T.C. Memo. 2003-177
UNITED STATES TAX COURT
FILOMENA PAHAMOTANG, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6311-02L. Filed June 17, 2003.
Filomena Pahamotang, pro se.
Hieu C. Nguyen, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: The controversy in this case involves the
question of whether respondent is entitled to go forward with the
collection of petitioner’s outstanding and unpaid 1994 tax
liability. Respondent moved for summary judgment, and the motion
was set for hearing at the Court’s March 24, 2003, Los Angeles,
California, trial session. At the hearing, petitioner advised
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the Court that she had no evidence to present and no additional
arguments to add to those presented in her response to
respondent’s motion for summary judgment.
FINDINGS OF FACT
Petitioner and her husband filed their 1994 joint Federal
income tax return on April 15, 1995, wherein petitioner’s
occupation was shown as “registered nurse”. Attached to the
return were Forms W-2, Wage and Tax Statement, and a Form 1099-R,
Distributions From Pensions Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc., reflecting a
total of $90,017.59 for wages and income payments to petitioner
for the 1994 tax year. Petitioner and her husband reported total
joint wages of $105,265. The 1994 joint return contained a
$42,883 claimed loss on Schedule C, Profit or Loss From Business;
a $3,000 capital loss on Schedule D, Capital Gains and Losses; a
$12,821 loss on Schedule E, Supplemental Income and Loss; and
$57,768 of itemized deductions on Schedule A, Itemized
Deductions, resulting in no reported taxable income. A refund of
$12,067 was claimed, representing a claim for all of the income
tax withheld and excess employment taxes.
Petitioner’s 1994 return reflected her address as 1500 Adams
Avenue, Apt. 105, Costa Mesa, CA 92626 (Adams Avenue address).
During 1998, respondent was in communication with petitioner and
was provided with a second address--P.O. Box 11774, Costa Mesa,
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CA 92627 (P.O. Box address). On April 7, 1998, respondent mailed
duplicate statutory notices of deficiency to petitioner--one to
the Adams Avenue address and the other to the P.O. Box address.
In those notices for petitioner’s 1994 tax year, respondent
determined a $53,680 income tax deficiency and a $10,736 penalty
under section 6662(a).1 The deficiency results from respondent’s
determination that petitioner was not entitled to certain claimed
business and itemized deductions. The notice sent to the Adams
Avenue address was returned to respondent marked “Moved, Left No
Address”. The notice sent to the P.O. Box address was not
returned to respondent.
On June 23, 1998, respondent received a letter from
petitioner indicating that she wanted to appeal respondent’s
determinations for 1994 and 1995. Petitioner’s letter attached a
copy of the first pages of respondent’s notices of deficiency for
1994 and 1995, but only for the notices sent to the P.O. Box
address. Petitioner’s letter to respondent reflected her then
current address as the P.O. Box address. Petitioner did not
petition this Court with respect to the 1994 notice, and on
August 31, 1998, respondent assessed the income tax deficiency
and penalty.
1
Section references are to the Internal Revenue Code in
effect for the period under consideration.
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After petitioner failed to pay her 1994 income tax
liability, respondent, by means of certified mail dated April 11,
2000, sent petitioner a Form 1058, Final Notice--Notice of Intent
to Levy and Notice of Your Rights to a Hearing, as required under
section 6330. Petitioner timely mailed to respondent a Form
12153, Request for a Collection Due Process Hearing, and a Form
8857, Request for Innocent Spouse Relief. In addition to the
collection hearing, petitioner sought innocent spouse relief in
the amount of $45,617. Along with the requests for collection
hearing and spousal relief, petitioner submitted an attachment
claiming that she “thought that the statutory period of
limitations for tax assessment is three years from the time the
[1994] tax return was filed. I never received any tax bill or
assessment with the statutory time period.”
On January 31, 2002, an Appeals officer issued a Notice of
Determination Concerning Your Request for Relief from Joint and
Several Liability under section 6015 for petitioner’s 1994 tax
year. In that notice, petitioner was granted $33,378 of partial
relief leaving an unpaid income tax deficiency of $12,239 for
1994.
On January 29, 2002, another of respondent’s Appeals
officers sent petitioner a letter requesting financial
information in order for respondent to consider collection
alternatives, including an installment payment agreement.
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Petitioner’s hearing before Appeals was conducted via telephone
conversations on February 5 and February 19, 2002, at which times
collection alternatives for the $12,239 balance for 1994 were
discussed. The Appeals officer also considered and allowed some
itemized deductions for 1994.
Petitioner advised the Appeals officer during the February
19, 2002, telephonic conversation that she did not wish to
further pursue collection alternatives until she sought review by
the Tax Court of respondent’s partial denial of relief from
liability under section 6015. Petitioner did not submit her
financial information to the Appeals officer.
On March 1, 2002, the Appeals office mailed petitioner a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 concluding that respondent may proceed
with collection of the remainder of petitioner’s 1994 tax
liability.
On March 19, 2002, petitioner filed a petition with this
Court for review of respondent’s determination to proceed with
collection. In that petition she generally alleged that she
disputed respondent’s determination. On April 15, 2002, she
amended her petition and specifically alleged error with respect
to the underlying merits of the $12,239 balance for the 1994
year. No error was alleged with respect to respondent’s
determination under section 6015 or with respect to the adequacy
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of the hearing with Appeals or the consideration of collection
alternatives.
OPINION
There is no disagreement about any material fact, and the
controverted issue involves a question that is ripe for summary
judgment. Rule 121(b); Fla. Peach Corp. v. Commissioner, 90 T.C.
678, 681 (1988); Shiosaki v. Commissioner, 61 T.C. 861, 862
(1974).
