T.C. Memo. 2004-50
UNITED STATES TAX COURT
ALBERT G. COOPER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8163-02L. Filed March 5, 2004.
Joseph P. Nigro, for petitioner.
Edward J. Laubach, Jr., for respondent.
MEMORANDUM OPINION
WELLS, Chief Judge: The instant case is before us on
respondent’s motion for summary judgment pursuant to Rule 121.
Pursuant to section 6330, respondent determined that the proposed
collection action, relating to petitioner’s 1991 and 1995 taxable
years, was appropriate. Petitioner contends that respondent’s
motion for summary judgment should be denied because respondent
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did not consider a letter petitioner allegedly sent to respondent
declaring petitioner’s intent to pursue a collection alternative
or an offer in compromise. All section references are to the
Internal Revenue Code, as amended, and all Rule references are to
the Tax Court Rules of Practice and Procedure.
Background
The parties’ moving papers contain certain statements of
fact which the parties do not dispute and are set forth as facts
for the purpose of deciding the instant motion. Petitioner
resided in McKees Rocks, Pennsylvania, when the petition was
filed.
On December 16, 1991, petitioner filed a chapter 11
reorganization case with the U.S. Bankruptcy Court for the
Western District of Pennsylvania. An amended plan of
reorganization was confirmed in 1992. On November 5, 1996, the
plan was converted from a chapter 11 case to a chapter 7 case.
Respondent issued a proof of claim relating to petitioner’s 1991
and 1995 taxable years.
On August 11, 2001, respondent issued petitioner a Final
Notice of Intent to Levy and Notice of Your Right to a Hearing,
relating to the 1991 and 1995 taxable years. On August 30, 2001,
respondent received petitioner’s request for a hearing. In the
request for a section 6330 hearing, petitioner stated: “We
disagree with the assessed balances and statutory additions based
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on the fact that payments were made to the Internal Revenue
Service that have not been credited.”
On November 16, 2001, respondent’s Appeals officer contacted
petitioner by telephone to conduct a section 6330 hearing. In a
letter dated December 14, 2001, from the Appeals officer to
petitioner, the Appeals officer provided petitioner with a
transcript of account for the years in issue. The Appeals
officer’s letter stated:
This is in response to our phone conversation on
November 16, 2001.
* * * * * * *
When we last spoke the plan was for me to provide you
with these transcripts. You were to then study them
and advise me if there were any missing credits or, if
any taxes have not yet been abated according to the
Bankruptcy Court discharge order.
In a letter dated January 14, 2002, petitioner replied to
the Appeals officer’s letter and stated:
A review of the transcripts reveals several discrepancies:
1. The amounts that have been paid that have not been
credited to our clients account. It appears that the
amounts paid have been credited on the statement, but the
amounts have not been applied to reduce the tax obligations
of the Debtor;
2. Failure to credit penalties discharged in bankruptcy.
The Debtor filed for Chapter 11 Bankruptcy in 1991. His
case was subsequently converted to a Chapter 7 in 1996. The
Debtor did receive a discharge in Chapter 7 of all his
unsecured obligations. It is our contention that all the
penalties that have been assessed by the Internal Revenue
Service through 1996 should have been abated by the Internal
Revenue Service, since they were a general unsecured
obligation. The transcripts that you have provided do not
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reflect any abatement of penalties that were assessed
against the Debtor. Consequently, all account balances
shown for each year commencing in 1989 through the year 1997
are incorrect.
On January 23, 2002, the Appeals officer replied to
petitioner’s January 14, 2002, letter. The Appeals officer’s
letter stated:
You also stated that penalties discharged in
bankruptcy were not credited. I have consulted with
one of the local Bankruptcy Specialists who has advised
me that the penalties in your client’s case were not
dischargeable. Taxes will not be dischargeable if the
due date for a tax return is within 3 years of the
bankruptcy petition date. Also, when a case converts
from Chapter 11 to Chapter 7, it carries the same
original petition date. Although, according to the
dates in your letter, your client’s bankruptcy
converted to Chapter 7 in 1996, the petition date for
purposes of determining dischargeability goes back to
the original filing in 1991.
