T.C. Summary Opinion 2005-104
UNITED STATES TAX COURT
PETER AND MARGARET GIRAGOSIAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16501-03S. Filed July 26, 2005.
Peter and Margaret Giragosian, pro se.
Thomas D. Greenaway, for respondent.
COUVILLION, Special Trial Judge: This case was heard
pursuant to section 7463 in effect when the petition was filed.1
The decision to be entered is not reviewable by any other court,
and this opinion should not be cited as authority. Petitioners
1
Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the years at
issue.
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seek a review under section 6330(d) of respondent’s decision to
proceed with collection of petitioners’ Federal income tax
liabilities for the 1998 and 1999 tax years.2
Some of the facts were stipulated. Those facts, with the
exhibits annexed thereto, are so found and made part hereof.
Petitioners’ legal residence at the time the petition was filed
was Mariposa, California.
Petitioners claimed a low-income housing credit on each of
their 1998 and 1999 Federal income tax returns. This credit is
one element of the general business credit described in section
38(b), and the amount of the credit is calculated under section
42. The general business credit cannot exceed the excess of a
taxpayer’s net income tax over the tentative minimum tax, even if
the taxpayer is not liable for the alternative minimum tax. Sec.
38(c)(1). Petitioner husband (Mr. Giragosian) incorrectly
calculated the credit and claimed a greater amount than that
which was allowable. Sometime during 1999 and 2000, the IRS
corrected the computational error and assessed the additional
2
Respondent maintains that the taxable year 1999 is not
before the Court because the petition did not set out a claim of
error regarding that year. The Court disagrees. Petitioners
properly petitioned the Court for review of 1998 as well as 1999.
Consequently, both 1998 and 1999 are properly before the Court.
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amount of the excess credit that had been claimed3 as well as the
tax shown as due and owing on the return Sec. 6213(b).
On July 30, 2002, respondent notified petitioners of an
intent to levy with respect to petitioners’ unpaid tax
liabilities for 1998 and 1999. The notice listed $2,729.10 due
for 1998 and $3,014.71 due for 1999.
Petitioners filed a timely Form 12153, Request for a
Collection Due Process Hearing. In their request, petitioners
requested an explanation of their underlying tax deficiencies for
the years in question and complained of numerous delays by the
IRS. An Appeals officer subsequently provided petitioners with a
written explanation of both their error and the IRS adjustments.
Petitioners did not offer any documentation in dispute of this
explanation, nor did they propose any collection alternatives;
therefore, on August 15, 2003, respondent issued a Notice of
Determination to petitioners, concluding:
you have not established the underlying tax liability to be
incorrect. You did not correctly figure the limitation on
low-income housing credits on your original tax returns, and
they were corrected during processing. You did not provide
financial information, as requested, to enable consideration
of collection alternatives * * * The tax will not be abated
and the lien will not be released or withdrawn.
3
The record does not reflect the exact dates on which the
errors on petitioners’ 1998 and 1999 Federal income tax returns
were corrected; however, petitioners stipulated the underlying
tax deficiencies for both years. The exact dates, therefore, are
inconsequential.
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Petitioners filed a timely petition in this Court appealing the
Appeals officer’s determination.4
The Court must decide whether petitioners are entitled to
relief from the Appeals officer’s determination. Where the
underlying tax liability is properly at issue, the Court reviews
that issue de novo. Goza v. Commissioner, 114 T.C. 176, 181-182
(2000). Although petitioners did not receive a notice of
deficiency and were entitled to challenge the underlying tax
liability, they stipulated the correctness of the Commissioner’s
assessment. Therefore, where the underlying tax liability is not
at issue, as in this case, this Court reviews the determination
under an abuse of discretion standard. Sego v. Commissioner, 114
T.C. 603 (2000). An abuse of discretion is defined as any action
that is unreasonable, arbitrary, or capricious, clearly unlawful,
or lacking sound basis in law, taking into account all the facts
and circumstances. See, e.g., Thor Power Tool Co. v.
Commissioner, 439 U.S. 522, 532-533 (1979); Swanson v.
