T.C. Memo. 2008-213
UNITED STATES TAX COURT
PAUL L. AND CARYN ANN BRECHT, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11470-07L. Filed September 15, 2008.
Daniel A. Uribe, for petitioners.
Kim-Khanh Thi Nguyen, for respondent.
MEMORANDUM OPINION
MARVEL, Judge: This matter is before the Court on
respondent’s motion for summary judgment filed under Rule 121.1
1
All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code.
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Background
This is an appeal from respondent’s determination upholding
the use of a levy to collect petitioners’ unpaid Federal income
tax liabilities for 2000, 2001, and 2002. Petitioners resided in
California when the petition was filed.
Respondent determined deficiencies, additions to tax, and
penalties with respect to petitioners’ 1999, 2000, 2001, and 2002
Federal income tax and issued a notice of deficiency for those
years. In response petitioners timely filed a petition with the
Court at docket No. 22876-04 disputing respondent’s
determination. Appeals Officer Kevin Foist (Appeals Officer
Foist) was assigned to review petitioners’ case at docket No.
22876-04. On June 15, 2005, Appeals Officer Foist met with two
of petitioners’ representatives, Robert A. Concolino (Mr.
Concolino) and an unenrolled representative. At the meeting
petitioners’ representatives requested a full abatement of
interest and penalties. Appeals Officer Foist responded that “it
was unlikely that the interest would ever be abated.”
On August 5, 2005, Appeals Officer Foist sent Mr. Concolino
a letter enclosing a proposed decision document in docket No.
22876-04. The letter stated:
If you owe the Internal Revenue Service, the enclosed
decision document does not include interest. By law,
interest accrues from the due date of the return. If
you wish to stop or reduce interest on part or all of
the taxes, you can submit an advance payment * * *
along with your decision document * * *. The estimated
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total amount you owe as of June 30, 2005 is shown in
the enclosed audit statement.
The letter also enclosed a statement estimating the total
penalties and interest if petitioners paid the deficiencies by
June 30, 2005 (June 30, 2005, statement).
On August 15, 2005, petitioners signed the proposed decision
document in docket No. 22876-04. On September 26, 2005, the
Court entered the decision in docket No. 22876-04 (stipulated
decision). In the stipulated decision, the Court ordered and
decided that petitioners were liable for Federal income tax
deficiencies, additions to tax, and section 6662 penalties for
1999, 2000, 2001, and 2002. The stipulated decision that the
Court entered contained the following statement: “It is further
stipulated that interest will be assessed as provided by law on
the deficiencies & penalties due from petitioners.”
On February 27, 2006, respondent assessed the deficiencies,
additions to tax, penalties, and interest for 2000-022 in
accordance with the stipulated decision. On April 11, 2006, Mr.
Concolino sent Appeals Officer Foist a check dated March 13,
2006, for $139,979.80, representing “the total amount as set
forth on the Decision of the United States Tax Court dated
2
We assume that respondent also assessed petitioners’ 1999
tax liability (including the addition to tax, penalty, and
interest), but we do not have a Form 4340, Certificate of
Assessments, Payments, and Other Specified Matters, for 1999 in
the record.
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September 26, 2005”. The amounts set forth in the stipulated
decision consisted of the tax deficiencies, additions to tax, and
penalties for 1999-2002, but not interest. Appeals Officer Foist
acknowledged receipt of the check.
On June 17, 2006, respondent sent petitioners a Final Notice
of Intent to Levy and Notice of Your Right to a Hearing (notice)
in which respondent stated his intent to levy to collect
petitioners’ unpaid 2000, 2001, and 2002 tax liabilities.3
Petitioners timely submitted Forms 12153, Request for a
Collection Due Process Hearing, for those years, which stated
only that the “amount due was paid”.
On January 10, 2007, petitioners participated in a face-to-
face section 6330 hearing with Appeals Officer Teresa Peck
(Appeals Officer Peck). At the hearing petitioners argued only
that they paid the amounts due pursuant to the stipulated
decision. Petitioners did not propose a collection alternative
or submit any financial information on which Appeals Officer Peck
could have evaluated potential collection alternatives.
On January 10, 2007, Appeals Officer Peck sent petitioners a
letter explaining that the parties had agreed to the penalties in
the stipulated decision and that the decision contained an
acknowledgment that interest would be assessed. She also
3
The notice does not cover 1999 presumably because
respondent applied petitioners’ payment to satisfy the 1999 tax
liability in full.
