T.C. Summary Opinion 2009-195
UNITED STATES TAX COURT
LEEDREAU, LLC, LEONIA M. BOUDREAU, SOLE MEMBER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 30376-08S. Filed December 15, 2009.
Leonia M. Boudreau, for petitioner.
Molly H. Donohue, for respondent.
ARMEN, Special Trial Judge: This case was heard pursuant to
the provisions of section 7463 of the Internal Revenue Code in
effect when the petition was filed.1 Pursuant to section
7463(b), the decision to be entered is not reviewable by any
1
Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code, as amended, and all
Rule references are to the Tax Court Rules of Practice and
Procedure.
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other court, and this opinion shall not be treated as precedent
for any other case.
The instant case arises from a petition for judicial review
filed in response to a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330. The issue
presented is whether respondent may proceed with the collection
action as so determined. Before us now is respondent’s Motion
For Summary Judgment.
Background
Leonia M. Boudreau (Ms. Boudreau) resided in the State of
Massachusetts when the petition was filed. During the periods at
issue, Leedreau, LLC (the LLC), was a single-member limited
liability company validly created under Massachusetts law.
Ms. Boudreau was the sole member of the LLC during the
periods at issue. She did not elect to have the LLC treated as a
corporation for Federal income tax purposes. All references to
petitioner refer to the LLC and its sole member, Ms. Boudreau,
who are treated as a single taxpayer under the regulations as
discussed below.
Petitioner’s Tax Liability
The LLC failed to file Forms 941, Employer’s Quarterly
Federal Tax Return, for tax periods ended June 30, September 30,
and December 31, 2005; and March 31, June 30, September 30, and
December 31, 2006. In addition, the LLC failed to file a Form
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940, Employer’s Annual Federal Unemployment (FUTA) Tax Return,
for the tax period ended December 31, 2006.
Respondent generated Substitutes for Return pursuant to
section 6020(b) for these tax periods and, consistent with
existing procedures, assessed the taxes due.
Final Notices of Intent To Levy
On March 11, 2008, respondent issued a Final Notice--Notice
of Intent to Levy and Notice of Your Right to a Hearing with
regard to each of the tax periods at issue except the tax period
ended December 31, 2005.
On April 1, 2008, petitioner timely submitted a Form 12153,
Request for a Collection Due Process or Equivalent Hearing, in
respect of all of the tax periods at issue including the tax
period ended December 31, 2005. Petitioner requested the hearing
only on the basis that Ms. Boudreau was not a responsible officer
of the LLC.
On September 4, 2008, respondent issued a Final Notice--
Notice of Intent to Levy and Notice of Your Right to a Hearing
with regard to the tax period ended December 31, 2005.
On September 25, 2008, petitioner timely submitted a Form
12153 for the tax period ended December 31, 2005, again stating
only that Ms. Boudreau was not a responsible officer of the LLC.
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Administrative Developments
A settlement officer from respondent’s Appeals Office was
assigned to petitioner’s collection case for all of the tax
periods at issue.
By letter dated October 8, 2008, sent to both petitioner and
petitioner’s authorized representative, the settlement officer
scheduled a telephone conference for November 5, 2008. This
letter also stated that in order for the settlement officer to
consider a collection alternative, petitioner was required to
submit: A collection information statement; signed tax returns
for designated tax periods; and proof of Federal tax deposits for
one tax period.
Neither petitioner nor petitioner’s representative contacted
the settlement officer at the scheduled time for the conference
call. In addition, petitioner did not submit the requested
information to the settlement officer.
Ultimately, on November 21, 2008, respondent’s Appeals
officer issued a Notice of Determination Concerning Collection
Action(s) Under Section 6320 and/or 6330 sustaining respondent’s
proposed levy.
Petition
On December 17, 2008, Ms. Boudreau filed the petition. In
the petition Ms. Boudreau states that she disagrees with the
notice of determination on the basis that the liability is not
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her liability, as she was not a responsible officer of the LLC
and the operation was leased to a third party.
On February 6, 2009, respondent filed the Answer to the
petition.
Respondent’s Motion for Summary Judgment
On August 13, 2009, respondent filed the Motion For Summary
Judgment that is presently before the Court.
Hearing on Respondent’s Motion For Summary Judgment
The Court calendared for hearing respondent’s Motion For
Summary Judgment on September 23, 2009. Both parties appeared
and were heard. At the hearing petitioner filed an Objection to
respondent’s motion.
Respondent argues that because the LLC did not elect to be
treated as a corporation for Federal tax purposes, Ms. Boudreau,
as the sole member, is personally liable for the LLC’s tax
liabilities.
Ms. Boudreau argues that she should not be personally liable
for the LLC’s tax liabilities because she was not a responsible
officer of the LLC.2 Ms. Boudreau contends that the LLC was
leased to a third party who was permitted to use the taxpayer
identification number of the LLC. Ms. Boudreau further contends
2
In Petitioner’s Objection to Respondent’s Motion for
Summary Judgment, petitioner conceded that Ms. Boudreau was a
responsible officer for the period of Feb. 5, 2006, through Mar.
