T.C. Memo. 2003-231
UNITED STATES TAX COURT
ANTONIO L. AND ERNESTINE THOMAS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3263-02L. Filed August 1, 2003.
Antonio L. and Ernestine Thomas, pro se.
Monica D. Armstrong, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GALE, Judge: This case arises from a petition filed
pursuant to sections 6320(c) and 6330(d)(1)(A).1 After
1
Unless otherwise noted, all section references are to the
Internal Revenue Code, as amended.
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concessions,2 the issue for decision is whether respondent’s
determination to proceed with a collection with respect to
petitioners’ Federal income tax liabilities for 1991 should be
sustained. We hold that it should.
FINDINGS OF FACT
Most of the facts have been stipulated and are so found.
The parties’ stipulation of facts and the accompanying exhibits
are incorporated herein by this reference.
At the time of filing the petition in this case, petitioners
resided in East Point, Georgia.
Petitioners filed their 1991 joint Federal income tax return
(1991 return) on September 28, 1993, reporting a tax due of
$8,343, which was not paid. Respondent assessed the tax shown as
due on the 1991 return on October 18, 1993, as well as additions
to tax under sections 6651(a)(1) and (2) and 6654, plus interest
(return assessment).
On or about March 6, 1995, respondent notified petitioners
that their 1991 income tax return had been selected for
examination.
2
The notice of determination that is the subject of this
action covered petitioners’ liabilities with respect to taxable
years 1985, 1991, 1997, and 1998. Respondent conceded in the
notice that his collection action with respect to 1985 was not
appropriate, and petitioners seek review herein only with respect
to 1991.
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On March 10, 1995,3 petitioners filed a petition (bankruptcy
petition) in the U.S. Bankruptcy Court for the Northern District
of Georgia, thereby commencing a bankruptcy proceeding under
chapter 7 of title 11 of the United States Code.
On March 20, 1996, petitioners amended their bankruptcy
petition to include their Federal tax liabilities for 1991.
On March 21, 1996, respondent issued a statutory notice of
deficiency to petitioners with respect to 1991, determining a
deficiency of $31,560, an addition to tax under section
6651(a)(1) of $8,004, and a penalty under section 6662(a) of
$6,312.
On June 12, 1996, the bankruptcy court entered a “DISCHARGE
OF DEBTOR(S) WITH ORDER APPROVING TRUSTEE’S REPORT OF NO
DISTRIBUTION, CLOSING ESTATE AND DISCHARGING TRUSTEE” with
respect to petitioners (discharge order), granting petitioners a
discharge pursuant to 11 U.S.C. sec. 727 (2000). The return
assessment was abated shortly after issuance of the discharge
order.
On June 19, 1996, petitioners filed a petition with this
Court with respect to the notice of deficiency for 1991.
3
The parties have stipulated that the bankruptcy petition
was filed on Mar. 10, 1995, although the bankruptcy court’s
discharge order indicates that the petition was filed on Oct. 10
of that year. As discussed infra note 5, since the result in
this case would be the same under either filing date, we need not
resolve this discrepancy.
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Petitioners ultimately settled the deficiency proceeding by
agreeing to a deficiency in tax of $13,914 plus an addition to
tax under section 6651(a)(1) of $3,478.50. A decision was
entered on October 20, 1997, reflecting the foregoing agreement.
The deficiency and addition to tax, plus interest of $10,457.90,
were assessed on December 29, 1997 (examination assessment).
On August 29, 2000, respondent filed a notice of Federal tax
lien with the Clerk of Superior Court in Fulton County, Georgia.
The notice of Federal tax lien was issued with respect to
petitioners’ income tax liabilities for the years 1985, 1991,
1997, and 1998. With respect to 1991, the Notice of Federal Tax
Lien indicated an unpaid balance of $22,227.91. On September 1,
2000, respondent mailed to petitioners a Notice of Federal Tax
Lien Filing and Your Right to a Hearing Under IRC 6320.