Accordingly, my determination, at this time, would have
to be that the balances shown due are correct. If I
have misstated or misunderstood either the facts or the
law relating to some aspect of this matter, please
correct me and provide a citation that supports your
position. I will certainly reconsider all of this if
my analysis is not consistent with the facts and law.
If you wish to explore payment options, I can assist
you in that matter. Options may include either an
installment payment agreement, an offer in compromise
or, possibly, a suspension of collection action pending
an improvement in your client’s financial situation.
Form 656 is enclosed for your use and information. In
that booklet you will also find financial statements
(Forms 433-A&B). If anything other than a short-term
payment plan is sought, your client will have to submit
the appropriate financial statement in support of the
proposal they wish to make.
I am faxing this letter to you this morning. The
original will be in the mail along with the Form 656.
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If you have questions or concerns, please give me a
call. I would like your reply by February 4, 2002. If
I do not hear from you by that time, I will close my
case and issue a Determination Letter that will advise
you of your client’s right to contest the determination
by filing suit in Tax Court.
Petitioner responded to the Appeals officer’s letter, by
letter sent by petitioner’s counsel to respondent on January 30,
2002, in which petitioner requested an extension of time to reply
to respondent’s January 23, 2002, letter. Petitioner’s counsel
indicated that petitioner was employed as a truck driver, and
that he was out of town. Petitioner’s counsel requested an
extension of 30 days from February 4, 2002, to review the
contents of the Appeals officer’s letter.
On April 4, 2002, respondent issued a notice of
determination for the years in issue, sustaining the amounts
sought to be collected by levy. The notice of determination
stated:
No evidence has been presented to show that the amounts
shown due are incorrect. You have not demonstrated
that any portion of these liabilities was discharged in
bankruptcy. You have not proposed a collection
alternative. The proposed collection action is
sustained.
Attachment 3193, attached to the notice of determination,
indicated that petitioner “expressed concern for the fact that
there are missing credits and for the fact that bankruptcy should
have discharged a portion of what is due.” The Appeals officer
indicated that petitioner did not question the appropriateness of
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the collection action or raise any collection alternatives.
Moreover, Attachment 3193 stated:
Taxpayer has not demonstrated that there are any
missing credits and has not refuted the Service’s claim
that these liabilities were never discharged in
bankruptcy. A telephonic hearing was held with the
representative. A deadline for responding was set,
and, later, extended at the request of the
representative. I have not received a reply to my
offer to consider other collection alternatives.
Absent a cooperative response from the taxpayer, I must
sustain the proposed levy action.
On May 6, 2002, petitioner filed a petition in this Court.
On May 20, 2003, respondent’s Appeals officer signed an affidavit
which states:
2. I have examined the purported letter from Attorney
Nigro to me dated March 4, 2002, a copy of which is attached
hereto as Exhibit 1.
3. To the best of my knowledge, I never received this
letter, Exhibit 1. If I had received this letter, it would
now be part of the administrative file in this case.
4. If I had received this letter before Appeals
issued the Notice of Determination to Mr. Cooper on
April 4, 2002, I would have given Mr. Cooper a short
period of time to formally submit an offer in
compromise. If an offer was not formally submitted, I
would have still issued the Notice of Determination.
5. On January 23, 2002, I provided Attorney Nigro
with a Form 656, Offer in Compromise, instructional
booklet and forms which he could have used to submit an
offer to me before Appeals issued the Notice of
Determination on April 4, 2002.
Discussion
Petitioner contends that respondent failed to consider his
March 4, 2002, letter, which announced petitioner’s intent to
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pursue collection alternatives or an offer in compromise.
Respondent contends that petitioner’s March 4, 2002, letter was
not received and petitioner did not make an offer in compromise
or propose collection alternatives.
“Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials.” Florida Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). A motion for summary
judgment may be granted where there is no dispute as to a
material fact and a decision may be rendered as a matter of law.