31, 2006.
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that this lessee is responsible for the tax liabilities of the
LLC pursuant to their lease agreement.
Discussion
A. Summary Judgment
Summary judgment is intended to expedite litigation and
avoid unnecessary 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 in
controversy “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).
After carefully reviewing the record, we are satisfied that
there is no genuine issue as to any material fact, and a decision
may be rendered as a matter of law. Accordingly, we shall grant
respondent’s Motion For Summary Judgment.
B. Respondent’s Proposed Levy
Section 6330 generally provides that the Commissioner cannot
proceed with collection by levy until the taxpayer has been given
notice and the opportunity for an administrative review of the
matter (in the form of an Appeals Office hearing) and, if
dissatisfied, with judicial review of the administrative
determination. See Davis v. Commissioner, 115 T.C. 35, 37
(2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).
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Section 6330(c) prescribes the matters that a taxpayer may
raise at an Appeals Office hearing. In sum, section 6330(c)
provides that a taxpayer may raise collection issues such as
spousal defenses, the appropriateness of the Commissioner's
intended collection action, and possible alternative means of
collection. Section 6330(c)(2)(B) provides that the existence
and amount of the underlying tax liability can be contested at an
Appeals Office hearing only if the person did not receive a
notice of deficiency for the tax in question or did not otherwise
have an earlier opportunity to dispute the tax liability. See
Sego v. Commissioner, 114 T.C. 604, 609 (2000); Goza v.
Commissioner, supra at 180-181.
Section 6330(d) grants the Court jurisdiction to review the
Appeals Office’s determination to proceed with collection action
via levy after the hearing. When rendering a judgment as a
matter of law, the standard of review makes no difference; we
must reject erroneous views of the law. McCorkle v.
Commissioner, 124 T.C. 56, 63 (2005).
Although petitioner was given the opportunity for an
administrative hearing, neither petitioner nor petitioner’s
representative called the settlement officer at the appointed
time. Petitioner has not alleged any spousal defenses,
challenged the appropriateness of collection actions, or proposed
any collection alternatives. Any such issue is now deemed to be
conceded. See Rule 331(b)(4) (“Any issue not raised in the
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assignments of error shall be deemed to be conceded.”). Ms.
Boudreau’s only contention is that she is not liable for the
taxes owed by the LLC because she was not a responsible officer
of the LLC.
C. Check-the-Box Regulations
Sections 301.7701-1 through 301.7701-3, Proced. & Admin.
Regs. (check-the-box regulations), provide rules for the
classification of business entities for Federal tax purposes.
These regulations provide rules and procedures for taxpayers to
choose the tax treatment of their business entity.
Upon formation, a business entity, such as a limited
liability company, with two or more members is treated as a
partnership unless it elects to be treated as a corporation.
Sec. 301.7701-3(b)(1)(I), Proced. & Admin. Regs. However, a
business entity with only one member is treated as a disregarded
entity unless it elects to be treated as a corporation separate
from its owner. Sec. 301.7701-3(b)(1)(ii), Proced. & Admin.
Regs. A single-member entity must make an affirmative election
on a Form 8832, Entity Classification Election, in order to be
treated as a corporation separate from its owner. Comensoli v.
Commissioner, T.C. Memo. 2009-242.
Petitioner does not challenge the validity of the check-the-
box regulations. In any event, this Court has previously held
those regulations to be valid in this context. See Med. Practice
Solutions, LLC v. Commissioner, 132 T.C. __ (2009). For
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employment taxes related to wages paid on or after January 1,
2009, a disregarded entity is treated as a corporation for
purposes of employment tax reporting and liability. Sec.
301.7701-2(c)(2)(iv), (e)(5), Proced. & Admin. Regs.; see Med.
Practice Solutions, LLC v. Commissioner, supra at __ (slip op. at
7). This amendment does not apply to the instant case.
During all of the taxable periods at issue Ms. Boudreau was
the sole member of the LLC. Ms. Boudreau never filed a Form 8832
to have the LLC treated as a corporation for Federal tax
purposes. Accordingly, the LLC is disregarded as an entity
separate from Ms. Boudreau pursuant to section 301.7701-
3(b)(1)(ii), Proced. & Admin. Regs. Thus, Ms. Boudreau is
personally liable for the taxes owed by the LLC. It is
irrelevant that Ms. Boudreau allowed a third party to use the
taxpayer identification number associated with her solely owned
LLC. Respondent is thereby authorized to collect the LLC’s
unpaid taxes from Ms. Boudreau by means of the levy.
To reflect the foregoing,
An order granting respondent’s
Motion For Summary Judgment and
decision for respondent will be
entered.