Section 6330 provides that, upon request and in the
circumstances described therein, a taxpayer has a right to a
“fair hearing”. Sec. 6330(b). A “fair hearing” consists of the
following elements: (1) An impartial officer will conduct the
hearing; (2) the conducting officer will receive verification
from the Secretary that the requirements of applicable law and
administrative procedure have been met; (3) certain issues may be
heard such as spousal defenses and offers-in-compromise; and (4)
a challenge to the underlying liability may be raised if the
taxpayer did not receive a statutory notice of deficiency or
otherwise receive an opportunity to dispute such liability. Sec.
6330(c).
Petitioner, in response to respondent’s motion for summary
judgment, advances three principal contentions. Her first
contention is that the 3-year period for assessment of the tax
had expired prior to the time (August 1998) that respondent
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assessed the tax. Petitioner relies on section 6501(a), which
generally provides for assessment within a 3-year period.
Petitioner, however, fails to understand that the April 7, 1998,
mailing of notices of deficiency to her caused the period for
assessment to be suspended and to remain open so as to permit the
assessment. The statute provides that the mailing of the notice
within the 3-year period suspends the running of the 3-year
period for a minimum of 150 days. See sec. 6503(a)(1).
Petitioner’s second contention is that Appeals should have
permitted her to address the underlying merits of respondent’s
deficiency determination for 1994. In that regard, section
6330(c)(2)(B) provides that a taxpayer may raise issues
concerning the underlying tax liability in a proceeding under
section 6330 where the taxpayer did not receive a notice of
deficiency or otherwise have an opportunity to dispute the tax
liability. See Sego v. Commissioner, 114 T.C. 604 (2000); Goza
v. Commissioner, 114 T.C. 176 (2000). Because petitioner
received a notice of deficiency and did not petition this Court
for relief, she was not entitled to contest the merits of the
underlying liability at her section 6330 hearing.
Even though respondent was not required to consider the
merits of the underlying tax liability for 1994, the Appeals
officer did consider some of the underlying merits of the 1994
liability. On that point, we have held that permitting a
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taxpayer to offer information concerning the underlying liability
does not constitute a waiver of the section 6330(c)(2)(B)
requirements. Behling v. Commissioner, 118 T.C. 572, 577-579
(2002).
In the Behling case, we considered a situation where the
Appeals officer received materials from the taxpayer concerning
the underlying merits of the tax liability. Ultimately, the
Appeals officer in Behling did not make any adjustments to the
underlying liability. Under those circumstances, it was held
that respondent did not waive the restrictions of section
6330(c)(2)(B). Behling v. Commissioner, supra at 579.
The circumstances in this case are, for all practical
purposes, the same as those in Behling v. Commissioner, supra.
Petitioner provided information that caused the Appeals officer
to allow additional itemized deductions, thereby reducing
petitioner’s 1994 tax liability. The Appeals officer’s agreement
to consider a part of the merits, even though he was not required
to do so, did not result in a waiver of the restrictions on
petitioner with respect to the underlying merits of the 1994 tax
liability. Accordingly, petitioner was not entitled to question
the underlying merits of the 1994 liability.
Thirdly, petitioner contends that this Court should consider
the denial of additional section 6015 relief from the 1994 tax
liability. The question of whether this Court may review
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petitioner’s claim for relief as an innocent spouse is somewhat
more complicated. In this case, respondent specifically reviewed
petitioner’s request for relief and granted $33,378 of the
$45,617 in relief requested by petitioner. Petitioner asks this
Court to review respondent’s failure to grant relief with respect
to the $12,239 balance.
With respect to petitioner’s separate request for innocent
spouse relief under section 6015, petitioner failed to make in
her original and amended petitions to this Court a specific claim
for relief from that determination. In that regard petitioner
received two separate notifications from respondent, one advising
that respondent would proceed with collection and the other
granting in part and denying in part petitioner’s request for
relief under section 6015. In the original petition, petitioner
generally requested review of respondent’s determination without
identifying which of the two determinations was in dispute. In
an amended petition, however, petitioner specifically limited her
request to review of the section 6330 notice to proceed with
collection.
Under section 6330(c)(2), however, petitioner is entitled to
raise certain issues, including spousal defenses. Consideration
of spousal defenses thus was anticipated in the context of a
section 6330 hearing. Therefore, our review will include
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respondent’s determination to partially grant and deny section
6015 relief to petitioner.
Petitioner engaged in an extensive dialog with two different
Appeals officers, and she received consideration of all issues
raised, even though some were not as a matter of right under
section 6330(b). In addition to the assignment of one Appeals
officer to provide a section 6330 hearing, respondent assigned a
second Appeals officer to consider petitioner’s claim for relief
under section 6015. With respect to a section 6330 hearing, one
Appeals officer granted some relief with respect to the
underlying merits, even though petitioner was not entitled to
question the underlying merits under section 6330. With respect
to petitioner’s claim for section 6015 relief, she was afforded
$33,378 of the $45,617 in relief she requested. Petitioner asks
this Court to review respondent’s failure to grant relief with
respect to the $12,239 balance, but she has provided no evidence
or specific argument upon which we could hold that she is
entitled to such relief. She received a substantial amount of
relief from the outstanding 1994 income tax liability
(approximately 75 percent of the relief she requested).
Petitioner was also offered a collection alternative in the
form of installment payments, which she declined. Petitioner
claims that respondent has abused his discretion because he did
not consider additional questions as to the merits of the 1994
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tax liability. Under the circumstances of this case, petitioner
was provided with a hearing and opportunity to be heard as
contemplated within the meaning of sections 6320 and 6330.
Accordingly, we hold that respondent is entitled to proceed with
enforced collection activity of petitioner’s 1994 income tax
liability.
To reflect the foregoing,
An order and decision will be
entered granting respondent’s
motion for summary judgment.