Commissioner, 121 T.C. 111, 119 (2003).
Petitioners seek an abatement of all penalties and interest
under section 6404 with respect to their taxable years 1998 and
1999 and claim that respondent’s failure to do so amounts to an
4
Petitioners petitioned the Court challenging the underlying
tax deficiencies; however, they have since stipulated to the
underlying deficiencies and seek only an abatement of interest
and penalties.
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abuse of discretion. With respect to petitioners’ position
regarding respondent’s failure to abate interest under section
6404, Mr. Giragosian testified that, although he stated his
reluctance to pay interest and penalties to one IRS agent, he
neglected to address and request an abatement of interest during
the Appeals conference. Petitioners formally raised the
abatement of interest issue for the first time at trial.5
As previously stated, respondent’s notice of determination
is generally reviewed under an abuse of discretion standard.
Lunsford v. Commissioner, 117 T.C. 183, 185 (2001). Under that
standard of review, it would be anomalous and improper for this
Court to conclude that respondent’s Appeals Office abused its
discretion under section 6330(c)(3) in failing to grant relief on
a claim that was not raised by petitioners in the Appeals
process. Estate of Chimblo v. Commissioner, T.C. Memo. 1997-535,
affd. 166 F.3d 119 (2d Cir. 1999); see also secs. 301.6320-
1(f)(2), Q&A-F5, 301.6330-1(f)(2), Q&A-F5, Proced. & Admin. Regs.
Accordingly, in this Court’s review for an abuse of discretion
under section 6330(d)(1) of respondent’s determination, generally
the Court considers only arguments, issues, and other matters
5
The petition does not specifically address abatement of
interest and penalties. As previously noted, petitioners’
original petition challenged the underlying deficiencies and
asked for a clear explanation of the assessment; however, as
noted above, petitioners later stipulated the correctness of the
deficiencies.
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that were raised at the collection due process hearing or
otherwise brought to the attention of the Appeals officer.
Magana v. Commissioner, 118 T.C. 488 (2002).
Petitioners, at trial, did not explain why they neglected to
raise the issue of abatement of interest with the Appeals
officer. Moreover, at trial, Mr. Giragosian acknowledged receipt
of Form 843, Claim for Refund and Request for Abatement,
accompanied by a letter explaining: “if you feel the interest was
due to unreasonable error or delay you may request an abatement
of interest on the Form 843, which is enclosed.” Petitioners’
only explanation as to why they did not reply to this letter or
file the Form 843 was that they thought it was futile.
Petitioners, therefore, have not established any credible basis
for an exception to the general rule in order to consider the new
issue of abatement of interest.
With respect to petitioners’ argument regarding respondent’s
failure to abate penalties under section 6404,6 assuming there
were penalties, petitioners acknowledged at trial that they did
not raise this issue at their Appeals Office hearing.
6
The record does not establish conclusively whether
penalties actually were assessed against petitioners.
Petitioners possessed a letter from an IRS agent stating that
penalties were assessed; however, the letter did not specify what
the penalties were. Likewise, counsel for respondent stated
that, while he was fairly sure no penalties had been assessed
against petitioners, he did find one reference to a sec. 6651(a)
failure to pay penalty in the administrative record, which he
conceded was “not the cleanest”.
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Consequently, for the reasons discussed above, the Court will not
consider the matter.
Petitioners received an appropriate hearing under section
6330(b)(1). Day v. Commissioner, T.C. Memo. 2004-30; Leineweber
v. Commissioner, T.C. Memo. 2004-17; sec. 301.6330-1(d)(2), Q&A-
D6, Proced. & Admin. Regs. Respondent properly verified that the
requirements of applicable law and administrative procedures were
met and balanced the need for efficient collection of taxes with
the legitimate concern of petitioners that the collection action
be no more intrusive than necessary. On this record, the Court
holds that there was no abuse of discretion in sustaining the
notice of intent to levy. Respondent, therefore, is sustained.
Reviewed and adopted as the report of the Small Tax Case
Division.
An appropriate order and
decision will be entered.