T.C. Summary Opinion 2007-160
UNITED STATES TAX COURT
JOHN HAYNES, JR., Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20509-05S. Filed September 10, 2007.
John Haynes, Jr., pro se.
Dennis R. Onnen, for respondent.
GOLDBERG, Special Trial Judge: This case was heard pursuant
to the provisions of section 74631 of the Internal Revenue Code
in effect at the time of filing. Pursuant to section 7463(b),
the decision to be entered is not reviewable by any other court,
and this opinion shall not be treated as precedent for any other
1
Unless otherwise indicated, all Rule references are to the
Tax Courts Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code, as amended.
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case. This case is before the Court on respondent’s Motion for
Summary Judgment pursuant to Rule 121.
Background
This case was commenced in response to a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330, sustaining the filing of a Notice of Federal Tax
Lien in order to collect petitioner’s unpaid Federal income taxes
for 1999 and 2000.
Petitioner filed his income tax return for 1999 and received
a refund of $24,228. For the 2000 taxable year, petitioner filed
his Federal income tax return and received refunds of $16,733 and
$500, respectively.
An audit occurred on January 7, 2003, and subsequently
respondent mailed a notice of deficiency to petitioner in which
respondent determined deficiencies in petitioner’s Federal income
taxes for taxable years 1999 and 2000 in the amounts of $20,764
and $24,532, respectively, together with accuracy-related
penalties pursuant to section 6662 for 1999 and 2000 in the
amounts of $4,152.80 and $4,906.40, respectively.
The notice of deficiency was mailed to petitioner at the
following addresses: 11705 Fishing River Road, Liberty, Missouri,
64068, and Post Office Box 100, Liberty, Missouri, 64069. Copies
of the notice of deficiency were also sent to petitioner’s
authorized representative, Richard T. Jones, at the following
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address: Post Office Box 1465, Rolla, Missouri, 65401. The
aforementioned Liberty, Missouri, address is the same address
stated on petitioner’s Federal income tax returns for taxable
years 1999 and 2000.
Petitioner failed to file a petition to this Court in
response to the notice of deficiency. Accordingly, respondent
assessed the deficiencies determined for taxable years 1999 and
2000, together with the penalties and interest applicable
thereon, on May 26, 2006.
On July 9, 2004, respondent mailed a Notice of Federal Tax
Lien Filing and Your Right to a Hearing Under IRC 6320 (CDP
Notice) that informed petitioner that a Notice of Federal Tax
Lien had been filed because there were unpaid tax liabilities for
taxable years 1999 and 2000, in the amounts of $7,114.94 and
$32,851.20, respectively. The CDP Notice informed petitioner of
his right to a hearing to appeal the collection action and to
discuss payment method options. Publication 1660, Collection
Appeal Rights, together with Form 12153, Request for a Collection
Due Process Hearing, Form 12153 was enclosed with the CDP Notice.
Petitioner timely mailed a Form 12153. Petitioner’s case
was then referred to the Internal Revenue Service (IRS) Appeals
Office in Kansas City and assigned to James C. Callanan. The
Appeals officer (Mr. Callanan) mailed an acknowledgement letter
to petitioner’s representative, Leonard G. Goldammer (Mr.
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Goldammer), on October 25, 2004. In the letter, Mr. Callanan
scheduled a CDP hearing by telephone on November 15, 2004, and
also offered Mr. Goldammer an opportunity to have either a face-
to-face conference or a hearing by correspondence. The November
15, 2004, hearing was continued until December 16, 2004.
Petitioner requested a face-to-face conference, which was
held on December 16, 2004, with petitioner, Mr. Callanan, and Mr.
Goldammer in attendance. A second face-to-face conference
occurred between Mr. Callanan and Mr. Goldammer on February 4,
2005.
