                PATRICIA HYDE,
                                   Petitioner

                                           v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                     —————

Docket No. 12796-20L.                                          Filed June 21, 2023.

                                     —————

Patricia Hyde, pro se.

G. Chad Barton, Philip A. Myers, Paul A. George, and Vassiliki
Economides Farrior, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       PARIS, Judge: This collection due process (CDP) case is before
the Court on a Petition for review pursuant to sections 6320(c) and
6330(d)(1) of respondent’s determination regarding collection action for
tax year 2006. 1 The relevant collection action, the filing of a Notice of
Federal Tax Lien (NFTL), was sustained by a notice of determination
dated September 29, 2020. The issue for decision is whether the
settlement officer (SO) abused her discretion by determining that
petitioner’s liabilities were appropriately assessed and that the
Commissioner’s NFTL filing should be sustained. We conclude that she
did not.

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

Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the
Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and
Rule references are to the Tax Court Rules of Practice and Procedure.

                                 Served 06/21/23
                                          2

[*2]                          FINDINGS OF FACT

       Petitioner resided in Arkansas when she filed her Petition. The
facts in this Opinion are derived from the administrative record of
petitioner’s CDP hearing. 2 Owing to the inadvertent omission of six
pages from the administrative record, the record was made complete
through the admission of two trial Exhibits submitted by agreement of
the parties. 3 Also pending is petitioner’s Motion to Dismiss for Lack of
Jurisdiction, which the Court took under advisement at the trial and on
which the Court directed the parties to include arguments in their
Briefs.

I.     Original Court Proceedings

       Petitioner is no stranger to this Court, nor are the issues
surrounding her unpaid 2006 federal income tax liabilities. Petitioner
failed to file a federal income tax return for 2006. Pursuant to section
6020(b) respondent prepared a substitute for return for that year and
issued a notice of deficiency to petitioner on January 4, 2010. In the
timely notice of deficiency respondent determined a $33,498 deficiency
in petitioner’s 2006 federal income tax and additions to tax of $7,537
under section 6651(a)(1), $4,857 under section 6651(a)(2), and $1,585
under section 6654(a).

      Petitioner timely petitioned this Court, in the case at Docket No.
8225-10, to dispute the notice of deficiency for 2006. This Court held a
trial in which petitioner actively participated and issued a
memorandum findings of fact and opinion determining a deficiency in
income tax due from petitioner of $33,497.60 and additions to tax of
$7,536.96 under section 6651(a)(1), $8,374.40 under section 6651(a)(2),
and $17.35 under section 6654. Hyde v. Commissioner, T.C. Memo.

       2 In Robinette v. Commissioner, 439 F.3d 455, 461–62 (8th Cir. 2006), rev’g 123
T.C. 85 (2004), the U.S. Court of Appeals for the Eighth Circuit held that this Court’s
review of CDP cases is limited by the Administrative Procedure Act and therefore that
such review is limited to the administrative record. Because this case appears to be
appealable to the Eighth Circuit, we will follow that court’s precedent. See Golsen v.
Commissioner, 54 T.C. 742, 757 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971); see also
§ 7482(b)(1)(G)(i).
       3 Respondent contends the omitted administrative record pages were not

material to his determination. Notwithstanding that contention, to the extent the
admitted trial Exhibits exceed the administrative record, we conclude that the parties
have waived any objection on that ground. See Laidlaw’s Harley Davidson Sales, Inc.
v. Commissioner, 154 T.C. 68, 69 n.2 (2020), rev’d and remanded on other grounds, 29
F.4th 1066 (9th Cir. 2022).
                                           3

[*3] 2011-104, aff’d, 471 F. App’x 537 (8th Cir. 2012). 4 The Court also
determined petitioner was liable for a $3,000 penalty pursuant to
section 6673(a)(1) for asserting frivolous and groundless claims. Hyde,
T.C. Memo. 2011-104, slip op. at 15. 5 The Court entered its decision on
October 19, 2011.

       On November 18, 2011, petitioner filed a motion to vacate or
revise the Court’s decision. The Court denied that motion on November
22, 2011.

      Unsatisfied with the result of her Tax Court case, petitioner
appealed the decision, which was subsequently affirmed by the Eighth
Circuit. Hyde v. Commissioner, 471 F. App’x 537. Left unhappy yet
again, she petitioned the U.S. Supreme Court. The Supreme Court
denied her petition for a writ of certiorari. Hyde v. Commissioner, 568
U.S. 1091 (2013).

       Petitioner did not post a bond with this Court to stay assessment
and collection pending appeal of the Court’s decision. On April 9, 2012,
respondent assessed the foregoing deficiency, additions to tax, and
penalty. Respondent incorrectly assessed an addition to tax under
section 6654 of $1,585, the amount in the contested notice of deficiency,
rather than the Court’s redetermined amount of $17.35. Respondent has
conceded this discrepancy, which benefits petitioner, and does not seek
to make an adjustment.

