T.C. Memo. 2003-312
UNITED STATES TAX COURT
EDWARD H. AND ANNE G. HARRELL, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 4063-02L. Filed November 12, 2003.
R filed a motion for reconsideration of our
opinion in Harrell v. Commissioner, T.C. Memo. 2003-
271, arguing that our disposition of this case
constitutes both substantial error and unusual
circumstances. R claims that the language in our
opinion was ambiguous as to whether respondent’s
decision to issue the notice of determination was an
abuse of discretion.
Held: We reaffirm our holding in Harrell v.
Commissioner, supra, that R’s decision to issue the
notice of determination was an abuse of discretion.
R’s motion for reconsideration is denied.
*
This opinion supplements our opinion in Harrell v.
Commissioner, T.C. Memo. 2003-271.
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Guy C. Crowgey, for petitioners.
Mary Ann Waters, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
NIMS, Judge: Respondent moves the Court for reconsideration
of its Memorandum Opinion at T.C. Memo. 2003-271. See Rule 161.
Unless otherwise indicated, all section references are to the
Internal Revenue Code in effect at all relevant times, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
In Harrell v. Commissioner, T.C. Memo. 2003-271, we held
that Appeals Officer Martin (AO Martin) was an impartial officer
at the time she conducted the section 6330 hearing at issue in
this case. We further held that AO Martin did not abuse her
discretion in determining that the communications between Appeals
Officer Barbara Petrohovich and Deborah Stanley, an attorney in
respondent’s counsel’s office, did not violate petitioners’
rights. We also remanded this case to the Commissioner for the
sole purpose of permitting petitioners to reconsider their
rejection of AO Martin’s suggested installment agreement, which
was based in part on petitioners’ required concession of their
1991, 1992, and 1993 tax liabilities, or to offer another
collection alternative pursuant to section 6330(c)(2)(A)(iii).
Id.
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In his motion to reconsider our decision in Harrell,
respondent argues that the “Court’s disposition of this case
constitutes both substantial error and unusual circumstances.”
Background
We adopt the findings of fact in our prior memorandum
opinion, Harrell v. Commissioner, supra. For convenience we
repeat the facts necessary to elucidate the ensuing discussion.
Respondent issued to petitioners a “NOTICE OF DETERMINATION
CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330”
dated January 22, 2002 (Notice of Determination). The Notice of
Determination dealt with petitioners’ income tax liabilities for
tax years 1991, 1992, 1993, and 1999.
Petitioner Edward H. Harrell filed for chapter 11 bankruptcy
on October 24, 1995. Petitioner Anne G. Harrell filed for
chapter 11 bankruptcy on December 18, 1996. Petitioners’ chapter
11 bankruptcy cases were consolidated on February 27, 1997.
Their consolidated chapter 11 bankruptcy case was dismissed on
June 30, 1997.
On the same day as the dismissal of their chapter 11
bankruptcy case, petitioners filed a petition for chapter 7
bankruptcy relief. Petitioners were granted a discharge in their
chapter 7 bankruptcy case on June 11, 1998.
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On August 29, 1998, notices of Federal tax lien were filed
for petitioners’ income tax liabilities for tax years 1991, 1992,
and 1993.
On December 25, 2000, the IRS issued to petitioners a “Final
Notice - Notice of Intent to Levy” (Notice of Intent to Levy)
with regard to income tax liabilities for tax years 1991, 1992,
1993, and 1999.
On January 23, 2001, petitioners requested a hearing
pursuant to section 6330 with respect to the Notice of Intent to
Levy.
On April 13, 2001, petitioners’ case with respect to the
Notice of Intent to Levy was assigned to AO Martin.
Before the issuance of the Notice of Intent to Levy,
petitioners had submitted an offer in compromise for their 1991-
93 tax years based on “doubt as to liability”, taking the
position that their liability for these years was discharged
under chapter 7 of the Bankruptcy Code. They theorized that the
returns for those years were filed outside the 3-year lookback
period contained in the Bankruptcy Code. See 11 U.S.C. sec.
507(a)(8)(A)(i) (2000). At the section 6330 hearing, petitioners
contended that collection by levy was not appropriate because
their 1991-93 liabilities were discharged in their chapter 7
bankruptcy proceeding.
