T.C. Summary Opinion 2005-74
UNITED STATES TAX COURT
IRENE LUCILLE GRIFFEN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8098-04S. Filed June 7, 2005.
Irene Lucille Griffen, pro se.
Miriam C. Dillard, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of sections 6330(d) and 7463 of the Internal
Revenue Code in effect at the time that the petition was filed.
Unless otherwise indicated, subsequent section references are to
the Internal Revenue Code in effect at relevant times. The
decision to be entered is not reviewable by any other court, and
this opinion should not be cited as authority.
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The petition in this case was filed in response to a Notice
of Determination Concerning Collection Action(s) Under Section
6320 and/or 6330 (notice of determination). Pursuant to section
6330(d), petitioner seeks review of respondent’s determination to
proceed with collection of her tax liability of $1,837.02 for
1998. The issue for decision is whether the Appeals officer
abused her discretion in sustaining a proposed levy to collect
petitioner’s unpaid income tax liability.
The stipulation of facts and the exhibits received into
evidence are incorporated herein by reference. Petitioner
resided in Bristol, Virginia, at the time the petition was filed.
Background
A. Petitioner’s 1998 Tax Return
Petitioner timely filed her Form 1040, U.S. Individual
Income Tax Return, for 1998 as a head of household. On that
return, she claimed four dependency exemptions and an earned
income credit for two qualifying children. Respondent issued
petitioner a refund of $3,528.
Respondent later notified petitioner that her 1998 return
was being examined because another individual had claimed the
same children. Respondent requested documentation to verify
petitioner’s claimed exemptions and credit.
Petitioner submitted a copy of her daughter’s driver’s
license, Social Security card, and birth certificate. She also
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submitted copies of her two granddaughters’ Social Security cards
and hospital birth records.
On November 29, 2000, respondent issued to petitioner a
notice of deficiency by certified mail in which respondent
determined that petitioner is not entitled to head of household
filing status, dependency exemptions, or the earned income
credit. The IRS subsequently sent other correspondence
concerning petitioner’s case to the same address, 13750 S.E. 26th
Street, Morriston, Florida, 32668, which petitioner received.
Petitioner submitted canceled checks and utility statements
in an attempt to obtain reconsideration of the deficiency.
Respondent reviewed the documentation and notified petitioner of
respondent’s refusal to change the determinations set forth in
the notice of deficiency.
B. Respondent’s Collection Actions
Respondent withheld petitioner’s 2000 Federal income tax
refund and applied it toward the outstanding tax liability for
1998. Respondent also withheld petitioner’s 2001 and 2002
Federal income tax refunds and applied them toward her 1998
balance.
On September 1, 2003, respondent issued to petitioner a
Final Notice of Intent to Levy and Notice of Your Right to a
Hearing. Petitioner timely filed a Form 12153, Request for a
Collection Due Process Hearing (hearing), in which she asserted
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that she did not owe the taxes because the liability had been
discharged in a Chapter 7 bankruptcy proceeding in 2002.
C. Petitioner’s Appeals Hearing
During the telephonic hearing, petitioner told Appeals
Officer Carolyn Jackson (Ms. Jackson) that she had previously
given the auditor all of the information requested. She stated
that as soon as she received the notice of deficiency, she gave
the auditor additional information to verify the earned income
credit, dependency exemptions, and head of household filing
status. Petitioner said she never heard from the auditor again
regarding her consideration of the additional information. She
also stated that she had filed for bankruptcy and had been told
that her slate had been wiped clean.
Ms. Jackson discussed with petitioner installment agreements
and the possibility of placing her account in “currently not
collectible” status. When petitioner indicated that she wanted
to discuss the options in greater detail at a later date, Ms.
Jackson set up a telephonic conference for March 1, 2004. On
that date, petitioner called and indicated she would not be able
to participate because her daughter was ill. Ms. Jackson
rescheduled the conference to March 15, 2004. On that date, Ms.