See Rule 121(a) and (b).1 The moving party bears the burden of
proving that there is no genuine issue of material fact, and
factual inferences are viewed in a manner most favorable to the
other party. See Craig v. Commissioner, 119 T.C. 252, 260 (2002)
(citing Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985)). The
party opposing summary judgment must set forth specific facts
which show that a question of genuine material fact exists and
may not rely merely on allegations or denials in his pleadings.
1
Rule 121(b) provides:
A decision shall thereafter 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. * * *
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See Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322,
325 (1988); Casanova Co. v. Commissioner, 87 T.C. 214, 217
(1986).
In the instant case, the Appeals officer’s January 23, 2002,
letter, responding to petitioner’s January 14, 2002, letter,
addressed the issue of an offer in compromise or collection
alternatives. Petitioner’s January 30, 2002, letter, sent in
reply to the Appeals officer’s January 23, 2002, letter, stated
that petitioner’s counsel was attempting to contact petitioner in
an effort to discuss the issues proposed in respondent’s January
23, 2002, letter. Petitioner’s January 30, 2002, letter
indicated that an extension of time for reply to the Appeals
officer’s January 23, 2002, letter was necessary because
petitioner, a truck driver, was unavailable to consider the
Appeals officer’s letter.
The attachment to the notice of determination refers to the
Appeals officer’s January 23, 2002, letter to petitioner and
indicates that the period for petitioner to respond to that
letter was extended. However, according to respondent, no
communication from petitioner was received regarding that issue.
Petitioner contends that his counsel sent respondent a
letter on March 4, 2002, in which petitioner sought to negotiate
an offer in compromise or a collection alternative with the
Appeals officer. Petitioner alleges that letter states: “After
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discussing this matter with our client, he has requested that we
pursue a collection alternative on his behalf. Our client would
like to pursue an Offer and Compromise.” Respondent contends
that petitioner did not send the alleged March 4, 2002, letter.
Section 6330(c)(2)(A)(iii) requires the Commissioner’s
Appeals officer to consider “offers of collection alternatives,
which may include posting of a bond, the substitution of other
assets, an installment agreement, or an offer-in-compromise.”
See Goza v. Commissioner, 114 T.C. 176, 180-182 (2000). We
review the Commissioner’s determinations under section
6330(c)(2)(A)(iii) under an abuse of discretion standard. Sego
v. Commissioner, 114 T.C. 604, 609-610 (2000); Goza v.
Commissioner, supra.
The correspondence between petitioner and the Appeals
officer indicates that respondent was aware that petitioner was
interested in seeking an offer in compromise. Respondent
included the offer in compromise materials in the January 23,
2002, letter to petitioner. Petitioner’s January 30, 2002,
letter requested an extension of time to file a response to that
letter. The notice of determination refers to such an extension
of time to file a response. Petitioner contends that his March
4, 2002, letter stated that he wanted to seek an offer in
compromise or enter into a collection alternative with
respondent.
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We view these facts in the light most favorable to
petitioner as the nonmoving party. See Naftel v. Commissioner,
85 T.C. 527, 529 (1985). Upon review of the facts and
allegations contained in the parties’ moving papers, we conclude
that petitioner has alleged specific facts which indicate that a
factual controversy exists. Our examination of the
correspondence between petitioner and respondent leads us to
conclude that the parties contemplated further negotiations
toward an offer in compromise and that the March 4, 2002, letter,
even though it may not have been received by respondent, was sent
to achieve that purpose. Accordingly, we hold that respondent
has not proved that there is no genuine issue of material fact
and that a decision may be rendered as a matter of law on the
issue before us in the instant motion.2 See id. Accordingly,
respondent’s motion for summary judgment will be denied.
On the basis of the foregoing,
An appropriate order will be
issued.
2
Respondent contends that petitioner conceded all issues
relating to the 1991 taxable year, pursuant to Rule 34(b)(4).
Having denied respondent’s motion for summary judgment, we note
that petitioner may move to amend the petition to include the
1991 taxable year. See Rule 41.