T.C. Memo. 2005-87
UNITED STATES TAX COURT
CYNTHIA A. BELL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14945-04. Filed April 14, 2005.
Cynthia A. Bell, pro se.
Gerard Mackey, for respondent.
MEMORANDUM OPINION
WHALEN, Judge: This is an action for review of the
Commissioner’s failure to abate interest under section
6404(e). All section references are to the Internal
Revenue Code, as amended. The Commissioner mailed to
petitioner a notice of final determination not to abate
interest under section 6404, relating to interest that
- 2 -
accrued with respect to petitioner’s taxable years 1998
and 1999. Petitioner filed an imperfect petition and an
amended petition for review of the Commissioner’s failure
to abate interest. The case is presently before the
Court to decide respondent’s motion for summary judgment.
Petitioner resided in New York, New York, at the time her
petition was filed.
Background
As we read her amended petition, petitioner complains
that, from November 25, 2002, in the case of her 1998
return, and from November 11, 2002, in the case of her
1999 return, she “was never notified by the IRS” of any
discrepancies with respect to her returns. The amended
petition states: “No correspondence, nor any other effort
was made to contact me about this matter [and] I had firmly
believed that all had been settled and resolved in
reference to my IRS accounts.” She complains that, in
September 2003, she “was devastated” to learn “that my
brokerage account had incurred back-up withholding and
that a New York City school tax credit of $63.00 had been
withheld due to unpaid interest.”
Petitioner asserts that the failure to contact her
during this period of less than 10 months caused an
unreasonable delay in her payment of the balances owed for
- 3 -
taxable years 1998 and 1999. According to petitioner, this
delay was attributable to employees of the Internal Revenue
Service (IRS) being erroneous or dilatory in performing a
ministerial or managerial act. Petitioner asserts that,
pursuant to section 6404(e), she is entitled to the amount
she paid as interest, $2,229.58. The record does not
reveal how this amount was computed.
The amended petition refers to “the printed status
history of my IRS account for the years in question”.
Attached to the amended petition are two computer printouts
marked “1998–Status History” and “1999-Status History”.
These documents are reproduced below:
1998 Status History
IMFOLS ***-**-**** 30199812P01 STATUS HISTORY NM CTRL: BELL
UP-CYC:32
STATUS STATUS COPYS FLC AO STATUS STATUS EXTENSION SELECT
CODE DATE CYCLE FORM-SCORE IND AMOUNT DATE CODE
04 6/07/99 199921 00 8/15/99
02 5/17/00 200021 3-660 00 00 00 00
03 6/5/00 200021 0-000 65 00 07 38
06 9/6/01 200137 0-000 00 00 00 00
21 7/8/02 200226 22 $5,038.26
58 10/7/02 200239 22 5,038.26
48 10/14/02 200240 22 .00
21 10/21/02 200241 22 1,847.97
22 11/25/02 200246 22 1,847.97
12 04/19/04 200414 22 .00
- 4 -
1999 Status History
IMFOLS ***-**-**** 3019912P01 STATUS HISTORY NM CTRL: BELL
UP-CYC:32
STATUS STATUS COPYS FLC AO STATUS STATUS EXTENSION SELECT
CODE DATE CYCLE FORM-SCORE IND AMOUNT DATE CODE
04 6/12/99 200022 00 8/15/00
02 5/17/01 200121 3-660 00 00 00 00
03 6/4/00 200121 0-000 65 00 07 50
06 9/6/01 200137 0-000 00 00 00 00
21 6/3/02 200221 22 $884.66
21 7/1/02 200225 22 310.28
58 10/7/02 200239 22 310.28
22 11/11/02 200244 22 310.28
12 4/19/04 200414 22 .00
It appears that petitioner relies on those documents to
establish the starting dates of the periods that she “was
never notified by the IRS”, November 25, 2002, in the case
of tax year 1998, and November 11, 2002, in the case of
tax year 1999.
The affidavit of respondent’s trial attorney filed
in support of respondent’s motion for summary judgment
includes, as exhibits, certified transcripts of
petitioner’s 1998 and 1999 taxable years. Those
transcripts show the assessments, abatements, credits,
and refunds relating to each of petitioner’s taxable years
1998 and 1999. The transcript for each year is summarized
below:
- 5 -
Transcript
1998 amounts
4/15/99 Original due date of return
8/15/99 Due date of return, after
extension
4/17/02 Return filed, 976 days late
4/24/02 Payment, 1,105 days late ($8,273.00)
7/8/02 Assessment
Tax shown on return 7,914.00
Late filing penalty, addition 1,780.65
under sec. 6654(a)(1)
Failure to pay tax penalty, 989.25
addition under sec.
