T.C. Summary Opinion 2006-129
UNITED STATES TAX COURT
WARREN L. OWENS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10766-04S. Filed August 22, 2006.
Warren L. Owens, pro se.
A. Gary Begun, for respondent.
WHERRY, Judge: This case is before the Court on
respondent’s motion for summary judgment under Rule 121.1 The
petition was filed pursuant to the provisions of section 7463.
The decision to be entered is not reviewable by any other court,
and this opinion should not be cited as authority. The instant
1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
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proceeding arises from a petition for judicial review filed in
response to a Determination Letter Concerning Collection
Action(s) Under Section 6320 and/or 6330. The issue for decision
is whether respondent may proceed with collection action as so
determined.
Background
On September 25, 1998, the Internal Revenue Service (IRS)
sent to petitioner a letter indicating that the agency had no
record of receiving Federal income tax returns from petitioner
for 1991, 1994, 1995, and 1996, and proposing taxes and penalties
or additions to tax based upon records received from third-party
payers. The letter was sent to 12079 Plainview, Detroit, MI
48228, and invited a response from petitioner within 30 days.
The letter listed “Stop 822 M. HOWARD” as the IRS person to
contact. On or about November 23, 1998, the IRS received from
petitioner a copy of a Form 1040, U.S. Individual Income Tax
Return, for 1992. The address shown on the Form 1040 and the
return address on the envelope in which it arrived was 12079
Plainview, Detroit, MI 48228. Enclosed with the return was a
note from petitioner directed to “STOP 822 M. HOWARD” stating:
“THIS A COPY OF THE ORIGINAL TAX FILED IN 1996. I AM SENDING 91,
93, 94, 95, & 96”. Petitioner’s signature on the Form 1040, and
that of the return preparer, was dated September 27, 1996.
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A notice of deficiency for 1991 was thereafter issued to
petitioner and was sent by certified mail to 12079 Plainview,
Detroit, MI 48228-1070792, on December 1, 1998. The notice
reflected an income tax deficiency in the amount of $8,329.10 for
1991 and additions to tax under sections 6651(a) and 6654(a) of
$877.53 and $169.99, respectively. Petitioner did not file a
petition with this Court in response to the notice of deficiency,
and respondent assessed the corresponding taxes, additions to
tax, and interest for 1991 on June 21, 1999. A notice of balance
due was sent to petitioner on that date, as well as on July 26,
1999, and September 24, 2001.
On September 18, 2002, the IRS issued to petitioner a Final
Notice - Notice of Intent to Levy and Notice of Your Right to a
Hearing with respect to his 1991 liabilities. The notice was
sent by certified mail to an address in Romulus, Michigan. In
response, petitioner submitted to the IRS a timely Form 12153,
Request for a Collection Due Process Hearing, expressing his
disagreement as follows: “I have filed 1991 return your computer
is not correct”.
A face-to-face hearing between petitioner and the settlement
officer to whom his case had been assigned was held on March 10,
2004. Following the hearing, on May 21, 2004, the aforementioned
determination letter sustaining the proposed levy action was
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issued. An attachment to the determination contained the
following explanation:
In your request for a hearing under IRC Section 6330
you disagreed with the proposed levy action because you
filed Form 1040 1991 and the liability assessed is
incorrect. During the hearing you stated that you
timely filed your Form 1040 1991 but never received
your refund.
During the hearing the liability was reviewed and
discussed. The disallowed claim was reviewed with you.
You stated you did not file a Form 1040A for 1991. You
provided a copy of your Form 1040 for 1991. Since you
indicated that you did not recall receiving the
Statutory Notice of Deficiency, which our records
verify was mailed certified to you on December 1, 1998,
you were provided with an opportunity to present
information for reconsideration of the liability and
any proof of timely filing the return. No information
was presented by the March 24, 2004 deadline to
reconsider the liability and there has been no
information received to date. The audit
reconsideration procedures were explained to you and
you were provided with Publication 3598, The Audit
Reconsideration Process.
Also during the hearing, you were informed that
collection alternatives could not be considered since
you are not in compliance with the tax filing
requirements.
There were no relevant challenges to the
appropriateness of the proposed collection action.
No other issues were raised.
Petitioner filed a petition and amended petition with this
Court disputing the notice of determination on June 18 and
July 20, 2004, respectively, each of which reflected an address
at 11347 Gabriel, Romulus, MI 48174. The request for relief
proffered in the amended petition read:
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The IRS lost my 1991 tax return. I sent a copy of
the 1991 tax return in 1993. At that time I asked
about the 1989, & 1990 tax return, because I was due a
small return. Also, the IRS took money from my account
for my 1993 taxes. I sent a copy of my 1993 tax return
showing the IRS that they were wrong again.
