T.C. Memo. 2004-133
UNITED STATES TAX COURT
SAID M. KARARA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7748-02L. Filed June 2, 2004.
Said M. Karara, pro se.
D’Aun E. Clark, for respondent.
MEMORANDUM OPINION
GERBER, Chief Judge: Respondent moved for summary judgment
on the question of whether he may proceed with the collection of
petitioner’s 1993 and 1994 tax liabilities. Respondent contends
that all section 63301 prerequisites have been met and that he
should be allowed to proceed with collection. Petitioner filed a
1
All section references are to the Internal Revenue Code,
and all Rule references are to the Tax Court Rules of Practice
and Procedure, unless otherwise indicated.
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cross-motion for summary judgment, raising several arguments as
to why respondent should not be permitted to proceed with
collection. A hearing on the summary judgment motions was held
at Miami, Florida.
Background
Petitioner resided in Naples, Florida, at the time his
petition was filed. Petitioner’s 1993 and 1994 tax returns were
examined, and respondent determined an income tax deficiency for
each year. Petitioner petitioned this Court with respect to both
years, and on July 29, 1999, this Court filed a memorandum
opinion in Karara v. Commissioner, T.C. Memo. 1999-253,
sustaining respondent’s determinations. A decision was entered,
and petitioner filed an appeal to the Court of Appeals for the
Eleventh Circuit.
On December 12, 1999, because of petitioner’s failure to
file a bond while the appeal was pending, respondent assessed the
1993 and 1994 income tax deficiencies. Approximately 5 months
later on May 5, 2000, the Court of Appeals for the Eleventh
Circuit affirmed this Court’s decision without published opinion.
Karara v. Commissioner, 214 F.3d 1358 (11th Cir. 2000). On
July 10, 2000, the Court of Appeals denied rehearing.
On July 29, 2000, about 2 weeks following the Court of
Appeals’ denial of rehearing, respondent mailed to petitioner a
Final Notice-–Notice of Intent to Levy and Notice of Your Right
to a Hearing for the 1994 tax year. Four days later, on August
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2, 2000, the Court of Appeals stayed issuance of the mandate
pending petitioner’s petition for writ of certiorari to the U.S.
Supreme Court. On August 8, 2000, petitioner timely requested a
hearing for his 1994 tax year by submitting Form 12153, Request
for a Collection Due Process Hearing. During subsequent
conversations with respondent, petitioner consented to the
inclusion of his 1993 tax year, in addition to his 1994 tax year,
for purposes of the section 6330 hearing.
On October 6, 2000, petitioner filed a petition for writ of
certiorari with the Supreme Court. Respondent had the option to
file a response to the petition, but declined to do so.
Therefore, in accordance with Supreme Court rules, the Solicitor
General timely filed a waiver of the right to respond on behalf
of respondent. Approximately 3 weeks later, on November 6, 2000,
the Supreme Court denied petitioner’s petition for writ of
certiorari. Karara v. Commissioner, 531 U.S. 980 (2000).
On September 24, 2001, respondent applied an overpayment of
tax by petitioner in the amount of $300 toward his 1993 tax
liability.
Petitioner and the Appeals officer engaged in telephone
conferences on September 5 and October 4 and 5, 2001. During
these conferences, respondent notified petitioner that the
assessments were valid and subject to collection because of
petitioner’s failure to post a bond while his appeals were in
progress. See sec. 7485. In response, petitioner raised the
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argument that respondent, in waiving the right to respond to the
petition for writ of certiorari, had also waived opposition to
the issues presented in the petition. Petitioner also argued
that because of respondent’s waiver petitioner is entitled to a
$300 refund.
On April 17, 2002, respondent issued a Notice of
Determination Concerning Collection Actions(s) Under Section 6320
and/or 6330 determining to proceed with collection of
petitioner’s 1993 and 1994 tax liabilities.
Discussion
Respondent moved for summary judgment on the question of
whether he may proceed to collect petitioner’s 1993 and 1994
income tax liabilities. Summary judgment is intended to expedite
litigation and avoid unnecessary trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). A motion for summary
judgment may be granted if there is no genuine issue as to any
material fact. See Rule 121(b); Elec. Arts, Inc. v.
Commissioner, 118 T.C. 226, 238 (2002). The moving party bears
the burden of showing that there is no genuine issue of material
fact, and factual inferences will be read in a manner most
favorable to the party opposing summary judgment. Bond v.
