T.C. Summary Opinion 2006-59
UNITED STATES TAX COURT
SEDRICK CELESTIN, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6229-05S. Filed April 19, 2006.
Sedrick Celestin, pro se.
Kim Nguyen, for respondent.
DEAN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect at the time the petition was filed. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code of 1986, as amended. 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. Pursuant to sections 6320(c) and 6330(d),
petitioner seeks review of respondent’s filing of a notice of
Federal tax lien for his tax liabilities for 1997 and 1998. The
issue for decision is whether respondent’s collection action was
an abuse of his discretion.
Background
The stipulated exhibits and the exhibits received into
evidence are incorporated herein by reference. At the time the
petition in this case was filed, petitioner resided in Corona,
California.
Petitioner signed a stipulated decision in Sedrick Celestin
and Marie M. Paul, docket No. 8355-00, entered by this Court on
October 23, 2001. On February 4, 2002, respondent assessed the
deficiency of $44,545 and an accuracy-related penalty of $3,847
for 1997, as agreed in the stipulated decision. Petitioner filed
for bankruptcy in April of 2002.
Discussion
Section 6320 entitles a taxpayer to notice of his right to
request a hearing with the Internal Revenue Service (IRS) Office
of Appeals after a notice of lien is filed by the Commissioner in
furtherance of the collection of unpaid Federal taxes. The
taxpayer requesting the hearing may raise any relevant issue with
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regard to the Commissioner’s intended collection activities,
including spousal defenses, challenges to the appropriateness of
the Commissioner’s intended collection action, and alternative
means of collection. Secs. 6320(b) and (c), 6330(c); see Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner, 114
T.C. 176, 180 (2000).
The taxpayer may raise challenges “to the existence or
amount of the underlying tax liability”, however, only if he “did
not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability.” Sec. 6330(c)(2)(B).
Where the validity of the tax liability is not properly part
of the appeal, the taxpayer may challenge the determination of
the Appeals officer for abuse of discretion. Sego v.
Commissioner, supra at 609-610; Goza v. Commissioner, supra at
181-182.
The only issues raised by petitioner at the section 6330
hearing were: (1) That petitioner did not understand the nature
of the decision document he signed in his deficiency proceeding
for 1997 in this Court;1 and (2) whether petitioner’s tax
liability for 1997 was discharged in bankruptcy. At trial,
1
Because petitioner did not pursue the issue at trial, the
Court considers petitioner to have conceded the issue of his
unilateral mistake. Bradley v. Commissioner, 100 T.C. 367, 370
(1993); Sunstrand Corp. v. Commissioner, 96 T.C. 226, 344 (1991);
Rybak v. Commissioner, 91 T.C. 524, 566 n.19 (1988).
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petitioner’s memory of the prior Tax Court proceeding vanished
completely, and he questioned the authenticity of the decision
document though, incongruously, not his signature. But his
primary argument was that the tax for 1997 was discharged in
bankruptcy or should be so treated because, he alleged, an
Internal Revenue Service (IRS) representative advised him that
filing for bankruptcy would relieve him of the tax. He argues
that the IRS representative misled him.
Because petitioner’s income tax liability was assessed
within 240 days before the date of the filing of the bankruptcy
petition, it was not dischargeable. See 11 U.S.C. secs.
523(a)(1)(A), 507(a)(8)(A)(ii) (2000). As petitioner’s tax debt
is of a kind specified in 11 U.S.C. section 523(a)(1)(A), it is
not discharged whether or not a proof of claim is filed or
allowed. 11 U.S.C. 523(a)(1)(A)(2000); Swanson v. Commissioner,
121 T.C. 111, 128 (2003). Petitioner’s discharge argument is
without merit.
Petitioner’s argument that he was misled by an IRS
representative into filing for bankruptcy is essentially one of
estoppel. This Court has held that it will apply the doctrine of
equitable estoppel against the Government with the utmost caution
and restraint. Kronish v. Commissioner, 90 T.C. 684, 695 (1988)
(citing Boulez v. Commissioner, 76 T.C. 209, 214-215 (1981),
affd. 810 F.2d 209 (D.C. Cir. 1987)); see Cavanaugh v.
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Commissioner, T.C. Memo. 1991-407, affd. without published
opinion 986 F.2d 1426 (10th Cir. 1993). Estoppel claims against
the Government involving misstatements of law or faulty advice by
Government agents are generally rejected on one of two grounds:
either the claimant’s reliance on the agent’s misstatement is not
sufficiently detrimental, or the misdeed itself is not
sufficiently egregious. Burdett v. Commissioner, T.C. Memo.
1992-576. The instant claim is lacking in both respects.
Petitioner has failed to allege sufficient detrimental reliance
on the alleged misstatement of respondent’s representative.
Detrimental reliance is a primary element of an estoppel
claim. Heckler v. Community Health Services, 467 U.S. 51 (1984).
In Heckler, the Court held that the plaintiff, in relying on the
agent’s advice, “lost no rights but merely was induced to do
something which could be corrected at a later time.” Id. at 62.
Here, petitioner lost no rights. His position would be the same
as it is now had he not filed for bankruptcy; he would be liable
for the tax assessed for 1997.
In addition, it is generally held that a misstatement of law
by a Government agent, by itself, is not sufficient to support a
claim of estoppel. See Schweiker v. Hansen, 450 U.S. 785 (1981);
see also Henry v. United States, 870 F.2d 634, 637 (Fed. Cir.
1989) (erroneous advice of IRS agent not sufficient misconduct to
estop IRS from raising statute of limitations where advice caused
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taxpayer to file claim after limitations period had run); Burdett
v. Commissioner, supra. Clearly, if respondent’s representative
advised petitioner that filing for bankruptcy would enable him to
have the deficiency assessment for 1997 discharged, it was an
erroneous statement of law, insufficient to support a claim of
estoppel.
Conclusion
The filing of a Notice of Federal Tax Lien was not an abuse
of discretion by respondent.
Reviewed and adopted as the report of the Small Tax Case
Division.
Decision will be entered
for respondent.