T.C. Summary Opinion 2003-152
UNITED STATES TAX COURT
OLEN W. AND GWENDOLYN WILBORN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6805-02S. Filed October 15, 2003.
Olen W. and Gwendolyn Wilborn, pro sese.
John F. Driscoll, for respondent.
WHERRY, Judge: This case is before the Court on
respondent’s Motion For Summary Judgment under Rule 121.1 The
petition was filed pursuant to the provisions of section 7463.
The decision to be entered is not reviewable by any other court,
and this opinion should not be cited as authority. The instant
proceeding arises from a petition for judicial review filed in
1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
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response to a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330.
Background
On April 12, 1999, respondent assessed $1,846.02 pertaining
to petitioners’ Federal income tax liabilities for the 1996 year.
Thereafter, on February 25, 2000, respondent issued to
petitioners separate identical notices of deficiency for the
taxable year 1997. The notices reflected a deficiency of $24,773
and an accuracy-related penalty under section 6662(a) of $4,234.
The notices were sent by certified mail to petitioners at P.O.
Box 425, Magee, Mississippi 39111-0425-257. In response to the
notices of deficiency, petitioners apparently prepared a petition
to the Tax Court for redetermination. They attached to their
pleadings in the instant collection case a copy of a petition
with respect to the deficiency signed and dated March 18, 2000.
Such a petition, however, was never in fact filed with this
Court, and no deficiency proceedings were instituted. Respondent
assessed an unpaid balance of $34,760.65 with respect to 1997 on
July 17, 2000.
On or about December 5, 2000, respondent issued to
petitioners a Final Notice - Notice of Intent to Levy and Notice
of Your Right to a Hearing with regard to their 1996 and 1997
taxable years. Subsequently, on March 29, 2001, respondent sent
to petitioners separate Notices of Federal Tax Lien Filing and
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Your Right to a Hearing Under IRC 6320 with respect to the 1996
and 1997 years.
Petitioners then submitted a Form 12153, Request for a
Collection Due Process Hearing, which was received by respondent
on April 27, 2001. On the Form 12153 petitioners checked boxes
indicating disagreement with both a “Filed Notice of Federal Tax
Lien” and a “Notice of Levy/Seizure”. They also attached a
statement explaining that their reasons for disagreeing included
that they were never given the Tax Court hearing they requested
on March 18, 2000, and that they primarily disputed the
disallowance in its entirety of $53,541 claimed in 1997 as cost
of good sold.
In response to that portion of petitioners’ request which
related to the notice of intent to levy, respondent held a so-
called equivalency hearing and, on January 24, 2002, issued a
Decision Letter Concerning Equivalent Hearing Under Section 6320
and/or 6330 concluding that the subject levy was an appropriate
collection action. In response to that portion of petitioners’
request which pertained to the notices of lien filing, respondent
held a “Collection Due Process” hearing and sent to petitioners a
Notice of Determination Concerning Collection Actions(s) Under
Section 6320 and/or 6330 dated February 28, 2002. An attachment
to the notice of determination explained in relevant part as
follows:
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In their protest Taxpayer stated that they did not
agree with the lien filing because they were never
given a Tax Court hearing in Mobile, AL as they had
requested in a timely filed petition. Taxpayer
provided a copy of the petition that was mailed to the
Tax Court. In their petition Taxpayer had disagreed
with the audit adjustment to disallow the cost of good
sold in its entirety. It was decided to give the
Taxpayer the benefit of a doubt and consider the cost
of good sold issue. Taxpayer provided documentation to
substantiate material cost of $31,365.45. The SND was
revised to reflect the allowance of the COGS. This
adjustment reduces the amount of tax owed for 1997 from
$24,773 to $12,478 and the penalty associated with the
adjustment to be abated is $4,234.
Taxpayer was told of the recommendation to reduce
the liability for 1997. Taxpayer-wife had stated
several times that she was going to try and borrow some
money to pay part of the liability and set the balance
on payments. A copy of the revised audit report was
mailed to Taxpayer along with the Form 12257.
Taxpayer-wife called to discuss the form and was given
two weeks to sign and return the waiver or a
determination letter would be issued.