Commissioner, 100 T.C. 32, 36 (1993); Dahlstrom v. Commissioner,
85 T.C. 812, 821 (1985). This case is ripe for summary judgment
with respect to petitioner’s 1994 tax year. Genuine issues of
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material fact exist, however, with respect to petitioner’s 1993
tax year.
I. Section 6330 Hearing Prerequisites
If a taxpayer neglects or refuses to pay a Federal tax
liability within 10 days of notice and demand, the Secretary is
authorized to collect such liability by levy on the taxpayer’s
property. Sec. 6331(a). Pursuant to section 6330(b), a taxpayer
has a right to a hearing before the Commissioner may levy. We
first address whether respondent met the hearing prerequisites of
section 6330 with respect to petitioner’s 1993 and 1994 tax
years.
Section 6330(b) provides that administrative hearings be
held by an impartial officer of the Internal Revenue Service
Office of Appeals. If dissatisfied with the Appeals Office
determination, a taxpayer may seek judicial review of the
decision in this Court or a District Court of the United States
as applicable. Sec. 6330(d).
The matters to be considered at the hearing are specified by
section 6330(c), which provides: (1) The Appeals officer shall
obtain verification that the requirements of applicable law and
administrative procedure have been met; (2) certain issues may be
heard, including spousal defenses, appropriateness of collection
activities, and collection alternatives; and (3) a challenge to
the underlying liability may be raised if the taxpayer did not
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receive a statutory notice of deficiency or otherwise receive an
opportunity to dispute the liability. Sec. 6330(c).
Petitioner and an impartial Appeals officer conducted an
administrative hearing comprising three separate telephone calls.
For purposes of the hearing, petitioner and respondent agreed to
place petitioner’s 1993 and 1994 tax years at issue. Because
this Court had previously entered a decision, the merits of
petitioner’s underlying tax liability were not at issue at the
administrative hearing and are not at issue here. Therefore, we
review respondent’s administrative determination to proceed with
collection for an abuse of discretion. Sec. 6330(c)(2)(B); Sego
v. Commissioner, 114 T.C. 604, 610 (2000). Because petitioner
was not entitled to question the underlying tax liability, his
administrative hearing was limited to collection issues,
including spousal defenses, the appropriateness of respondent’s
intended collection action, and collection alternatives.
Petitioner raises two issues with respect to the appropriateness
of respondent’s collection actions.2
Respondent assessed petitioner’s 1993 and 1994 tax
liabilities on December 12, 1999. On July 29, 2000, respondent
issued to petitioner a Final Notice-–Notice of Intent to Levy and
Notice of Your Right to a Hearing for his 1994 tax year. On
2
Petitioner does not challenge his underlying tax
liability, but rather challenges respondent’s ability to collect.
Petitioner contends that there was a waiver or some form of
estoppel connected with respondent’s waiver of respondent’s right
to respond to petitioner’s petition for writ of certiorari.
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brief and at the summary judgment hearing, petitioner argued that
during an August 7, 2000, telephone conversation, he and a
Department of Justice attorney agreed to stay further collection
activity with respect to petitioner’s 1993 and 1994 tax
liabilities until the decision of the Tax Court in his deficiency
suit became final. Petitioner further contends that he raised
this issue at the administrative hearing and that it was an abuse
of discretion that the Appeals officer did not consider it.
Respondent acknowledges the agreement to stay collection and
maintains that there was compliance with its terms.
Section 6330(e)(1) precludes the Commissioner from
proceeding with a proposed levy that is the subject of a hearing
while the hearing and any related appeals are pending. See Craig
v. Commissioner, 119 T.C. 252, 258 (2002). Therefore, as of
August 14, 2000, the date that respondent received petitioner’s
request for a hearing, respondent was precluded from proceeding
with levy actions pending the outcome of this appeal. See Boyd
v. Commissioner, 117 T.C. 127, 130-131 (2001). In that respect,
respondent has not pursued enforced collection since issuing the
Final Notice-–Notice of Intent to Levy and Notice of Your Right
to a Hearing on July 29, 2000. Accordingly and irrespective of
the agreement to stay collection, since August 14, 2000,
respondent has otherwise been precluded from proceeding with levy
activity.