Respondent filed the instant motion for summary judgment on
December 3, 2004, and petitioner filed an objection thereto on
April 21, 2005. Attached to the objection petitioner included,
inter alia, a copy of a computerized printout for Form 1040 for
1991, bearing a signature for petitioner dated March 28, 1992.
The return reflects total tax of $4,348, withholding of $4,819,
and a refund amount of $471. A hearing was held on respondent’s
motion on June 7, 2005. Both petitioner and respondent appeared
and were heard, and the motion was taken under advisement.
Discussion
Rule 121(a) allows a party to move “for a summary
adjudication in the moving party’s favor upon all or any part of
the legal issues in controversy.” Rule 121(b) directs that a
decision on such a motion shall be rendered “if the pleadings,
answers to interrogatories, depositions, admissions, and any
other acceptable materials, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.”
The moving party bears the burden of demonstrating that no
genuine issue of material fact exists and that he or she is
entitled to judgment as a matter of law. Sundstrand Corp. &
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Subs. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994). Facts are viewed in the light most favorable to
the nonmoving party. Id. However, where a motion for summary
judgment has been properly made and supported by the moving
party, the opposing party may not rest upon mere allegations or
denials contained in that party’s pleadings but must by
affidavits or otherwise set forth specific facts showing that
there is a genuine issue for trial. Rule 121(d).
I. Collection Actions--General Rules
Section 6331(a) authorizes the Commissioner to levy upon all
property and rights to property of a taxpayer where there exists
a failure to pay any tax liability within 10 days after notice
and demand for payment. Sections 6331(d) and 6330 then set forth
procedures generally applicable to afford protections for
taxpayers in such levy situations. Section 6331(d) establishes
the requirement that a person be provided with at least 30 days’
prior written notice of the Commissioner’s intent to levy before
collection may proceed. Section 6331(d) also indicates that this
notification should include a statement of available
administrative appeals. Section 6330(a) expands in several
respects upon the premise of section 6331(d), forbidding
collection by levy until the taxpayer has received notice of the
opportunity for administrative review of the matter in the form
of a hearing before the IRS Office of Appeals. Section 6330(b)
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grants a taxpayer who so requests the right to a fair hearing
before an impartial Appeals officer.
Section 6330(c) addresses the matters to be considered at
the hearing:
SEC. 6330(c). Matters Considered at Hearing.--In
the case of any hearing conducted under this section--
(1) Requirement of investigation.--The
appeals officer shall at the hearing obtain
verification from the Secretary that the
requirements of any applicable law or
administrative procedure have been met.
(2) Issues at hearing.--
(A) In general.--The person may raise at
the hearing any relevant issue relating to
the unpaid tax or the proposed levy,
including--
(i) appropriate spousal defenses;
(ii) challenges to the
appropriateness of collection actions;
and
(iii) offers of collection
alternatives, which may include the
posting of a bond, the substitution of
other assets, an installment agreement,
or an offer-in-compromise.
(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.
Once the Appeals officer has issued a determination
regarding the disputed collection action, section 6330(d) allows
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the taxpayer to seek judicial review in the Tax Court or a
District Court, depending upon the type of tax. In considering
whether taxpayers are entitled to any relief from the
Commissioner’s determination, this Court uses the following
standard of review:
where the validity of the underlying tax liability is
properly at issue, the Court will review the matter on
a de novo basis. However, where the validity of the
underlying tax liability is not properly at issue, the
Court will review the Commissioner’s administrative
determination for abuse of discretion. [Sego v.
Commissioner, 114 T.C. 604, 610 (2000).]
II. Analysis
A. Review of Underlying Liabilities
Petitioner’s position throughout this proceeding has been
that the liability the IRS is proposing to collect for 1991 is
incorrect. Rather, petitioner maintains that his liability is
more accurately reflected in the Form 1040 he allegedly filed for
1991, which reflected an overpayment of $471. Respondent asserts
to the contrary that petitioner is precluded from challenging his
underlying liability and has raised no other issues establishing
an abuse of discretion.
As previously indicated, section 6330(c)(2)(B) permits
taxpayers to challenge the underlying liability in a collection
proceeding only where they did not receive a notice of deficiency
or otherwise have a prior opportunity to dispute the liability.