From the best information available it appears
that all required legal procedures were followed by the
Internal Revenue Service in issuing the Notice of
Federal Tax Lien and advising Taxpayer of their Appeal
right. Taxpayer had raised the liability issue for one
year, which was considered. The Notice of Federal Tax
Lien should not be withdrawn. The lien was properly
file to secure the Government’s priority position.
This action balances the need for the efficient
collection of taxes with the legitimate concern that
any collection action be no more intrusive than
necessary. [Reproduced literally.]
On March 29, 2002, petitioners filed with this Court a
petition that on its face challenges the “Notice of Determination
- 2/28/02” with respect to the year “1997”. Attached to the
petition is an explanation of petitioners’ position which
mentions once again the lack of a Tax Court proceeding in
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response to their 2000 petition; acknowledges that respondent
considered and allowed at the “Collection Due Process Hearing” a
portion of the disputed cost of goods sold; argues that
respondent did not consider other issues that petitioners wished
to raise, such as deductions in 1997 for gambling losses, State
income taxes, and mortgage interest; and contends that “a levy
against petitioners’ current income would indeed be ‘more
intrusive than necessary.’” Petitioners then allude to several
items of real property and state: “What the petitioners want is
for the levy against current earnings to be delayed until the
correct amount of deficit has been determined and until they can
sell the property or mortgage it to pay the deficit.” The
attachment also clarifies that “petitioners are not challenging
any of the $1,846 alleged to be owed for 1996”.
Respondent on July 18, 2003, filed a Motion To Dismiss For
Lack of Jurisdiction As To Petitioners’ I.R.C. § 6330(a) Claim.
The Court granted respondent’s motion on grounds that
petitioners’ request for a hearing as to the levy was not timely
submitted to respondent within the time period prescribed by
statute. See sec. 6330(a)(3)(B); Kennedy v. Commissioner, 116
T.C. 255, 261-262 (2001). Respondent on September 15, 2003,
filed the instant motion for summary judgment. Petitioners were
ordered to file any response to this motion on or before October
6, 2003, but no such response has been received by the Court.
Discussion
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Rule 121(a) allows a party to move “for a summary
adjudication in the moving party’s favor upon all or any part of
the legal issues in controversy.” Rule 121(b) directs that a
decision on such a motion shall be rendered “if the pleadings,
answers to interrogatories, depositions, admissions, and any
other acceptable materials, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.”
The moving party bears the burden of demonstrating that no
genuine issue of material fact exists and that he or she is
entitled to judgment as a matter of law. Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994). Facts are viewed in the light most favorable to the
nonmoving party. Id. However, where a motion for summary
judgment has been properly made and supported by the moving
party, the opposing party may not rest upon mere allegations or
denials contained in that party’s pleadings but must by
affidavits or otherwise set forth specific facts showing that
there is a genuine issue for trial. Rule 121(d). The Court has
considered the pleadings and other materials in the record and
concludes that there is no genuine justiciable issue of material
fact in this case.
I. Collection Actions--General Rules
Section 6321 imposes a lien in favor of the United States
upon all property and rights to property of a taxpayer where
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there exists a failure to pay any tax liability after demand for
payment. The lien generally arises at the time assessment is
made. Sec. 6322. Section 6323, however, provides that such lien
shall not be valid against any purchaser, holder of a security
interest, mechanic’s lienor, or judgment lien creditor until the
Secretary files a notice of lien with the appropriate public
officials. Section 6320 then sets forth procedures applicable to
afford protections for taxpayers in lien situations.
Section 6320(a)(1) establishes the requirement that the
Secretary notify in writing the person described in section 6321
of the filing of a notice of lien under section 6323. This
notice required by section 6320 must be sent not more than 5
business days after the notice of tax lien is filed and must
advise the taxpayer of the opportunity for administrative review
of the matter in the form of a hearing before the Internal
Revenue Service Office of Appeals. Sec. 6320(a)(2) and (3).
Section 6320(b) and (c) grants a taxpayer, who so requests, the
right to a fair hearing before an impartial Appeals officer,
generally to be conducted in accordance with the procedures
described in section 6330(c), (d), and (e).
Section 6330(c) addresses the matters to be considered at
the hearing:
SEC. 6330(c). Matters Considered at Hearing.--In
the case of any hearing conducted under this section--
(1) Requirement of investigation.--The
appeals officer shall at the hearing obtain
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verification from the Secretary that the
requirements of any applicable law or
administrative procedure have been met.