II.     CDP Hearing on NFTL Filing

       On May 14, 2019, respondent filed an NFTL in Benton County,
Arkansas, with respect to petitioner’s 2006 liabilities. On May 16, 2019,
respondent sent petitioner a Letter 3172, Notice of Federal Tax Lien
Filing and Your Right to a Hearing Under IRC 6320. Petitioner timely
requested a CDP hearing with the IRS Office of Appeals (Appeals) 6 and,
in so doing, made arguments for withdrawal of the NFTL, including on

        4 In Hyde, T.C. Memo. 2011-104, slip op. at 13–15, this Court determined that

petitioner’s required annual payment for 2006 was $330, the lesser of 90% of her 2006
tax liability ($30,148) or 100% of her 2005 tax liability ($330). On the basis of that
determination, petitioner was liable for an addition to tax under section 6654 of $17.35,
not $1,585, as respondent originally determined in the notice of deficiency.
        At trial the Court repeatedly warned petitioner that the use of frivolous
        5

arguments could subject her to a section 6673 penalty of up to $25,000.
      6 Appeals was renamed the Independent Office of Appeals later in 2019. See

Taxpayer First Act, Pub. L. No. 116-25, § 1001, 133 Stat. 981, 983–85 (2019).
                                     4

[*4] grounds that this Court and others had previously found frivolous.
Petitioner did not raise any spousal defenses or request any collection
alternatives.

      Respondent acknowledged receipt of petitioner’s request for a
CDP hearing regarding the NFTL filing. Later, in a letter from Appeals’
SO Chavez, petitioner was informed that the CDP hearing she had
requested had been scheduled for February 27, 2020. The SO’s letter
also outlined the factors that would be considered during the hearing,
including circumstances under which the underlying tax liability may
be properly at issue, such as when the taxpayer has not been given a
previous opportunity to challenge the liability.

       As scheduled, on February 27, 2020, a telephone CDP hearing
was held between petitioner and SO Chavez. Petitioner challenged the
date and the amount of the assessment and questioned the Court-
ordered penalty. Petitioner also disputed receiving the notice of
deficiency even though her original petition to the Court in the case at
Docket No. 8225-10 acknowledged receipt. On the basis of the hearing
the SO concluded that petitioner would not agree that the assessment
based on this Court’s decision entered on October 19, 2011, was valid.
The SO also concluded that petitioner would not willingly consider any
collection alternatives. Nor did petitioner request any collection
alternatives. Neither did petitioner raise any spousal defenses or make
any plausible challenges to the appropriateness of the NFTL filing.

        On September 29, 2020, respondent issued a notice of
determination sustaining the filing of the NFTL under sections 6320
and/or 6330 for petitioner’s unpaid 2006 income tax, additions to tax,
and penalty liabilities. In the notice of determination SO Chavez, having
reviewed petitioner’s account, administrative file, and submissions,
confirmed that all applicable legal and administrative requirements had
been followed in connection with the assessment and proposed collection
of the liabilities. This included verifying that the tax year and the
liabilities were correct and that the proposed collection action was no
more intrusive than necessary.

       Petitioner timely petitioned this Court to review the notice of
determination. In her Petition she asserts that (1) this Court’s decision
entered on October 19, 2011, does not overcome the alleged inadequacies
of the notice of deficiency (on account of petitioner’s being a nonfiler with
a substitute for return), (2) the assessments based on the Court’s
decision were premature or otherwise procedurally defective because of
                                    5

[*5] petitioner’s pending appeal of the decision, and (3) the frivolous
position penalty imposed sua sponte by this Court was not approved
before being assessed, among other frivolous and groundless arguments.

III.   CDP Case Trial

        The Court held a trial on this case during its Little Rock,
Arkansas, remote Trial Session. During that time the Court also heard
petitioner’s Motion to Dismiss for Lack of Jurisdiction, which was taken
under advisement. At the end of the trial the Court ordered the parties
to file Opening and Answering Briefs.

                                OPINION

I.     Jurisdiction and Standard of Review

       Section 6321 imposes an automatic lien in favor of the United
States on all property and property rights of a taxpayer liable for tax if
the taxpayer refuses to pay the tax after a demand for payment is made.
The lien arises when the assessment is made. § 6322. An NFTL may
then be filed to preserve priority of the lien and alert other creditors to
the secured claim. § 6323. The Commissioner must notify the taxpayer
in writing of the NFTL’s filing and of her right to a CDP hearing on the
propriety of the filing. § 6320(a).

