T.C. Summary Opinion 2006-15
UNITED STATES TAX COURT
PAUL THOMAS DEMOS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1483-04S. Filed January 30, 2006.
Paul Thomas Demos, pro se.
Rachael J. Zepeda, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of sections 6330(d) and 7463 of the
Internal Revenue Code in effect when the petition was filed. The
decision to be entered is not reviewable by any other court, and
this opinion should not be cited as authority. Unless otherwise
indicated, all subsequent section references are to the Internal
Revenue Code, as amended.
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This proceeding arises from a petition for judicial review
filed in response to a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 (notice of
determination) sent to petitioner on December 30, 2003. Pursuant
to sections 6320(c) and 6330(d), petitioner seeks review of
respondent’s determination sustaining the filing of two notices
of Federal tax liens against petitioner.
The issues for decision are: (1) Whether petitioner’s case
regarding the filing of the notices of Federal tax liens is moot;
(2) whether petitioner may raise the underlying tax liability for
any of the years in issue, and if so, whether any adjustment is
appropriate; and (3) whether respondent abused his discretion in
failing to abate interest and additions to tax.
Some of the facts have been stipulated, and they are so
found. Petitioner resided in Phoenix, Arizona, at the time the
petition was filed.
Background
Petitioner filed his 1995 Federal income tax return on June
12, 1996. Petitioner and his wife timely filed joint 1996, 1997,
and 1998 Federal income tax returns.1
1
Petitioner’s wife, Kristin K. Demos, is not a party to
these proceedings because she did not request a hearing and she
did not file a petition.
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1995 and 1996
Petitioner’s 1995 and 1996 tax returns were selected for
examination, and respondent proposed adjustments. On March 12,
1998, respondent issued a 30-day letter to petitioner for the
taxable year 1995. On the same date, respondent issued a 30-day
letter to petitioner and his wife for the taxable year 1996.
Petitioner agreed with the adjustments proposed by respondent for
1995 and signed the Form 4549-CG, Income Tax Examination Changes.
The Form 4549-CG for 1995 included a corrected liability and an
addition to tax under section 6651(a)(1). Petitioner and his
wife agreed with the adjustments proposed by respondent for 1996,
and they each signed the Form 4549-CG.
Petitioner returned the signed Forms 4549-CG to respondent,
by letter dated April 9, 1998. In the letter, petitioner asked
respondent to make further adjustments to his 1995 tax return.
Petitioner asserted that payments he received from a third party
were salary and not self-employment income as characterized by
the payor. Petitioner enclosed with the April 9 letter an
advance payment of $650, which he asked respondent to apply to
his “past due self-employment tax” for the 1995 tax year.
Respondent applied the $650 payment to petitioner’s 1995 tax
liability on April 13, 1998.
In the April 9, 1998, letter, petitioner also requested that
respondent prepare an installment agreement because petitioner
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wanted to pay the outstanding tax liabilities for 1995 and 1996.
At some point, petitioner and respondent entered into an
installment agreement. The record does not reflect the terms of
the agreement. Petitioner made four separate payments during
1998, totaling $550, which were applied to his 1995 tax
liability. Petitioner apparently defaulted on the installment
agreement on May 10, 1999.
1997 and 1998
Petitioner’s tax liabilities for 1997 and 1998 were assessed
in amounts as reported by petitioner and his wife on the
respective returns. Petitioner made a payment of $617.39 when
the 1997 tax return was filed. Petitioner made an additional
payment of $350 with respect to the 1997 tax liability on June
13, 1998. Petitioner made a payment of $1,584.97 when the 1998
tax return was filed. As of December 7, 2000, there were
outstanding balances due on both the 1997 and the 1998 returns as
filed.
Collection History
On December 7, 2000, respondent filed two notices of Federal
tax liens for assessments made for all tax years in question. On
December 12, 2000, respondent sent by certified mail to
petitioner, a Notice of Federal Tax Lien Filing and Your Right to
a Hearing Under IRC 6320 (the 3172 Letter). On January 5, 2001,
petitioner timely filed a Form 12153, Request for a Collection
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Due Process Hearing (CDP hearing request). Respondent
temporarily lost the CDP hearing request.
On January 17, 2001, petitioner submitted a Form 656, Offer
in Compromise (OIC). Petitioner offered $1,300 in satisfaction
of the balance due for the tax years in question.2 Petitioner’s
wife did not sign the initial OIC. Respondent rejected the OIC
because petitioner failed to respond to a letter requesting
additional documentation. Petitioner did not execute a new OIC
that included both his and his wife’s signatures. Respondent
closed the OIC file on May 15, 2002.
In April 2001, a portion of petitioner’s overpayment for tax
year 2000 was applied to the underpayment for the 1995 tax year.