On October 5, 2000, petitioners filed with respondent a Form
12153, Request for a Collection Due Process Hearing. On the Form
12153, petitioners alleged as grounds for relief: (1) “IRS
assessed taxes after the date a petition for discharge filed”;
(2) “IRS mailed Notice of Deficiency to wrong address”; (3) “The
statute of limitation for collection has ended”; and (4)
“Agreement was reached in Tax Court”. Petitioners did not raise
any spousal defenses or offer collection alternatives. A face-
to-face meeting was scheduled between petitioners and a
settlement officer of respondent for November 19, 2001.
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Petitioner Antonio Thomas telephoned the settlement officer on
November 14, 2001, to postpone this meeting because his
representative was ill, and the scheduled meeting did not take
place. A second meeting was scheduled for December 3, 2001, at
10 a.m. Petitioners failed to appear, and in the afternoon of
that day, a representative of petitioners contacted the
settlement officer to request a further postponement. The
representative was advised that Appeals would close the case and
issue a determination.
On December 12, 2001, respondent issued a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 (determination letter). Therein, the settlement
officer first determined that all applicable laws and
administrative procedures had been met for all liabilities at
issue except for the 1985 taxable year; for 1985, the settlement
officer determined that petitioners’ liability had been
discharged in the bankruptcy proceeding. With respect to issues
raised by petitioners, the determination letter concluded that
all of the issues raised by petitioners related to the validity
of the assessments and that all of the assessments except for the
one relating to 1985 were valid. Finally, the determination
letter concluded that the proposed collection action
appropriately balanced petitioners’ interests with the need for
efficient tax collection, noting a “pattern of unresponsiveness”
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in that petitioners had failed to appear for two scheduled
hearings.
On February 11, 2002, petitioners filed their petition in
the present case. The petition alleged: (1) That petitioners’
1991 liabilities had been discharged in the bankruptcy
proceeding; (2) that the amount of the 1991 liabilities asserted
by respondent was incorrect; and (3) that contrary to the
determination letter, petitioners and their representative had
called the settlement officer to request that the hearings be
rescheduled. At trial, petitioners further argued that the lien
should be released because the 1991 liabilities had been paid.
OPINION
Section 6321 imposes a lien in favor of the United States on
all property and rights to property of a person when a demand for
payment of that person’s taxes has been made and the person fails
to pay those taxes. Such a lien arises when an assessment is
made. Sec. 6322. Section 6323(a) requires the Secretary to file
a notice of Federal tax lien if the lien is to be valid against
any purchaser, holder of a security interest, mechanic’s lienor,
or judgment lien creditor. Lindsay v. Commissioner, T.C. Memo.
2001-285, affd. 56 Fed. Appx. 800 (9th Cir. 2003).
Section 6320 provides that the Secretary shall furnish the
person described in section 6321 with written notice of the
filing of a notice of lien under section 6323. The notice
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required by section 6320 must be provided not more than 5
business days after the day of the filing of the notice of lien.
Sec. 6320(a)(2). Section 6320 further provides that the person
may request administrative review of the matter (in the form of
an Appeals Office hearing) within 30 days beginning on the day
after the 5-day period. Section 6320(c) provides that the
Appeals Office hearing generally shall be conducted consistent
with the procedures set forth in section 6330(c), (d), and (e).
Section 6330(c)(2) prescribes the matters that a person may
raise at an Appeals Office hearing. Under that section, a person
may raise any relevant issue related to the unpaid tax or noticed
lien, but may only contest the existence or amount of the
underlying tax liability if the person did not receive a notice
of deficiency for the tax liability or did not otherwise have an
opportunity to dispute the tax liability. Sec. 6330(c)(2)(B);
Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v.