      In a section 6320 CDP hearing a taxpayer may raise any relevant
issue and request the consideration of a collection alternative. See
§§ 6320(c), 6330(c)(2)(A). An issue is not properly raised at the CDP
hearing if the taxpayer fails to request consideration of that issue by the
SO or if the taxpayer requests consideration but fails to present any
evidence after being given a reasonable opportunity to do so. See Treas.
Reg. § 301.6320-1(f)(2), Q&A (F)(3). Once Appeals makes a
determination following a CDP hearing, the taxpayer may appeal the
determination to this Court. §§ 6320(c), 6330(d)(1).

       Petitioner contends in her Motion to Dismiss for Lack of
Jurisdiction that this Court lacks jurisdiction over this case under
sections 6320 and 6330 because Appeals abused its discretion and issued
an invalid notice of determination. The Court disagrees with petitioner.
Not only does petitioner misapprehend the effect that granting her
Motion would have on her case; the record establishes that all
jurisdictional conditions have been met and that the case is properly
before this Court. See §§ 6320(c), 6330(d)(1). Accordingly, the Court will
deny petitioner’s Motion to Dismiss for Lack of Jurisdiction.
                                    6

[*6] Where the validity of the underlying tax liability is at issue, the
Court reviews the determination de novo. Goza v. Commissioner, 114
T.C. 176, 181–82 (2000). Where the underlying tax liability is not
properly at issue, the Court reviews the determination for abuse of
discretion. Id. at 182. Such review is limited to the administrative record
developed at the hearing. Robinette v. Commissioner, 439 F.3d at 461–
62. Appeals abuses its discretion if it acts “arbitrarily, capriciously, or
without sound basis in fact or law.” Woodral v. Commissioner, 112 T.C.
19, 23 (1999).

II.    Petitioner’s 2006 Federal Income Tax Liabilities

      A taxpayer may challenge the existence or amount of her
underlying liabilities in a CDP proceeding only if she “did not receive
any statutory notice of deficiency for such tax liability or did not
otherwise have an opportunity to dispute such tax liability.”
§§ 6320(c), 6330(c)(2)(B); see also Bell v. Commissioner, 126 T.C. 356,
358 (2006). In this case the phrase “underlying tax liability” includes the
tax deficiency, the additions to tax, the frivolous position penalty, and
statutory interest. See Katz v. Commissioner, 115 T.C. 329, 339 (2000).

       Administratively, as well as in this Court, the Eighth Circuit, and
the Supreme Court, petitioner has challenged her underlying liabilities
with a barrage of frivolous and groundless arguments. The record before
this Court illustrates that petitioner has previously received a trial and
a memorandum findings of fact and opinion on her dispute as well as
postdecision consideration of her motion to vacate or revise. Thus,
petitioner has had not only a prior opportunity—but multiple prior
opportunities—to dispute her liabilities. Consequently, she is precluded
from doing so here yet again. See §§ 6320(c), 6330(c)(2)(B); see also Bell,
126 T.C. at 358; Pierson v. Commissioner, 115 T.C. 576, 579–80 (2000).
Accordingly, the Court concludes that a determination de novo is
inappropriate in this case.

III.   Abuse of Discretion

       Having decided that de novo review is inappropriate, the Court
will review respondent’s determination for abuse of discretion. Appeals
is required to (1) properly verify that the requirements of applicable law
and administrative procedure have been met, (2) consider any relevant
issues that the taxpayer raised, and (3) consider “whether any proposed
collection action balances the need for the efficient collection of taxes
with the legitimate concern of the [taxpayer] that any collection action
                                     7

[*7] be no more intrusive than necessary.” § 6330(c)(3); see § 6320(c).
The administrative record establishes that the SO properly discharged
her responsibilities under sections 6320(c) and 6330(c)(3). Because
petitioner failed to provide any documentation or information to the
contrary, the Court is satisfied that SO Chavez adequately balanced the
need for efficient collection of taxes with petitioner’s legitimate concern
that the NFTL filing be no more intrusive than necessary. The Court
will thus confine its discussion to the first two requirements.

      A.     Verification of Applicable Law and Procedure, Including
             Proper Assessment

       Petitioner contends that the assessments based on the Court’s
decision entered on October 19, 2011, were premature or otherwise
procedurally defective because of petitioner’s pending appeal of the
decision. The Court disagrees.