Jackson was unable to contact petitioner, and petitioner did not
contact her to reschedule or to discuss the case. On June 16,
2004, Ms. Jackson sent petitioner a notice of determination
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sustaining respondent’s proposed levy as the appropriate means of
collecting petitioner’s unpaid liability for the 1998 tax year.
Discussion
Section 6330(c) prescribes the matters that a person may
raise at an Appeals Office hearing. Section 6330(c)(2)(A)
provides that a person may raise collection issues such as
spousal defenses, the appropriateness of the Commissioner's
intended collection action, and possible alternative means of
collection. See Sego v. Commissioner, 114 T.C. 604, 609 (2000);
Goza v. Commissioner, 114 T.C. 176, 180 (2000). In addition,
section 6330(c)(2)(B) establishes the circumstances under which a
person may challenge the existence or amount of his or her
underlying tax liability. Section 6330(c)(2)(B) provides:
(2) Issues at hearing.--
* * * * * * *
(B) Underlying liability.--The person may
also raise at the hearing challenges to the
existence or amount of the underlying tax
liability for any tax period if the person did not
receive any statutory notice of deficiency for
such tax liability or did not otherwise have an
opportunity to dispute such tax liability.
On November 29, 2000, respondent sent a notice of deficiency
to petitioner’s S.E. 26th Street address. The notice was sent by
certified mail, but petitioner contends that she does not recall
receiving a notice of deficiency, and no petition for
redetermination was filed with this Court.
Petitioner received mail subsequently sent to that address.
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The notice of determination indicates that at the Appeals
conference on February 26, 2004, petitioner admitted receiving
the notice of deficiency and that her address had not changed.
Petitioner’s only evidence on the issue is that she does not
recall receiving the notice of deficiency. The Court concludes
that petitioner received the notice of deficiency.
Because petitioner received the notice of deficiency and
failed to file a petition with this Court, petitioner was not
able to challenge her underlying 1998 tax liability in the
Appeals Office hearing. Assuming, arguendo, that petitioner were
permitted to challenge the underlying liability, she has failed
to present sufficient evidence to support her position.
Where, as is the case here, the validity of the underlying
tax liability is not properly placed at issue, the Court will
review the administrative determination of the Appeals Office for
abuse of discretion. Sego v. Commissioner, supra at 610; Goza v.
Commissioner, supra at 181-183. The Court reviews only whether
the Appeals officer’s refusal to accept petitioner’s OIC was
arbitrary, capricious, or without sound basis in fact or law.
See Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Petitioner alleges that her tax liability was discharged in
her Chapter 7 bankruptcy proceeding. The Supreme Court has
stated in Young v. United States, 535 U.S. 43, 44 (2002), that “A
discharge under the Bankruptcy Code does not extinguish certain
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tax liabilities for which a return was due within three years
before the filing of an individual debtor’s petition.” 11 U.S.C.
secs. 523(a)(1)(A), 507(a)(8)(A)(i) (2000). Or to put it another
way, an income tax is a nondischargeable priority claim against
the estate if it relates to a tax return whose due date,
including extensions, was within 3 years of the commencement of
the bankruptcy case. 11 U.S.C. sec. 507(a)(8)(A)(i).
Petitioner filed a bankruptcy petition on January 15, 2002,
which was discharged on December 13, 2002. The 1998 tax
liability is, therefore, nondischargeable because it relates to a
tax return the due date of which, including extensions, was
within 3 years of the date the bankruptcy petition was filed. 11
U.S.C. secs. 523(a)(1), 507(a)(8)(A).
Petitioner did not pursue her opportunities to discuss
collection alternatives with Ms. Jackson. She also failed to
submit any financial information for Ms. Jackson to consider.
Having reviewed the entire record, the Court cannot find that the
determination sustaining respondent’s proposed levy was an abuse
of discretion. Accordingly, collection by levy of petitioner’s
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unpaid 1998 tax liability reflected in the notice of
determination may proceed.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.