T.C. Memo. 2007-269
UNITED STATES TAX COURT
YVONNE THOMAS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11047-06L. Filed September 10, 2007.
Jeffrey D. Moffatt, for petitioner.
Elaine T. Fuller, for respondent.
MEMORANDUM OPINION
SWIFT, Judge: This matter is before us on cross-motions in
limine seeking a ruling as to whether petitioner, in this
collection action under section 6330, may challenge and may offer
evidence as to the amount of her underlying 2002 individual
Federal income tax liability.
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Background
On March 26, 2007, a hearing was held on these motions in
Los Angeles, California. Respondent’s motion is based on
section 6330(c)(2)(B) that limits considerably the scope of our
review of respondent’s Appeals Office determinations in
collection matters. Petitioner’s motions are based on a variety
of theories and statutory provisions.
A securities firm reported to respondent on Forms 1099-B,
Proceeds from Broker and Barter Exchange Transactions, that
petitioner in 2002 realized income of approximately $88,000 on
the sale of stock.
On her 2002 individual Federal income tax return filed with
respondent, petitioner reported only nominal income and no income
from the sale of stock.
Petitioner did not participate in the audit of her 2002
individual Federal income tax return that was conducted by
respondent, and petitioner did not submit information to
respondent’s examining agent relating to the income reported on
the above Forms 1099-B.
Based on the $88,000 reported on the Forms 1099-B,
respondent recalculated petitioner’s income and determined a
$19,923 deficiency in petitioner’s 2002 Federal income taxes.
On February 22, 2005, respondent mailed to petitioner a
notice of deficiency reflecting the above $19,923 tax deficiency
and a $3,900 section 6662 accuracy-related penalty.
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On February 26, 2005, respondent’s notice of deficiency was
delivered to and received by petitioner, but petitioner did not
file a petition with this Court to contest respondent’s
deficiency determination.
After assessment of the above deficiency, on October 29,
2005, respondent mailed to petitioner a notice of intent to levy,
and petitioner timely requested of respondent an Appeals Office
collection hearing.
In the Appeals Office hearing, petitioner sought to raise an
issue as to the correctness of respondent’s above tax deficiency
determination, and petitioner requested an abatement of interest
solely on the ground that respondent’s tax deficiency
determination was erroneous. Petitioner did not raise any
collection alternatives, and petitioner did not make or submit to
respondent an offer-in-compromise. Because petitioner had
received respondent’s February 22, 2005, notice of deficiency and
because petitioner could have petitioned the Tax Court with
regard thereto, respondent’s Appeals officer declined to consider
petitioner’s 2002 Federal income tax liability and concluded that
the proposed levy should be sustained. Also, respondent’s
Appeals officer rejected petitioner’s claim for interest
abatement.1
1
Respondent’s motion in limine does not seek to preclude
petitioner from pursuing her claim for interest abatement.
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At the Appeals Office collection hearing (and herein)
petitioner claimed that in February of 2005 when she received
respondent’s deficiency notice charging her with an additional
$88,000 in income, she began to suspect that $88,000 may have
been stolen or embezzled from her and received by someone else.
Accordingly, petitioner explains, rather than file a Tax
Court petition to contest respondent’s deficiency determination,
upon receipt of the notice of deficiency petitioner contacted a
local California police department and requested an investigation
as to whether $88,000 had been stolen from her.
As part of the police investigation that was begun,
petitioner delivered to the police approximately 100 pages of
personal documents, apparently including the original of
respondent’s notice of deficiency to petitioner and the Forms
1099-B that petitioner had received.
Petitioner explains further that she did not make copies of
the documents, including the notice of deficiency, and therefore
that once she turned the documents over to the police--in early
March of 2005 and until early 2006 when they were returned to
her--she did not have access to the documents.
Because--for much of the 90-day period allowed under section
6213(a) for the filing of a Tax Court petition--the original of
respondent’s notice of deficiency to petitioner was in the
possession of the police, petitioner in this collection action
asserts that she should be excused for her failure to file a
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timely Tax Court petition and that during her hearing with
respondent’s Appeals Office she should have been allowed (and now
in this collection case should be allowed) to raise an issue as
to her correct 2002 Federal income tax liability.
Further, petitioner claims that various physical, mental,
and emotional disabilities have afflicted her for years and
provide an equitable basis to excuse petitioner from not filing a
timely petition to challenge respondent’s notice of deficiency.
Petitioner summarizes that, taken together, the suspected
theft, the police department’s possession for over a year of the
notice of deficiency, and petitioner’s poor medical condition
justify an equitable relaxation of the limitation of section
6330(c)(2)(B) and a ruling on the instant motions that would
allow petitioner now to raise the issue as to the correct income
she realized on 2002 stock sales and her correct 2002 Federal
income tax liability.