6654(a)(2)
Interest 2,627.36
7/8/02 Reverse addition under sec. (1,780.65)
6654(a)(1)
10/21/02 Reverse addition under sec. (989.25)
6654(a)(2)
10/21/02 Abate related interest (420.39)
10/21/03 Subsequent payment (63.00)
1,784.97
3/29/04 Subsequent payment (1,914.16)
4/19/04 Assess additional interest 129.19
Balance 0.00
7/8/02 Stat. notice of balance due
10/7/02 Stat. notice of intent to levy
10/21/02 Stat. notice of balance due
- 6 -
Transcript
1999 amounts
4/15/00 Original due date of return
8/15/00 Due date of return, after
extension
4/17/02 Return filed, 732 days late
4/17/02 Withholding ($81.00)
4/17/02 Payment, 732 days late (1,868.00)
6/3/02 Assessment
Tax shown on return 1,864.00
Late filing penalty, addition 401.17
under sec. 6654(a)(1)
Failure to pay tax penalty, 115.89
addition under sec.
6654(a)(2)
Estimated tax penalty, addition 85.00
under sec. 6654
Interest 367.60
6/3/02 Reverse addition under (401.17)
sec. 6654(a)(1)
7/1/02 Reverse addition under (115.89)
sec. 6654(a)(2)
7/1//02 Abated related interest (57.32)
2/11/02 Apply overpayment of tax from tax (39.25)
year 2000
271.03
3/29/04 Subsequent payment (294.56)
4/19/04 Assess additional interest 23.53
Balance 0.00
6/3/02 Stat. notice of balance due
7/1/02 Stat. notice of balance due
10/7/02 Stat. notice of intent to levy
- 7 -
As shown above, petitioner filed her 1998 return on
April 17, 2002, approximately 32 months after it was due.
The return reported tax in the amount of $7,914. On
April 24, 2002, more than 36 months after payment of the
tax was due, petitioner paid $8,273, or $359 more than the
tax shown on the return. The record does not explain the
nature of this additional amount.
The tax reported on petitioner’s return for 1998 was
due and unpaid from April 15, 1999, until April 24, 2002.
By July 8, 2002, when respondent assessed the tax reported
on petitioner’s delinquent 1998 return, interest of
$2,206.97 had accrued on the tax reported on the return
(i.e., $2,627.36, total interest assessed, less $420.39,
interest related to the addition to tax under section
6654(a)(2) that was later reversed). Petitioner paid $359
of that amount (i.e., $8,273, total payment, less $7,914,
tax shown on the return) on April 24, 2002, when she filed
her delinquent return and $63 was offset by a credit on
October 21, 2003. The balance, $1,784.97, continued to
accrue interest from July 8, 2002, to March 29, 2004, when
petitioner paid $1,914.16, the balance of $1,784.97, plus
additional assessed interest of $129.19.
In passing, we note that the transcript of
petitioner’s account for 1998 shows that additions to tax
- 8 -
under section 6654(a)(1) in the amount of $1,780.65 and
under section 6654(a)(2) in the amount of $989.25 were
assessed on July 8, 2002, and were reversed on July 8,
2002, and October 21, 2002, respectively, along with the
interest related thereto in the amount of $420.39, and
that a credit of $63 was applied to petitioner’s account
on October 21, 2003.
The certified transcript for tax year 1998 also shows
that on July 8, 2002, and on October 21, 2002, statutory
notices of balance due were issued to petitioner. The
balance of petitioner’s account on July 8, 2002, was
$5,038.26 (i.e., - $8,273 + $7,914 + $1,780.65 + $989.25 +
$2,627.36). The balance of petitioner’s account on
October 21, 2002, was $1,847.97 (i.e., - $8,273 + $7,914 +
$1,780.65 + $989.25 + $2,627.36 - $1,780.65 - $989.25 -
$420.39).
In the case of petitioner’s 1999 return, as shown
above, petitioner filed her return on April 17, 2002,
approximately 20 months after the due date. The return
showed tax of $1,864, and claimed a credit for withholding
of $81, for a balance due of $1,783. Petitioner paid
$1,868 with the return. Petitioner made this payment more
than 24 months after the payment of her 1999 tax was due
(i.e., April 15, 2000). The amount of this payment,
$1,868, is $85 more than the balance shown on the return.
- 9 -
The record does not explain the nature of this additional
payment.
The tax reported on petitioner’s return for 1999 was
due and unpaid from April 15, 2000, until April 17, 2002.