At the December 16, 2004, conference, petitioner
acknowledged that he had received the notice of deficiency but
had relied on his representative at that time to file a petition
with the Court. Petitioner acknowledged that it was his
responsibility to assure that a petition was filed with this
Court and that he had failed in this duty. After this admission,
Mr. Callanan explained to petitioner that because he had received
a notice of deficiency, the merits of the underlying deficiencies
could not be raised as part of the CDP hearing. The parties then
discussed the appropriateness of the collection action, the
filing of the Notice of Federal Tax Lien, and possible collection
alternatives.
With respect to the collection alternatives discussed at the
December 16, 2004, CDP hearing, petitioner requested that any
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collections action be rescinded on the grounds that the
outstanding liabilities from taxable years 1999 and 2000 would
ultimately be satisfied by one of two ways: (1) through a refund
petitioner anticipated as a result of his yet-to-be-filed amended
returns for taxable years 1999 and 2000; or (2) through a refund
petitioner anticipated from his yet-to-be-filed Federal income
tax return for taxable year 2004. Mr. Callanan rejected
petitioner’s proposal on the basis that petitioner had yet to
file any of the returns proposed, and because any refund would,
at that point, be purely speculative, there would be no way to
assure that refunds would repay the liabilities owed. In the
alternative, Mr. Callanan raised the possibility that petitioner
might be able to enter into an installment agreement.
Petitioner, however, stated that he would not be financially able
to accept such an arrangement. The CDP hearing concluded without
further mention of collection alternatives.
On February 4, 2005, Mr. Callanan met with Mr. Goldammer to
review petitioner’s financial statement. At this meeting, Mr.
Goldammer protested that such a review was not necessary as the
refunds that petitioner anticipated receiving would cover his
outstanding liabilities owed.
On February 14, 2005, Mr. Goldammer left a voicemail message
on Mr. Callahan’s voicemail system, reiterating petitioner’s
position that the collection action should be abandoned in the
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light of the refunds that petitioner anticipated he was to
receive from the filing of amended returns for taxable years 1999
and 2000, and his Federal income tax return for 2004. Mr.
Callanan contacted Mr. Goldammer and reiterated that petitioner’s
proposal was still unacceptable. In that same conversation, Mr.
Callanan informed Mr. Goldammer that despite his continuing
rejection of petitioner’s proposal, he would “work on
petitioner’s financial statement” and get back to him.
On July 6, 2005, Mr. Callanan contacted Mr. Goldammer and
informed him that because the outstanding liability owed was
below $25,000--$18,277.54, to be precise--he could accept an
installment agreement. Mr. Callanan then proposed that
petitioner agree to make monthly payments of $375. Petitioner
rejected this offer.
The record in this case includes petitioner’s Federal income
tax return for the taxable year 2003. On that return, petitioner
reported wages, salaries, and tips in the amount of $125,979.
Petitioner also reported rental income from six residential and
commercial properties that he owns, including a banquet hall. As
of the time the present motion was filed, petitioner had filed
neither his Federal income tax return for taxable year 2004, nor
any amended returns for 1999 or 2000.
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Discussion
With respect to the pending motion, petitioner was permitted
to file a response but elected not to file one.
Summary judgment is appropriate “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.” Rule 121(b).
Summary judgment is intended to expedite litigation and avoid
unnecessary and expensive trials. See Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988).
Section 6320 generally provides that the IRS cannot proceed
with the collection of taxes by way of the filing of a notice of
Federal tax lien with respect to a taxpayer’s property until the
taxpayer has been given notice of and the opportunity for an
administrative review of the proposed filing (in the form of an
IRS Office of Appeals hearing). Section 6330(c)(1) provides that
the Appeals officer shall obtain verification that the
requirements of any applicable law or administrative procedure
have been met. Section 6330(c)(2)(A) provides that the taxpayer
may raise any relevant issue relating to the unpaid tax including
spousal defenses, challenges to the appropriateness of collection
actions, and alternatives to collection. The taxpayer may also
raise challenges to the existence or amount of the underlying tax
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liability if he or she did not receive a statutory notice of
deficiency with respect to the underlying tax liability or did
not otherwise have an opportunity to dispute that liability.