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On January 22, 2002, respondent issued the Notice of
Determination, which dealt with petitioners’ income tax
liabilities for tax years 1991, 1992, 1993, and 1999. The Notice
of Determination found that collection action by levy was proper
and appropriate. Attached to the Notice of Determination is a
memorandum that states, in part: “The tax liabilities will not
be abated as the collection statute was tolled during the period
of the prior bankruptcy.”
Discussion
Reconsideration under Rule 161 permits us to correct
manifest errors of fact or law, or to allow newly discovered
evidence to be introduced that could not have been introduced
before the filing of an opinion even if the moving party had
exercised due diligence. See Estate of Quick v. Commissioner,
110 T.C. 440, 441 (1998); see also Traum v. Commissioner, 237
F.2d 277, 281 (7th Cir. 1956), affg. T.C. Memo. 1955-127. The
granting of a motion for reconsideration rests within the
discretion of the Court, and we do not grant a motion for
reconsideration unless the party seeking reconsideration shows
unusual circumstances or substantial error. See Alexander v.
Commissioner, 95 T.C. 467, 469 (1990), affd. without published
opinion sub nom. Stell v. Commissioner, 999 F.2d 544 (9th Cir.
1993); Estate of Halas v. Commissioner, 94 T.C. 570, 573 (1990);
Vaughn v. Commissioner, 87 T.C. 164, 166-167 (1986); Estate of
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Bailly v. Commissioner, 81 T.C. 949, 951 (1983). Reconsideration
is not the appropriate forum for rehashing previously rejected
legal arguments or tendering new legal theories to reach the end
result desired by the moving party. See Estate of Quick v.
Commissioner, supra at 441-442; Stoody v. Commissioner, 67 T.C.
643, 644 (1977).
Respondent’s main contention in support of his motion for
reconsideration is that this Court was ambiguous in Harrell v.
Commissioner, T.C. Memo. 2003-271, as to whether the issuance of
the Notice of Determination, without awaiting the Supreme Court’s
opinion in Young v. United States, 535 U.S. 43 (2002), was an
abuse of discretion. For the sake of clarity, we deem it
necessary to discuss our rationale in greater detail than we did
previously.
As of January 22, 2002, the date of the Notice of
Determination upon which this case is based, the Supreme Court
had not as yet decided Young, which had been argued on January 9,
2002, but was not decided until March 4, 2002. In this case, the
Supreme Court held that the 3-year lookback period in bankruptcy
cases is automatically tolled during the pendency of an earlier
proceeding under the Bankruptcy Code.
In Harrell v. Commissioner, supra, we stated that we were
“reluctant to label respondent’s issuance of the Notice of
Determination an abuse of discretion based upon a somewhat
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technical reason for doing so”. Despite this reluctance, we
nevertheless found that under the circumstances of this case, it
was an abuse of discretion to issue the Notice of Determination.
We acknowledge that the circumstances surrounding this case
are highly unusual. In large part because of the uncertainty as
to how the Supreme Court would resolve the equitable tolling
issue, petitioners were unwilling to accept a collection
alternative that required them to agree with respondent that
their 1991-93 tax liabilities were not discharged. As we stated
in Harrell v. Commissioner, supra,
at the time petitioners rejected AO Martin’s suggested
installment agreement, and at the time the Notice of
Determination was issued, there was sufficient reason
to raise a doubt as to petitioners’ tax liabilities for
1991, 1992, and 1993, so as to justify petitioners’
rejection of an installment agreement based in part
upon a concession of the 1991-93 liabilities.
By issuing the Notice of Determination at that time,
respondent effectively denied petitioners the opportunity to
present or consider collection alternatives that they might have
presented or accepted had they known the outcome of Young v.
United States, supra, before the issuance of the Notice of
Determination. If, under this alternative scenario, petitioners
had presented a collection alternative during the section 6330
hearing that was then rejected by respondent, petitioners would
have been able to petition this Court pursuant to section
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6330(d)(1) for review of that determination. Consequently, this
Court finds it appropriate to retain jurisdiction over this case.
We have considered each of the remaining arguments of
respondent and to the extent they are not discussed herein, find
them to be either not germane or unconvincing.
Accordingly, we will deny respondent’s motion for
reconsideration.
To reflect the foregoing,
An appropriate order denying
respondent’s motion for
reconsideration will be issued.