By June 3, 2002, when respondent assessed the tax reported
on petitioner’s delinquent return for 1999, interest of
$310.28 had accrued on the tax (i.e., $367.60, total
interest assessed, less $57.32, interest related to the
addition to tax under section 6654(a)(2) that was later
reversed). That amount was partially satisfied by an
overpayment of tax from petitioner’s 2000 tax return in
the amount of $39.25. The balance, $271.03, continued to
accrue interest until March 29, 2004, when petitioner paid
$294.56, the balance of $271.03, plus additional assessed
interest of $23.53.
In passing, we note that the transcript of
petitioner’s account for 1999 shows that additions to tax
under section 6654(a)(1) in the amount of $401.17 and under
section 6654(a)(2) in the amount of $115.89 were assessed
on June 3, 2002, and were reversed on June 3, 2002, and
July 1, 2002, respectively, along with the interest related
thereto in the amount of $57.32.
- 10 -
As in the case of petitioner’s 1998 return, the
certified transcript for tax year 1999 also shows that
statutory notices of balance due were issued to petitioner.
One notice was issued on June 3, 2002, when the balance of
petitioner’s account was $884.66 (i.e., - $81 - $1,868 +
$1,864 + $401.17 + $115.89 + $85 + $367.60). Another
notice was issued to petitioner on July 1, 2002, when the
balance of petitioner’s account was $310.28 (i.e., - $81
- $1,868 + $1,864 + $401.17 + $115.89 + $85 + $367.60 -
$401.17 - $115.89 - $57.32).
The total interest that petitioner paid for 1998 and
1999 is $2,669.97 computed as follows:
7/8/02 Assess interest for 1998 $2,627.36
10/21/02 Abate interest related to additions -420.39
to tax for 1998
3/29/04 Assess additional interest for 1998 129.19
6/3/02 Assess interest for 1999 367.60
7/1/02 Abate interest related to additions -57.32
to tax for 1999
3/29/04 Assess additional interest for 1999 23.53
2,669.97
Discussion
The purpose of summary judgment is to expedite
litigation and to avoid unnecessary and expensive trials.
See, e.g., Keene v. Commissioner, 121 T.C. 8, 14 (2003);
Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
Generally, we grant summary judgment if the pleadings,
answers to interrogatories, depositions, admissions, and
- 11 -
any other acceptable materials show that there is no
genuine issue of any material fact and a decision may be
rendered as a matter of law. Rule 121(b), Tax Court Rules
of Practice and Procedure. See Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754
(1988).
The moving party, respondent in this case, bears the
burden of proving that there is no genuine issue of
material fact. Dahlstrom v. Commissioner, 85 T.C. 812, 821
(1985); Jacklin v. Commissioner, 79 T.C. 340, 344 (1982).
Factual inferences will be made in a manner most favorable
to the party opposing summary judgment.
For the reasons set forth below, we conclude that
there are no genuine issues of any material fact and that
respondent is entitled to prevail as a matter of law.
Accordingly, we shall grant respondent’s motion.
Under section 6404(e)(1), the Commissioner may abate
part or all of an assessment of interest on any deficiency
or payment of income, gift, estate, and certain excise tax
to the extent that any error or delay in payment is
attributable to erroneous or dilatory performance of a
ministerial or managerial act by an officer or employee of
the Commissioner if (a) the Commissioner contacted the
- 12 -
taxpayer in writing about the deficiency or payment, and
(b) the taxpayer did not contribute significantly to the
error or delay. Congress intended for the Commissioner to
abate interest under section 6404(e) "where failure to
abate interest would be widely perceived as grossly unfair"
and did not intend abatement to "be used routinely to avoid
payment of interest". H. Rept. 99-426, at 844 (1985),
1986-3 C.B. (Vol. 2) 1, 844; S. Rept. 99-313, at 208
(1986), 1986-3 C.B. (Vol. 3) 1, 208.
In this case, as discussed above, petitioner seeks the
abatement of interest that was assessed with respect to
petitioner’s 1998 and 1999 taxes. Petitioner’s amended
petition asks for the abatement of interest in the amount
of $2,229.58. Petitioner’s response to respondent’s motion
for summary judgment states that “petitioner is now
requesting that * * * $2,669.97, be fully abated.”
According to petitioner’s response, petitioner was not
previously aware of “the entire amount of interest that had
been paid over the years.” In effect, petitioner is asking
for abatement of all of the interest that accrued with
respect to the delay of approximately 60 months in the
payment of her 1998 tax liability, and all of the interest
that accrued with respect to the delay of approximately 48
months in the payment of her 1999 tax liability.