A notice of deficiency for 1991 was sent to petitioner at 12079
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Plainview, Detroit, MI 48228-1070792, on December 1, 1998. On or
about November 23, 1998, the IRS had received from petitioner a
copy of a Form 1040 for 1992, and both the return and the
envelope in which it arrived reflected the Plainview address.
Petitioner also stated at the hearing on respondent’s motion that
he moved from the Plainview address in 1999 or 2000. Thus, the
evidence shows that the notice of deficiency was sent in a manner
in compliance with, and valid under, section 6212 and
corresponding regulations, requiring that a notice of deficiency
be sent to a taxpayer’s last known address. See sec. 6212(a) and
(b)(1).
However, section 6330(c)(2)(B) focuses upon receipt of the
notice of deficiency. During the administrative proceedings,
petitioner apparently indicated that he “did not receive” or “did
not recall receiving the Statutory Notice of Deficiency”. He was
therefore provided with an opportunity to present information for
reconsideration of the liability but submitted no substantiating
materials by a deadline established for that purpose. At the
hearing on respondent’s motion, following a lengthy explanation
from the Court regarding certified mail procedures, petitioner
never expressly denied receiving either (1) notification of a
certified letter to be claimed or (2) the notice of deficiency
itself. He merely stated that the IRS had been unable to “give *
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* * [him] a copy of who signed for it”.2 Additionally, the note
enclosed with the copy of petitioner’s 1992 return and directed
to “STOP 822 M. HOWARD” suggests that petitioner received other
IRS communications sent to the Plainview address, specifically
the September 25, 1998, letter.
In general, absent clear evidence to the contrary,
compliance with certified mail procedures raises a presumption of
official regularity in delivery and receipt with respect to
notices sent by the Commissioner. United States v. Zolla, 724
F.2d 808, 810 (9th Cir. 1984); United States v. Ahrens, 530 F.2d
781, 784-785 (8th Cir. 1976); Clough v. Commissioner, 119 T.C.
183, 187-188 (2002); Sego v. Commissioner, supra at 610-611.
Furthermore, taxpayers are not permitted to defeat actual receipt
by deliberately refusing delivery of a statutory notice. Sego v.
Commissioner, supra at 610-611. Suffice it to say that the
evidence here is far from convincing regarding petitioner’s
nonreceipt of the notice of deficiency. Petitioner would
reasonably be considered in these circumstances to have forfeited
his opportunity to contest the notice of deficiency in this Court
and likewise now to be precluded from challenging his underlying
liability in this proceeding.
2
In this connection, we also note that although the order
setting respondent’s motion for hearing was sent to petitioner by
certified mail on May 6, 2005, petitioner apparently did not pick
up the letter until May 31, 2005.
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Nonetheless, even if petitioner were entitled to contest his
underlying liabilities at this juncture, he has at no time
offered requisite evidence in substantiation of the positions
taken upon the 1991 Form 1040. During the administrative process
before Appeals, petitioner was afforded an opportunity to submit
information for reconsideration of his liability but declined to
do so. He was even given an additional 2 weeks after the
collection hearing to provide documentation but did not take
advantage of this chance. At the hearing on respondent’s motion,
he again mentioned possible supporting materials but had made no
effort to bring such items. Thus, even a de novo review would
not aid petitioner as the record now stands, and he has been
given multiple opportunities to remedy this defect.
B. Review for Abuse of Discretion
Regardless of the availability of review under section
6330(c)(2)(B) of underlying liability, section 6330(c)(2)(A)
directs that taxpayers may raise at collection hearings relevant
issues relating to the unpaid tax or proposed collection action
including, inter alia, spousal defenses, challenges to the
appropriateness of the collection action, and collection
alternatives. Determinations made by the Appeals Office with
respect to these issues are reviewed for abuse of discretion.
Action constitutes an abuse of discretion under this standard
where arbitrary, capricious, or without sound basis in fact or
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law. Cox v. Commissioner, 126 T.C. 237, 255-256 (2006); Woodral
v. Commissioner, 112 T.C. 19, 23 (1999).
Throughout these proceedings, petitioner has focused solely
on his contentions concerning having filed a 1991 return. While
the Court sympathizes with petitioner’s frustrations in this
regard, what transpired with respect to this return is not
substantively relevant in the current procedural posture. Yet
due to this singularity of focus, petitioner has never advanced
any other issues susceptible to review under section
6330(c)(2)(A). Accordingly, nothing in the record reflects an
abuse of discretion. The Court will grant respondent’s motion
for summary judgment and sustain the proposed collection action.
To reflect the foregoing,
An order granting
respondent’s motion for
summary judgment and decision
for respondent will be
entered.