(2) Issues at hearing.--
(A) In general.--The person may raise at
the hearing any relevant issue relating to
the unpaid tax or the proposed levy,
including--
(i) appropriate spousal defenses;
(ii) challenges to the
appropriateness of collection actions;
and
(iii) offers of collection
alternatives, which may include the
posting of a bond, the substitution of
other assets, an installment agreement,
or an offer-in-compromise.
(B) Underlying liability.--The person
may also raise at the hearing challenges to
the existence or amount of the underlying tax
liability for any tax period if the person
did not receive any statutory notice of
deficiency for such tax liability or did not
otherwise have an opportunity to dispute such
tax liability.
Once the Appeals officer has issued a determination
regarding the disputed collection action, section 6330(d) allows
the taxpayer to seek judicial review in the Tax Court or a U.S.
District Court. In considering whether taxpayers are entitled to
any relief from the Commissioner’s determination, this Court has
established the following standard of review:
where the validity of the underlying tax liability is
properly at issue, the Court will review the matter on
a de novo basis. However, where the validity of the
underlying tax liability is not properly at issue, the
Court will review the Commissioner’s administrative
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determination for abuse of discretion. [Sego v.
Commissioner, 114 T.C. 604, 610 (2000).]
II. Review of Underlying Liability
Petitioners seek to challenge in this proceeding the amount
of their underlying tax liability for 1997. The record, however,
makes clear that petitioners received a notice of deficiency for
1997. Identical notices were sent to what respondent alleges and
petitioners do not dispute was their last known address. See
sec. 6212(b). That address is the same address as petitioners
have indicated to the Court should be used for correspondence in
connection with this case. Moreover, petitioners in fact
received one or both of the statutory notices in time to prepare
and sign on March 18, 2000, a timely Tax Court petition. See
sec. 6213(a). The reason why this petition was never actually
filed with the Court is not explained by the record, but it is
clear that petitioners failed to follow up adequately on their
submission to ensure its receipt and filing.
Accordingly, because a statutory notice of deficiency for
1997 was received by petitioners, they are precluded by section
6330(c)(2)(B) from challenging their underlying liability for
that year in this proceeding. Furthermore, this preclusion
mandated by statute is not altered or waived by the fact that the
Appeals officer chose to consider at the collection hearing
matters related to petitioners’ liability. See Behling v.
Commissioner, 118 T.C. 572, 577-579 (2002). Petitioners’
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contentions regarding items such as deductions for 1997 are not
properly at issue and cannot be addressed here. Petitioners have
also expressly conceded any challenge to the balance due for
1996. We therefore review respondent’s determination solely for
abuse of discretion.
III. Review for Abuse of Discretion
With respect to issues subject to review in collection
proceedings for abuse of discretion, petitioners have at no time
raised a spousal defense. Nor have they offered any specific,
concrete collection alternatives. Although petitioners in their
petition generally allude to the possibility of selling or
mortgaging real property, they have not proposed any actual plan
or arrangements for satisfying their tax liabilities. They also
apparently broached at their Appeals hearing but failed to follow
through on borrowing funds to pay a portion of the debt. Hence,
the record does not reveal that respondent inappropriately
rejected any bona fide collection alternative.
Concerning challenges to the appropriateness of collection
actions, the petition complains about intrusiveness. To the
extent that this complaint pertains to the levy action, the issue
is not before us. To the extent that the complaint can be
interpreted to encompass the lien action, we conclude that, in
light of the absence of any definite collection alternatives, the
filing of a lien properly balances the competing concerns of
efficient collection and intrusiveness.
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As this Court has noted in earlier cases, Rule 331(b)(4)
states that a petition for review of a collection action shall
contain clear and concise assignments of each and every error
alleged to have been committed in the notice of determination and
that any issue not raised in the assignments of error shall be
deemed conceded. See Lunsford v. Commissioner, 117 T.C. 183,
185-186 (2001); Goza v. Commissioner, 114 T.C. 176, 183 (2000).
Accordingly, having considered those matters set forth in
petitioners’ pleadings, the Court concludes that respondent’s
determination to proceed with collection was not an abuse of
discretion. Respondent’s motion for summary judgment will be
granted.
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To reflect the foregoing,
An appropriate order
granting respondent’s motion
for summary judgment and
decision for respondent will
be entered.