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explained that petitioners could not request a redetermination of
the interest because they did not file a timely motion for
redetermination of interest under section 7481(c).4 On March 27,
2007, Ronald J. Channels (Mr. Channels), on behalf of
petitioners, replied to Appeals Officer Peck that petitioners had
paid the amount stated in the stipulated decision and that
respondent erred in assessing interest on petitioners’ 1999-2002
income tax deficiencies, additions to tax, and penalties. Mr.
Channels requested an explanation of respondent’s interest
calculation. On April 4, 2007, Appeals Officer Peck sent
petitioners a response letter and attached several interest and
penalty detail reports, the June 30, 2005, statement with
handwritten notes, and Notice 746, Information About Your Notice,
Penalty and Interest.
On April 16, 2007, respondent sent petitioners a Notice of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330 sustaining respondent’s proposed collection actions
for 2000, 2001, and 2002. On May 22, 2007, petitioners’ petition
was filed. In their petition petitioners challenge only
respondent’s assessment of interest on the 2000-02 income tax
deficiencies, additions to tax, and penalties.
4
Sec. 7481(c) provides generally that a taxpayer may file a
motion in the Court for a redetermination of interest within 1
year after the date the Court’s decision becomes final.
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On April 17, 2008, we issued petitioners a notice setting
their case for trial during the Court’s September 22, 2008, Los
Angeles, California, trial session. On July 23, 2008, respondent
filed the motion for summary judgment. On August 20, 2008,
petitioners filed their response.
Discussion
I. Summary Judgment
Summary judgment is a procedure designed to expedite
litigation and avoid unnecessary, time-consuming, and expensive
trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681
(1988). Summary judgment may be granted with respect to all or
any part of the legal issues presented “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(a) and
(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),
affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90
T.C. 753, 754 (1988). The moving party bears the burden of
establishing that there is no genuine issue of material fact, and
factual inferences will be drawn in a manner most favorable to
the party opposing summary judgment. Dahlstrom v. Commissioner,
85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340,
344 (1982). The nonmoving party, however, cannot rest upon the
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allegations or denials in his pleadings but must “set forth
specific facts showing that there is a genuine issue for trial.”
Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821.
II. Section 6330
Section 6330(a) provides that no levy may be made on any
property or right to property of any person unless the Secretary
has notified such person in writing of the right to a hearing
before the levy is made. If the person makes a request for a
hearing, a hearing shall be held before an impartial officer or
employee of the Internal Revenue Service Office of Appeals. Sec.
6330(b)(1), (3). At the hearing, a taxpayer may raise any
relevant issue, including appropriate spousal defenses,
challenges to the appropriateness of the collection action, and
collection alternatives. Sec. 6330(c)(2)(A). A taxpayer may
contest the existence or amount of the underlying tax liability
at the hearing if the taxpayer did not receive a notice of
deficiency for the tax liability in question or did not otherwise
have an earlier opportunity to dispute the tax liability. Sec.
6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609
(2000).
Following a hearing, the Appeals Office must determine
whether the proposed levy action may proceed. The Appeals Office
is required to take into consideration: (1) Verification
presented by the Secretary that the requirements of applicable
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law and administrative procedures have been met, (2) relevant
issues raised by the taxpayer, and (3) whether the proposed levy
action appropriately balances the need for efficient collection
of taxes with a taxpayer’s concerns regarding the intrusiveness
of the proposed levy action. Sec. 6330(c)(3).
Section 6330(d)(1) grants this Court jurisdiction to review
the determination made by the Appeals Office in connection with
the section 6330 hearing. Where the underlying tax liability is
not in dispute, the Court will review the determination of the
Appeals Office for abuse of discretion. Lunsford v.
Commissioner, 117 T.C. 183, 185 (2001); Sego v. Commissioner,
supra at 610; Goza v. Commissioner, 114 T.C. 176, 182 (2000). An
abuse of discretion occurs if the Appeals Office exercises its
discretion “arbitrarily, capriciously, or without sound basis in
fact or law.” Woodral v. Commissioner, 112 T.C. 19, 23 (1999).