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There is no indication in the summary judgment documents as
to whether petitioner raised the collection stay agreement issue
in the administrative hearing. Moreover, it appears that
respondent complied with its terms. The Supreme Court's denial
of the petition for writ of certiorari on November 6, 2000,
finalized the decisions of the Tax Court and the Court of Appeals
for the Eleventh Circuit. In accordance with the agreement,
respondent did not resume any collection activity until
approximately 10 months after the Supreme Court’s denial of
petitioner’s petition for writ of certiorari.3
Petitioner makes a second argument as to why respondent
should be precluded from proceeding with collection. The essence
of petitioner’s argument is that respondent failed or waived the
right to respond to petitioner’s petition for writ of certiorari.
Petitioner further contends that the waiver of the right to
respond constitutes a waiver or bar to respondent with respect to
petitioner’s position that he owes no tax for 1993 and 1994.
Petitioner bases his position on rule 15 of the Rules of the
Supreme Court, which, among other provisions, sets forth
procedures for waiver of the right to respond to a petition for
writ of certiorari. Specifically, petitioner contends that the
waiver of the right to respond foreclosed respondent from taking
collection action against petitioner. Petitioner’s reliance on
3
Respondent’s resumed collection activity, offsetting
against petitioner’s 1993 liability an overpayment from another
period, was unrelated to a levy on petitioner’s property.
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rule 15 of the Rules of the Supreme Court is misplaced and
without substance. The rule’s purpose relates solely to
procedural requirements for filing briefs in opposition, reply
briefs, and supplemental briefs with respect to petitions for
writs of certiorari. The rule has no bearing on petitioner’s
underlying tax liability or on whether respondent may proceed
with collection activity.4 Respondent’s waiver was not a
concession with respect to petitioner’s tax liabilities.
Respondent provided petitioner with an opportunity for a
hearing pursuant to section 6330(b). The Appeals officer
properly considered and met the section 6330 hearing requirements
with respect to petitioner’s 1993 and 1994 tax years.
II. Section 6330 Notice Requirements
The next issue we consider is whether respondent met the
notice requirements of section 6330(a) for petitioner’s 1993 and
1994 tax years. Before proceeding with a levy, the Secretary
must meet several notice requirements. Section 6330(a)(1)
provides that no levy may be made on any property of a taxpayer
unless the Secretary, before proceeding with the levy, has
notified the person in writing of the right to a hearing.
Section 6330(a)(2) specifies that such notice be: (1) Given in
person; (2) left at the taxpayer’s dwelling or usual place of
business; or (3) sent by certified or registered mail to the
4
On brief, in addition to taking the rule completely out of
context, petitioner distorted its text by omitting relevant
phrases and adding language.
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taxpayer’s last known address. Further, such notice must be
furnished at least 30 days before the first levy action. See
sec. 6330(a)(2).
Petitioner received timely written notice of respondent’s
intent to levy and petitioner’s right to request a hearing for
his 1994 tax year. However, the record does not reflect, one way
or the other, whether a notice of intent to levy was issued with
respect to petitioner’s 1993 tax year. Petitioner raised this
issue with respondent before his administrative hearing. For
simplicity, petitioner and respondent agreed to and held a
hearing with respect to both the 1993 and 1994 tax liabilities.
However, the plain meaning of section 6330(a)(1) is that no levy
may be made without proper notice to a taxpayer. Petitioner’s
agreement to include his 1993 tax year cannot substitute for the
explicit notice requirements of section 6330(a)(2). Respondent
may not proceed with a levy with respect to petitioner’s 1993 tax
liability without satisfying these requirements.
Sufficient evidence was not produced for us to ascertain
whether respondent issued to petitioner a Final Notice-–Notice of
Intent to Levy and Notice of Your Right to a Hearing for his 1993
tax year. This is a genuine issue of material fact, and
accordingly, the cross-motions for summary judgment with respect
to this issue are denied. Apart from this single flaw,
respondent met all of the section 6330 prerequisites with respect
to petitioner’s 1993 and 1994 tax years. The Appeals officer
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verified that respondent had complied with all legal and
procedural requirements pertaining to the proposed levy. In
addition, the Appeals officer balanced the need to efficiently
collect tax with concerns that the means of collection be no more
intrusive than necessary. Finally, because of a lack of viable
collection alternatives, the Appeals officer concluded that the
proposed levy was legally and procedurally correct.
Accordingly, we hold that respondent’s determination to
proceed with collection of petitioner’s 1994 tax liability was
not an abuse of discretion.
To reflect the foregoing,
An order will be issued
granting in part and denying in
part respondent’s motion for
summary judgment and denying
petitioner’s cross-motion.