T.C. Memo. 2004-105
UNITED STATES TAX COURT
RUSSELL L. VOORHEES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6891-02L. Filed April 22, 2004.
Russell L. Voorhees, pro se.
R. Bradley Taylor, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GERBER, Judge: Respondent, on March 14, 2002, issued a
Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination), with regard
to petitioner’s 1991 and 1996 taxable years, determining to
proceed with enforced collection, including levy. Petitioner
timely petitioned this Court seeking to dispute the underlying
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merits of his tax liabilities for 1991 and 1996 and to show that
respondent’s determination to proceed with collection was an
abuse of discretion.1
On November 5, 2003, respondent filed a Motion For Summary
Judgment seeking to preclude petitioner from addressing the
merits of his underlying tax liabilities. In a January 23, 2004,
Order, this Court granted respondent’s motion with respect to the
1991 tax year based on section 6330(c)(2)(B) and denied
respondent’s motion with respect to the 1996 year. At trial,
petitioner conceded that he did not want to raise the underlying
merits of his 1996 tax liability, which arose due to petitioner’s
self-assessed tax liability reflected in his 1996 tax return.
The remaining issue for our consideration is whether
respondent abused his discretion in refusing to accept
petitioner’s offer in compromise.
All section references are to the Internal Revenue Code in
effect for the years in issue.
FINDINGS OF FACT
At the time of filing his petition, petitioner resided in
Phoenix, Arizona. On February 3, 1993, petitioner filed his 1991
Federal income tax return, and on July 19, 1994, respondent
1
It may be noted that in a prior Memorandum Opinion the
Court granted a motion by respondent to dismiss Ruth C. Voorhees
from this proceeding for lack of jurisdiction. Voorhees v.
Commissioner, T.C. Memo. 2002-289.
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issued a notice of deficiency for the tax year 1991 determining a
$7,363 income tax deficiency and penalties in the amounts of $367
and $1,473. Petitioner filed a timely petition with this Court
in connection with his 1991 tax return filed February 3, 1993,
and on October 18, 1995, an agreed decision was entered
reflecting a $2,717 income tax deficiency and no penalties or
additions to tax for petitioner’s 1991 tax year. On August 18,
1997, petitioner filed his 1996 income tax return showing a
balance due.
On August 21, 2001, respondent issued petitioner a Letter
1058, Final Notice--Notice of Intent to Levy and Notice of Your
Right to a Hearing, with respect to petitioner’s 1991 and 1996
outstanding income tax liabilities, which totaled $5,743.04,
including statutory additions. Petitioner requested a hearing,
and on January 24, 2002, a face-to-face hearing was held between
petitioner and respondent’s Appeals officer. On February 16,
2002, petitioner submitted Form 656, Offer in Compromise, along
with a Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, offering to pay $1,500 in
full payment of the outstanding liabilities.
At the time that petitioner offered $1,500 in full
settlement of more than $5,000 in liabilities, petitioner was
paying $500 per month on credit card debt. Subsequent to the
rejection of petitioner’s offer, petitioner was able to borrow
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$15,000 on assets that he owned at the time of the consideration
of his offer.
Respondent rejected petitioner’s offer and countered with an
offer to permit petitioner to make $100 monthly installment
payments to pay the outstanding liabilities. Petitioner rejected
those terms, and respondent, on March 14, 2002, issued a notice
of determination, advising petitioner that respondent intended to
proceed with enforced collection. Petitioner filed an Amended
Petition with this Court on May 3, 2002.
OPINION
We have held in an Order dated January 23, 2004, that
petitioner is precluded from contesting the underlying merits of
his 1991 income tax liability, and petitioner does not contest
his self-assessed 1996 liability. Accordingly, our review of the
administrative determination is for abuse of discretion. Sec.
6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 610 (2000).
Petitioner contends there was an abuse of discretion due to
respondent’s rejection of petitioner’s $1,500 offer in
compromise. That decision was made based on information
available to respondent showing that petitioner was able to
satisfy the outstanding tax liabilities.
Petitioner contended at trial that the 1991 income tax
liability should have been about one-half of the $2,717 amount to
which he had agreed in the decision entered October 18, 1995.
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Petitioner’s contention is based on his allegation that he signed
a blank decision with the understanding that the income tax
deficiency would have been an amount approaching $1,500.
Petitioner further alleges that upon receipt of the entered
decision the amount of the “agreed” income tax deficiency was
almost double the amount he thought he had agreed to with
respondent. The Court asked petitioner whether he had brought
the alleged discrepancy to this Court’s attention after the
decision was entered in 1995. Petitioner testified that it was
not worth his effort or monetary cost at the time so he did
nothing. Respondent argued that petitioner’s $1,500 offer in
compromise was based on petitioner’s belief that the wrong amount
had been included in the decision.
Sections 6320 and 6330 provide for a hearing in connection
with certain collection activity by respondent. Under section
6330(c)(2)(B) a taxpayer may raise the merits of the underlying
liability if the taxpayer “did not receive any statutory notice
of deficiency for such tax liability or did not otherwise have an
opportunity to dispute such tax liability.” It is clear in this
case that petitioner received a statutory notice of deficiency
and did have an opportunity to dispute such tax liability. Under
the statute, and under the doctrine of res judicata, it does not
matter whether petitioner is now in a position to show that the
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outcome or holding resulting from that opportunity may be in
error. Id.
In addition, respondent has, in all other respects, complied
with the requirements of section 6330 so as to be entitled to
proceed with collection of petitioner’s outstanding tax
liabilities for 1991 and 1996. We hold that there was no abuse
of discretion in respondent’s determination to proceed with
collection.
To reflect the foregoing,
Decision will be entered for
respondent.