             1.     Assessment of Liabilities

       Section 6213(a) provides that “no assessment of a deficiency in
respect of any tax imposed . . . and no levy or proceeding in court for its
collection shall be made . . . , if a petition has been filed with the Tax
Court, until the decision of the Tax Court has become final.” “[T]he date
on which a decision of the Tax Court becomes final shall be determined
according to the provisions of section 7481.” § 6214(d). Section 7481(a)
provides that a Tax Court decision generally will become final “[u]pon
the expiration of the time allowed for filing a notice of appeal, if no such
notice has been duly filed within such time,” or “if the decision of the
Tax Court has been affirmed or the appeal dismissed.” However, there
is no stay of assessment or collection of any portion of the deficiency
determined by the Tax Court unless a bond is filed with the Tax Court
on or before the date the notice of the appeal is filed. § 7485(a).

        Petitioner did not post a bond with the Tax Court on or before the
filing date of her notice of appeal, January 17, 2012. Her failure to do so
ended on that date any temporary stay of assessment or collection with
respect to the deficiency, additions to tax, or penalty determined in the
Court’s decision entered October 19, 2011. Accordingly, the Court
concludes the assessments were not premature, were properly made on
April 9, 2012, and are therefore collectible.
                                     8

[*8]         2.     Frivolous Position Penalty

       Section 6673(a)(1) authorizes this Court to impose a penalty of up
to $25,000 on a taxpayer whenever it appears that the taxpayer
instituted the proceeding primarily for delay or that the taxpayer’s
position is frivolous or groundless. The authority of the Court to impose
such a penalty is not subject to the supervisory approval requirement of
section 6751(b)(1). Williams v. Commissioner, 151 T.C. 1, 5–10 (2018).
This is so because the provision “was not intended as a broad restraint
mechanism on the Federal judiciary . . . [or] to cover the imposition of
penalties that Congress intended could be imposed by courts because of
misbehavior by a litigant during the course of a judicial proceeding.” Id.
at 10. Accordingly, the Court concludes that petitioner’s assertion that
sanctions imposed pursuant to section 6673 must comply with section
6751(b)(1) is wrong and that the section 6673 penalty was assessable
contemporaneously with the decision entered in the notice of deficiency
case. See §§ 6671(a), 6673(a)(1).

       Having determined that petitioner’s liabilities for 2006 had not
been assessed prematurely in view of the pending appeal, SO Chavez
needed only to review the administrative steps taken before assessment,
which she did. See § 6330(c)(1). Because documents that support her
review are in the administrative record, the Court concludes that the
verification requirement is met. See Blackburn v. Commissioner, 150
T.C. 218, 222 (2018). Further, the SO’s failure to spot the discrepancy
between the amount of the section 6654 penalty that was assessed and
the amount that should have been assessed pursuant to this Court’s
previous decision does not rise to the level of an abuse of discretion. This
Court will, however, rectify the discrepancy, to petitioner’s benefit.

       B.    Issues Raised

      Petitioner, rather than raise issues related to the NFTL filing,
continued to raise issues that this Court and others have previously
deemed frivolous and groundless, and that were not properly at issue in
the CDP hearing.

      Petitioner did not propose any collection alternatives. Because no
such proposal was made, the SO was not required to pursue a collection
alternative. See McLaine v. Commissioner, 138 T.C. 228, 243 (2012).
Further, even if she had, the SO was not provided the current financial
data necessary to evaluate the merits of any alternatives. See Roman v.
Commissioner, T.C. Memo. 2004-20.
                                    9

[*9] Petitioner did not raise, nor does she qualify for, any spousal
defenses, because she did not file a return, let alone a joint return, for
the year at issue. See §§ 66(a), 6015(a)(1). Nor did she make any
plausible challenges to the appropriateness of the NFTL filing.

       It is unnecessary for this Court to go any further in refuting
“petitioner’s groundless arguments with somber reasoning and copious
citations of precedent” because “do[ing] so might suggest that these
arguments possess some degree of colorable merit.” See Grunsted v.
Commissioner, 136 T.C. 455, 460 (2011) (citing Crain v. Commissioner,
737 F.2d 1417, 1417 (5th Cir. 1984)). Accordingly, the Court concludes
that petitioner has not demonstrated that sustaining the NFTL filing
was arbitrary, capricious, without sound basis in fact or law, or
otherwise an abuse of discretion.

IV.   Conclusion

        In consideration of the foregoing, the Court will sustain
respondent’s collection action. Because respondent concedes that he
incorrectly assessed the amount of the addition to tax under section
6654, the parties will be ordered to submit a Rule 155 computation to
facilitate adjustment of that assessment in accordance with the Court’s
memorandum findings of fact and opinion in Docket No. 8225-10 (T.C.
Memo. 2011-104), which was entered on October 19, 2011.

      The Court has considered all of petitioner’s arguments, and to the
extent not discussed above, the Court finds them to be irrelevant,
incomprehensible, or without merit.

      To reflect the foregoing,

      An appropriate order will be issued, and decision will be entered
under Rule 155.