On brief petitioner adds to her arguments. Petitioner
refers to language in the Internal Revenue Manual (IRM) which
provides that, “In a CDP hearing, a taxpayer may raise and
Appeals must consider, a liability that arose as a result of math
error notice adjustments.” 4 Administration, Internal Revenue
Manual (CCH), sec. 8.7.2.3.10.1(1), at 27,306. Petitioner claims
that whatever income petitioner realized in 2002 from the sale of
stock would be offset by petitioner’s cost basis in the stock and
that the failure to take into account petitioner’s cost basis
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should be treated as a mere “math error” which, under the above
IRM provision, should be treated as an administrative adjustment
automatically in issue under section 6330(c)(1) and (c)(3)(C).
Further, petitioner refers to the mandate of the Americans
With Disabilities Act of 1990 (ADA), Pub. L. 101-336, 104 Stat.
327, currently codified as 42 U.S.C. secs. 12101-12213 (2000), to
the general effect that disabled persons be given equal access to
governmental agencies, and petitioner argues that because she has
medical disabilities, the ADA overrides the period of limitations
of section 6213(a) and the jurisdictional limitation of section
6330(c)(2)(B), and she should be allowed to raise an issue as to
her correct Federal income tax liability.
At the March 26, 2007, Court hearing on the instant motions
in limine, petitioner’s counsel claimed to have in his possession
corrected brokerage account information showing that all 2002
stock sales that properly are to be charged to petitioner
resulted in a net loss.
Discussion
We briefly discuss our reasons for rejecting petitioner’s
various arguments and for granting respondent’s motion in limine.
Upon receipt of the notice of deficiency petitioner filed a
police report. Obviously, petitioner could have chosen in
addition, or in lieu thereof, to file a Tax Court petition.
Petitioner made that choice. Petitioner’s explanation for not
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filing a Tax Court petition is not credible. Nothing in the
record adequately explains why petitioner, having filed a police
report, could not also have filed a timely Tax Court petition to
contest respondent’s determination of her 2002 Federal income tax
liability.
Even the credible evidence submitted relating to
petitioner’s medical condition does not establish that petitioner
in 2002 was incapacitated in such a manner that would have
prevented her from filing a Tax Court petition. Much of the
evidence relates to petitioner’s medical condition in more recent
years, not to her medical condition in 2002.
Respondent’s notice of deficiency in this case does not
constitute a “math error notice”. Generally, a “math error
notice of adjustment” does not result in a notice of deficiency
but results in an automatic assessment notice under section
6213(b). Petitioner, however, received a notice of deficiency
and expressly had a right to petition this Court. Sec. 6213(a).
The IRM provision referred to by petitioner relating to math
errors provides no help to petitioner.
With regard to petitioner’s reliance on the ADA, petitioner
asserts that because of her medical disabilities and the ongoing
police investigation, we should conclude that petitioner did not
have a practical or realistic prior “opportunity to dispute” the
$19,923 tax deficiency and that under the ADA we should excuse
petitioner’s failure to timely file a Tax Court petition.
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As explained, in addition to her filing of a police report,
petitioner could have filed a Tax Court petition. Further, the
provisions of the ADA do not apply to Federal courts. United
States v. Wishart, 146 Fed. Appx. 171, 172-173 (9th Cir. 2005);
Sheridan v. Michels (In re Disciplinary Proceedings), 282 Bankr.
79, 92 n.15 (B.A.P. 1st Cir. 2002) (the ADA definition of a
public entity includes only State and local governments), vacated
on other grounds Sheridan v. Michels (In re Sheridan), 362 F.3d
96 (1st Cir. 2004).
Petitioner points out that under section 6330(c)(2)(A)(iii)
one basis for considering an offer-in-compromise is doubt as to
the underlying tax liability, and therefore that in considering
whether an offer-in-compromise would be appropriate, petitioner’s
underlying tax liability should be allowed to be raised.
Petitioner, however, in her collection hearing with respondent’s
Appeals Office, did not raise an offer-in-compromise, nor has she
made one to respondent at any time since then, and accordingly we
herein will not consider any offer-in-compromise. Magana v.
Commissioner, 118 T.C. 488, 493 (2002).
In this regard, respondent asks us to expressly hold that
the collection alternative language of section 6330(c)(2)(A)(iii)
does not implicitly or necessarily raise an issue as to the
amount of a taxpayer’s underlying tax liability and does not
override the section 6330(c)(2)(B) limitation on the raising of
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an issue as to the amount of a taxpayer’s tax liability. We need
not and do not address that issue.
None of the exceptions petitioner asks us to recognize are
valid. Under section 6330(c)(2)(B), petitioner is precluded from
challenging herein the amount of her 2002 Federal income tax
liability. Evidence relating to petitioner’s 2002 Federal income
tax liability is not relevant and will not be admitted.2
For the reasons stated, we shall deny petitioner’s motions
in limine, but we shall grant respondent’s motion in limine.
The issue as to petitioner’s claim for interest abatement
will be set for subsequent hearing.
An appropriate order will
be issued.
2
We note that in certain circumstances under sec. 6201(d)
respondent is required to seek reasonable verification of
taxpayer income reported by third parties on information returns
such as Forms 1099-B. For this verification requirement to be
triggered, however, a taxpayer must have cooperated with
respondent during respondent’s audit. Here, petitioner did not
participate in the audit, and sec. 6201(d) has no application.