Sec. 6330(c)(2)(B).
Section 6330(c)(3) provides that the determination of the
Appeals officer shall take into consideration the verification
under section 6330(c)(1), the issues raised by the taxpayer, and
whether the proposed collection action balances the need for the
efficient collection of taxes with the legitimate concern of the
taxpayer that any collection action be no more intrusive than
necessary. If the taxpayer is dissatisfied with the
determination made after the hearing, judicial review of the
determination, such as that sought in this case, is available.
See generally Goza v. Commissioner, 114 T.C. 176, 179-181 (2000).
Where the validity of the underlying tax liability is at
issue, the Court will review the matter de novo. Davis v.
Commissioner, 115 T.C. 35, 39 (2000). Where the taxpayer
challenges the assessment procedures of the case, the Court will
review the matter for abuse of discretion. Sego v. Commissioner,
114 T.C. 604, 610 (2000); Goza v. Commissioner, supra. In order
to prevail under abuse of discretion, a taxpayer must prove that
the Commissioner exercised this discretion arbitrarily,
capriciously, or without sound basis in fact or law. Woodral v.
Commissioner, 112 T.C. 19, 23 (1999).
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Petitioner’s position is twofold; he challenges both the
underlying liability, as well as respondent’s assessment
procedures with respect to his case. With respect to the first
prong, however, because petitioner received a notice of
deficiency for taxable years 1999 and 2000, but did not file a
petition with this Court, we cannot consider the underlying
liability. Therefore, our inquiry rests solely with the question
of whether respondent’s assessment procedures and, in particular,
his rejection of petitioner’s collection alternative, were done
arbitrarily, and without sound basis in fact or law. Id.
Petitioner’s argument that respondent should rescind or
abandon the collection action based on the amount of money he
anticipated receiving from refunds claimed on Federal income tax
returns is, at best, speculatively optimistic. Mr. Callanan
reasonably explained to petitioner on more than one occasion that
it would be impossible for him to rescind the collection action
based on petitioner’s proposal, especially where petitioner had
not yet filed any amended returns for taxable years 1999 or 2000,
and where his return for taxable year 2004 was not even due for
another 4 months. Petitioner presented no additional evidence,
aside from his assertion that refunds would be due to him from
the aforementioned returns, in support of his proposal.
Despite his assertion that he was unable to remit the amount
of liabilities owed, petitioner did not present any evidence that
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he was financially unable to make payments. While the record is
silent as to petitioner’s income at the time that the present
motion was filed, we note that neither petitioner nor his
representative offered evidence showing that petitioner did not
still possess the assets or maintain the income level as
reflected on his Federal income tax return for 2003.
Mr. Callanan, however, gave full consideration to
petitioner’s situation, repeatedly offering petitioner the
alternative of installment payments. In fact, Mr. Callanan
revisited petitioner’s financial statement and determined that
because the amount of liabilities owed was $18,277.54, petitioner
could request an installment payment option. Mr. Callanan then
proposed an installment payment whereby petitioner would pay $375
per month. When Mr. Callanan presented this installment payment-
option to petitioner, it was summarily rejected.
The record is replete with examples of how Mr. Callanan was
more than accommodating to petitioner throughout his dealings
with him. In sum, we are convinced that Mr. Callanan verified
that applicable law and administrative procedures had been met,
and determined that the proposed collection action balanced the
need for the efficient collection of taxes with the legitimate
concern of the taxpayer that any collection action be no more
intrusive than necessary.
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For his part, petitioner has offered no credible evidence
showing that respondent’s determination was arbitrary,
capricious, or without sound basis in law. We therefore conclude
that these is no genuine issue of material fact and that
respondent is entitled to an entry of decision as a matter of
law.
Based upon our review of the relevant evidence and law in
this case, we sustain the determination of respondent to proceed
with the proposed collection action to collect petitioner’s
unpaid income tax liabilities for taxable years 1999 and 2000.
To reflect the foregoing,
An appropriate order and
decision will be entered for
respondent.