The liability was paid in full, and on May 18, 2001, the Federal
tax lien for 1995 was released. In August 2001, the remainder of
petitioner’s overpayment for tax year 2000 was applied to the
underpayment for the 1996 tax year. Petitioner does not dispute
the propriety of the offsets to the years in issue.
2
Petitioner’s tax liability for the years in question as
of Dec. 7, 2000:
Form Tax Year Balance Due
1040 1995 $ 433.68
1040 1996 1,623.18
1040 1997 3,728.66
1040 1998 3,954.03
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Petitioner’s CDP hearing occurred on October 24, 2003. At
the hearing petitioner asserted that he was adversely affected by
the loss of the CDP hearing request. Petitioner paid the tax
liabilities due with respect to 1997 and 1998 on November 24,
2003. On December 5, 2003, approximately 6 weeks after the
Appeals Office hearing, the Federal tax lien for the 1996, 1997,
and 1998 tax years was released.
As indicated, a notice of determination was issued on
December 30, 2003. The Appeals officer determined that
respondent’s collection action under section 6320 was proper,
that the taxes were properly assessed, and that the notices of
Federal tax liens were properly recorded. The Appeals officer
further indicated that the tax liabilities for all years in issue
were paid in full, that the notice of Federal tax lien for 1995
had been released, and that the release of lien for 1996, 1997,
and 1998 was forwarded to the Maricopa County Recorder.3
Petitioner asserts that he entered into an agreement with
respondent for the payment of his 1995 and 1996 tax liabilities,
which allowed him to make payments of principal only, permitting
a waiver of all interest and “penalties”.4 Petitioner asserts
3
As noted earlier, the 1996, 1997, and 1998 lien was
actually released on Dec. 5, 2003, prior to the issuance of the
notice of determination.
4
An addition to tax under sec. 6651(a)(2) for failure to
timely pay the tax shown as due on the 1995, 1996, 1997, and 1998
(continued...)
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that he should have been permitted to contest the underlying tax
liabilities at the hearing. Petitioner asserts that respondent’s
delay in processing his hearing request resulted in additional
interest accruing on the tax liabilities.
Respondent asserts that petitioner’s case is moot because
the underlying tax was paid, the tax liabilities, including
interest, and additions to tax have been paid, and the notices of
Federal tax liens for all years in question have been released.
Furthermore, respondent asserts that petitioner cannot dispute
the 1995 and the 1996 tax liabilities because petitioner had a
prior opportunity to dispute the tax and waived his right to
dispute the underlying liabilities by his agreement to the
assessment of the tax for each year. As to all tax years in
issue, respondent asserts that petitioner is not entitled to
abatement of interest and additions to tax.
Discussion
Mootness
This Court has jurisdiction under section 6330 to review the
Commissioner’s administrative determinations. Sec. 6330(d); see
Iannone v. Commissioner, 122 T.C. 287, 290 (2004). We have also
stated that our review is generally limited to whether the
4
(...continued)
tax returns was also assessed.
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proposed lien or levy is proper. Gerakios v. Commissioner, T.C.
Memo. 2004-203; Chocallo v. Commissioner, T.C. Memo. 2004-152.
We first consider whether the issues in this proceeding are
moot. The notice of Federal tax lien filed for the 1995 tax year
was released on May 18, 2001. The notice of Federal tax lien
filed for the 1996, 1997, and 1998 tax years was released on
December 5, 2003. Thus, as of December 30, 2003, the date the
notice of determination was issued, all the tax liabilities were
fully paid and all notices of Federal tax liens were released.
The Court’s jurisdiction under section 6330 is generally
limited to reviewing whether the proposed lien or levy is proper.
Freije v. Commissioner, 125 T.C. 14 (2005). Since all the liens
in this matter have, in fact, been released, we conclude that the
matter is moot. See Greene-Thapedi v. Commissioner, 126 T.C.
(2006); Gerakios v. Commissioner, supra; Chocallo v.
Commissioner, supra.
Having concluded that any issues regarding the filing of
notices of Federal tax liens are moot, we do not consider any
claim made by petitioner as to the underlying tax liabilities,
and petitioner’s claim for abatement of interest and additions to
tax. Greene-Thapedi v. Commissioner, supra.
We note that petitioner claimed that respondent violated his
due process rights. Petitioner did not cite or rely on any
specific statute as a basis for this claim, and we generally have
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no jurisdiction over such matters. See Chocallo v. Commissioner,
supra. If petitioner meant to make a section 7433 claim, which
provides up to $1 million in civil damages, we note that such
claims must be brought in a District Court of the United States.
Sec. 7433(a); Chocallo v. Commissioner, supra.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
An appropriate order or
dismissal will be entered.