Commissioner, 114 T.C. 176, 180-181 (2000). Section 6330(d)
provides for judicial review of the administrative determination
in the Tax Court or a Federal District Court, as may be
appropriate. Where the underlying tax liability is not at issue,
the Court will review the Appeals officer’s determination for
abuse of discretion. Sego v. Commissioner, supra at 610.
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The Underlying Liabilities
Although petitioners allege various errors in the deficiency
respondent determined with respect to 1991, they may not raise
these issues in the instant proceeding. The underlying
liabilities for 1991 that respondent seeks to collect4 were the
subject of a notice of deficiency that petitioners received.
Accordingly, pursuant to section 6330(c)(2)(B), petitioners are
precluded from challenging the existence or amount of the
underlying tax liabilities for 1991 in this proceeding.
The Bankruptcy Discharge
Petitioners also allege that they owe no tax for 1991
because all of their liabilities for that year were discharged in
the bankruptcy proceeding. Petitioners further note that they
amended their bankruptcy petition specifically to include their
1991 income tax liabilities. Respondent agrees that the return
assessment was discharged in that proceeding but contends that
the examination assessment was not.
We have jurisdiction to decide whether a tax liability for
which collection is at issue in a section 6330(d)(1) proceeding
has been discharged in bankruptcy. Washington v. Commissioner,
120 T.C. 114, 121 (2003).
Respondent argues that the examination assessment was not
4
Respondent has abated the 1991 liability that petitioners
reported on their return for that year (i.e., the return
assessment).
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discharged in bankruptcy pursuant to 11 U.S.C. secs. 523(a)(1)(A)
and 507(a)(8)(A)(iii) (2000). Those sections provide
collectively that an income tax liability that is “not assessed
before, but assessable * * * after” commencement of the
bankruptcy proceeding, is not dischargeable. Thus, respondent
argues, the examination assessment, which was not made before the
commencement of the bankruptcy proceeding on March 10, 1995, but
instead was made after commencement, on December 29, 1997, was
not dischargeable pursuant to the foregoing provisions.
We agree that the examination assessment was not
dischargeable but disagree with respondent’s analysis.
Specifically exempted from the nondischargeability rule for
income taxes that were not assessed before but are assessable
after commencement of bankruptcy proceedings are income taxes
with respect to which a return was filed after its due date
(including extensions) and after 2 years before the filing of the
bankruptcy petition. See 11 U.S.C. secs. 507(a)(8)(A)(iii),
523(a)(1)(B)(ii) (2000). Such taxes are nondischargeable without
regard to the timing of the assessment. Petitioners’ 1991 return
was untimely filed on September 28, 1993, which is after 2 years
before the filing of the bankruptcy petition on March 10, 1995.5
5
We note that there is a discrepancy in the record regarding
the filing date of the bankruptcy petition. The parties have
stipulated that the petition was filed on Mar. 10, 1995; however,
the bankruptcy court’s discharge order indicates that the
(continued...)
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Accordingly, pursuant to 11 U.S.C. sec. 523(a)(1)(B)(ii) the
examination assessment was not discharged in the bankruptcy
proceedings.6
Payment
At trial, petitioners raised an additional issue; namely,
that any amount owed with respect to 1991 that was not discharged
in the bankruptcy proceeding had been paid. In support of this
contention, petitioners introduced a letter issued to them from
respondent dated July 21, 1997, indicating that the total amount
owed with respect to 1991 was $20. Petitioners allege that they
paid this amount and “additional payments” with respect to 1991.
Petitioners’ argument has no merit. The July 21, 1997,
letter on which they rely precedes by 3 months their October 20,
1997, execution of the stipulated decision in the Tax Court
proceedings covering 1991 in which they agreed there was a
5
(...continued)
petition was filed on Oct. 10, 1995.