Petitioners’ only argument throughout the section 6330
hearing process was directed to the interest assessed in
connection with the 2000-02 income tax deficiencies, additions to
tax, and penalties. Petitioners allege in their petition that
with regard to interest the respondent “failed to correctly apply
* * * the Internal Revenue Code in his determination to assess
the liability against the taxpayer”, and they allege in their
Forms 12153 only that the “amount due was paid”.
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We generally lack jurisdiction to determine the
appropriateness of the interest computed under section 6601,
except in two circumstances. Urbano v. Commissioner, 122 T.C.
384, 390 (2004). First, under section 7481(c), the Court may
redetermine an overpayment of interest if the taxpayer files a
motion with the Court within 1 year after the date a decision of
the Court becomes final. Id. Petitioners did not timely move
the Court for a redetermination of interest under section 7481(c)
or satisfy the section 7481(c) requirements.5 Second, we may
review the Commissioner’s denial of an abatement of interest
under section 6404(h). Id. Section 6404(e) authorizes the
Secretary to abate the assessment of interest attributable to an
unreasonable error or delay by the Internal Revenue Service in
performing a ministerial or managerial act.6 Although the Court
has jurisdiction to review the Appeals officer’s determination
regarding interest if a taxpayer requests an abatement of
interest in a section 6330 hearing, Katz v. Commissioner, 115
5
Sec. 7481(c)(2)(A)(ii) requires the taxpayer to have “paid
the entire amount of the deficiency plus interest” for the Tax
Court to have overpayment jurisdiction regarding interest.
Petitioners clearly did not satisfy this requirement.
6
Sec. 6404(e) was amended by the Taxpayer Bill of Rights 2,
Pub. L. 104-168, sec. 301, 110 Stat. 1457 (1996), to permit the
Secretary to abate interest with respect to an “unreasonable”
error or delay resulting from managerial and ministerial acts.
The amendment applies to interest accruing with respect to
deficiencies or payments for tax years beginning after July 30,
1996. Id.
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T.C. 329, 340-341 (2000), we will not consider an issue regarding
abatement of interest if it was not properly raised at the
section 6330 hearing and/or considered in the notice of
determination, Magana v. Commissioner, 118 T.C. 488, 493-494
(2002).
In their objection to respondent’s motion for summary
judgment, petitioners argue that they are entitled to an
abatement of interest under section 6404(e)(1). Although
petitioners and the Appeals officer apparently discussed the
appropriateness of the assessed interest as well as a general
request by petitioners to abate interest during the section 6330
hearing, petitioners do not allege that they actually made a
claim for abatement under section 6404(e) or that they presented
any information during the section 6330 hearing to support a
section 6404(e) abatement claim. Moreover, there is no
indication in the administrative record submitted with
respondent’s motion that petitioners presented any information to
the Appeals officer during the section 6330 hearing to establish
that they were entitled to abatement under section 6404(e), and
petitioners do not allege to the contrary in their objection to
respondent’s motion. We conclude, therefore, that petitioners
have failed to support their interest abatement request with
sufficient specificity to preserve the issue for Court review.
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See Poindexter v. Commissioner, 122 T.C. 280, 284-286 (2004),
affd. 132 Fed. Appx. 919 (2d Cir. 2005).7
The undisputed facts establish that during the section 6330
hearing process petitioners did not propose a collection
alternative or otherwise submit any financial information from
which Appeals Officer Peck could have evaluated potential
collection alternatives. The undisputed facts also establish
that, after reviewing the administrative record and determining
that the requirements of section 6330 had been satisfied, the
Appeals officer reasonably concluded that the collection action
could proceed. We find no abuse of discretion in her
determination.
7
In their objection to respondent’s motion, petitioners
allege only that the Internal Revenue Service (IRS) failed to
provide them with a specific payoff amount after the stipulated
decision was entered and that the IRS waited approximately 2
months after petitioners made their $139,979.80 payment to
attempt to collect interest. Even if we treat petitioners’
request as a sec. 6404 abatement claim and we accept these
statements as true for purposes of the summary judgment motion,
they are insufficient to support a claim for abatement under sec.
6404(e)(1), which authorizes an abatement of interest
attributable to an unreasonable error or delay by an officer or
employee of the IRS in performing a ministerial or managerial
act.
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We conclude on the record before us that there is no genuine
issue of material fact requiring a trial, and we hold that
respondent is entitled to the entry of a decision sustaining the
proposed levy as a matter of law.
An appropriate order and
decision will be entered.