- 13 -
Petitioner claims to be entitled to such relief under
section 6404(e)(1)(B) because of the failure of employees
of the IRS to contact her during a period of less than 10
months, from November 2002 until September 2003, when she
learned that backup withholding had been imposed on her
brokerage account and a school tax credit of $63 had been
withheld. Petitioner alleges that during this period she
was not notified by the IRS of “any discrepancies * * *
for my 1998 return” and she received “no manner of formal
contact” from the IRS with respect to her 1999 return.
Respondent’s motion for summary judgment argues that
“a significant aspect of the delay in payment, and the
resulting accrual of interest, is directly attributable to
petitioner * * * [who] did not have sufficient withholding
or estimated payments for her 1998 and 1999 taxes to be
paid in full on their respective due dates.” We agree with
respondent.
In deciding respondent’s motion we have accepted, as
true, all of the allegations made in petitioner’s amended
petition and in her response to respondent’s motion for
summary judgment, and we have drawn all factual inferences
in petitioner’s favor.
We find that petitioner has neither alleged nor shown
any justification for the application of section 6404(e).
- 14 -
The undisputed facts are that petitioner filed delinquent
returns for 1998 and 1999, and she paid the taxes reported
on those returns more than 36 months past the payment due
date in the case of the 1998 return, and more than 24
months past the payment due date in the case of the 1999
return. Respondent assessed the tax shown on each
delinquent return, together with appropriate interest,
and notified petitioner of her outstanding liability.
Petitioner did not pay her outstanding liabilities for 1998
and 1999 until approximately two years after she filed her
delinquent returns.
Furthermore, it is undisputed that respondent sent to
petitioner statutory notices of balance due and a notice of
intent to levy with respect to each of the years in issue.
The certified transcript of petitioner’s account for 1998
shows that respondent issued statutory notices of balance
due on July 8 and October 21, 2002, when the balance of
petitioner’s account was $5,038.26 and $1,847.97,
respectively. These balances are shown on the 1998 status
history of petitioner’s account, which is attached to
petitioner’s amended petition. The certified transcript of
petitioner’s account for 1999 shows that respondent issued
statutory notices of balance due on June 3 and July 1,
2002, when the balance of petitioner’s account was $884.66
- 15 -
and $310.28, respectively. These balances are shown on the
1999 status history of petitioner’s account, which is
attached to petitioner’s amended petition.
There is no basis on which to find that any
unreasonable error or delay in petitioner’s payment of
interest for 1998 and 1999 is attributable to an officer or
employee of the IRS’s being erroneous or dilatory in
performing a ministerial or managerial act. See sec.
6404(e)(1)(B). Petitioner’s allegation that respondent
failed to notify her or communicate during the 10-month
period November 2002 through September 2003 fails to
explain how that contributed to the delay in petitioner’s
payment. We can see no basis for petitioner’s assertion
that respondent was erroneous or dilatory in performing a
ministerial or managerial act. This is especially true in
light of the notices of balance due that respondent issued
for both years shortly before the 10-month period about
which petitioner complains.
Petitioner contends that respondent committed “an
overt abuse of discretion” “by seizing dividends and
placing back-up withholding” on petitioner’s brokerage
account. It is unclear to the Court how respondent’s
efforts to collect petitioner’s taxes contributed to the
delay in petitioner’s payment. Indeed, it appears that the
- 16 -
opposite is true. Petitioner was prompted to pay her
outstanding balance for each year when she learned that her
brokerage account was subject to backup withholding and a
school tax credit of $63 had been withheld.
Moreover, we find that the delay in payment of
petitioner’s taxes and interest for 1998 and 1999 is
attributable entirely to petitioner. Certainly, petitioner
bears full responsibility for filing her returns for those
years and paying the taxes shown thereon on or about
April 17, 2002, well past the filing and payment deadlines.
Petitioner also bears full responsibility for waiting until
March 29, 2004, to pay the outstanding liabilities owed for
both years. We are not persuaded to hold otherwise based
upon her vague assertion that she thought “that all had
been resolved”. To do so would be to hold that petitioner
should be relieved of interest because of her confusion or
lack of full understanding of the balances due with respect
to her taxes for 1998 and 1999. Accordingly, we find no
basis on which to abate any interest assessed with respect
to petitioner’s 1998 and 1999 taxes.
On the basis of the above,
An order and decision will
be entered for respondent.
Bell v. Comm'r
Court: United States Tax Court
Date filed: 2005-04-14
Citations: 2005 T.C. Memo. 87, 89 T.C.M. 1071, 2005 Tax Ct. Memo LEXIS 87
Copy Citations