Even if Oct. 10, 1995, were the correct filing date of the
bankruptcy petition, it would not change the result herein
because the examination assessment would still be
nondischargeable. If the filing date of the bankruptcy petition
were Oct. 10, 1995, the nondischargeability rule of 11 U.S.C.
secs. 523(a)(1)(A) and 507(a)(8)(A)(iii) (2000), relied on by
respondent, would apply. That is, the examination assessment
made on Dec. 29, 1997, would be nondischargeable because it was
not assessed before, but was assessable after, the commencement
of the bankruptcy proceeding on Oct. 10, 1995.
6
Petitioners’ amendment of their bankruptcy petition to
specifically list their 1991 Federal income tax liabilities has
no effect on their dischargeability.
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deficiency for that year of $13,914, plus an addition to tax of
$3,478.50. Thus, while the letter of July 21, 1997, may have
been an accurate statement of petitioners’ 1991 liabilities
before the examination assessment, it obviously did not reflect
the deficiency to which they agreed in October 1997.
Accordingly, the letter provides no support for the claim that
petitioners’ 1991 liabilities were satisfied.
To the contrary, respondent has submitted a certified copy
of Form 4340, Certificate of Assessments, Payments, and Other
Specified Matters, for petitioners’ 1991 tax year. Absent some
showing of irregularity, which petitioners have not made, the
Form 4340 provides presumptive proof of its contents. See Hansen
v. United States, 7 F.3d 137, 138 (9th Cir. 1993); United States
v. Chila, 871 F.2d 1015, 1019 (11th Cir. 1989); Craig v.
Commissioner, 119 T.C. 252, 262-63 (2002); Davis v. Commissioner,
115 T.C. 35, 40-41 (2000). The Form 4340 indicates that six
payments of $400 each were made by petitioners during 1998 with
respect to their 1991 liabilities and does not indicate that any
further payments were made. The Form 4340 indicates that the
total amount of the examination assessment was $24,647.91. The
amount that respondent seeks to collect, $22,247.91, is $2,400
less than the amount of the examination assessment. The Form
4340 also indicates that the return assessment was abated shortly
after it was discharged. Accordingly, we conclude that all
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payments that petitioners have made since the examination
assessment have been accounted for, and the amount respondent
seeks to collect is correct.
Necessity of a Face-to-Face Meeting
Finally, petitioners contend that their right to a hearing
under section 6330(b) was compromised by the settlement officer’s
issuing the determination letter without conducting a face-to-
face meeting. The parties have stipulated that a meeting
scheduled for November 19, 2001, was canceled by petitioners by
telephone on November 14, 2001, because of the illness of their
representative. A second meeting was scheduled for December 3,
2001, at 10 a.m. Further, the parties have stipulated that
petitioners failed to appear for this second meeting, and that a
representative of petitioners telephoned the settlement officer
later in the day to ask that the meeting be rescheduled. Rather
than schedule a third meeting, the settlement officer elected
instead to close the case and issue a determination letter.
We find it unnecessary to decide whether, in these
circumstances, petitioners’ right to a hearing under section
6330(b) was infringed upon when respondent’s settlement officer
refused to offer petitioners a third opportunity for a face-to-
face meeting. The issues that petitioners have raised herein and
indicated they would have raised in a face-to-face
meeting--namely, the correctness of the 1991 deficiency and the
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bankruptcy discharge of the 1991 liabilities or their
payment--have been considered in this proceeding and found to
lack merit. Thus, regardless of whether petitioners were
initially accorded their right to a hearing under section
6330(b), they have not been prejudiced, and we do not believe it
is “either necessary or productive” to remand this case for a
hearing on the claims we have found legally insufficient to
forestall collection. See Lunsford v. Commissioner, 117 T.C.
183, 189 (2001); Moore v. Commissioner, T.C. Memo. 2003-1.
Conclusion
Petitioners have not raised any spousal defenses, other
challenges to the appropriateness of the collection action, or
collection alternatives. We have considered every contention
raised by petitioners, and conclude that each is without merit.
We therefore hold that respondent may proceed with the proposed
collection action. To reflect the foregoing,
An appropriate order and
decision will be entered.