T.C. Memo. 2009-296
UNITED STATES TAX COURT
MABRIE L. AND MARGARET F. GILMER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19981-06L. Filed December 22, 2009.
Mabrie L. Gilmer and Margaret F. Gilmer, pro sese.
Marshall R. Jones, for respondent.
MEMORANDUM OPINION
WELLS, Judge: Respondent sent a Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330
(notice of determination) to petitioners with respect to a notice
of lien filed to collect petitioners’ unpaid Federal income tax
liabilities for tax years 1997 through 2003. In response,
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petitioners timely filed a petition pursuant to section 6330(d)1
seeking review of respondent’s determination. The issues to be
decided are: (1) Whether petitioners may raise issues relating
to the underlying tax liabilities for the taxable years in issue;
(2) whether, in refusing to withdraw the notice of Federal tax
lien, respondent’s Appeals officer abused her discretion; and (3)
whether petitioners may raise arguments relating to an abatement
of interest for the taxable years in issue.
Background
Some of the facts and certain exhibits have been stipulated.
The stipulations of fact are incorporated in this opinion and are
found accordingly.
At the time they filed their petition, petitioners resided
in Mississippi.
As of August 16, 2004, petitioners had not filed Federal
income tax returns for tax years 1997 through 2003.
On August 16, 2004, respondent filed substitute Federal
income tax returns (substitute returns), under section 6020(b),
for tax years 1997 through 2002 for petitioner Mabrie L. Gilmer
(Mr. Gilmer).2
1
Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended.
2
The parties appear to agree that respondent also filed
substitute returns for petitioner Margaret F. Gilmer for those
same years, but those returns are not in the record.
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On August 24, 2004, respondent sent Mr. Gilmer a Letter 950
(30-day letter) for tax years 1997 through 2002.3
On September 28, 2004, petitioners timely informed
respondent that they did not agree with the adjustments proposed
in respondent’s 30-day letter.
On January 20, 2005, petitioners filed joint Federal income
tax returns for tax years 1997 through 2002.
On February 17, 2005, petitioners signed a Form 4549, Income
Tax Examination Changes.
Petitioners consented to assessment of the following tax
liabilities for the 1997 through 2002 tax years:
Form 1040 Form 4549 Form 4549
Year tax liability tax increase penalty Total
1997 $17,887 $7,517 $1,879.25 $27,283.25
1998 27,233 23,736 5,933.75 56,902.75
1999 13,288 8,568 2,141.75 23,997.75
2000 9,763 20,484 4,869.50 35,116.50
2001 19,153 3,407 852.00 23,412.00
2002 15,708 (1,256) (314.00) 14,138.00
Total 103,032 62,456 15,362.25 180,850.25
On March 28, 2005, petitioners filed a joint Federal income
tax return for tax year 2003 and reported a total tax liability
of $19,177. Petitioners’ total agreed tax liability for tax
years 1997 through 2003 (including penalties for tax years 1997
through 2002) was $200,027.25.
3
It is not clear whether respondent also sent a 30-day
letter to petitioner Margaret F. Gilmer.
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On August 25, 2005, respondent filed, in Warren County,
Mississippi, a notice of Federal tax lien (NFTL) against
petitioners for tax years 1997 through 2003. On September 1,
2005, respondent sent to petitioners a Notice of Federal Tax Lien
Filing and Your Right to a Hearing Under IRC 6320 (NFTL notice)
with respect to petitioners’ tax liabilities for tax years 1997
through 2003. The NFTL notice listed petitioners’ unpaid tax
liabilities for tax years 1997 through 2003 as $194,867.78.
On September 30, 2005, petitioners timely submitted a Form
12153, Request for a Collection Due Process Hearing, in which
petitioners disputed the amounts of their tax liabilities for tax
years 1997 through 2003.
On April 11, 2006, petitioners and respondent participated
in a telephone hearing. During the hearing, petitioners raised
issues concerning the proper amount of their tax liabilities for
tax years 1997 through 2002. Petitioners claimed that the
amounts stated in the NFTL notice were greater than the amounts
of unpaid liabilities set forth in the Form 4549. The settlement
officer’s notes indicate that for tax years 1997 through 2001
respondent’s records erroneously reflected the tax liability
attributed to petitioner Margaret F. Gilmer in the SFR prepared
by respondent rather than reflecting the joint return liability
shown on the Form 4549. The settlement officer subsequently
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corrected petitioners’ outstanding liabilities, including the
associated penalties and interest.
By letter dated September 1, 2006, respondent sent
petitioners a notice of determination upholding the filing of the
NFTL.
By letter dated September 7, 2007, petitioners requested
that respondent “waive the penalties and interest charged against
us.”
Discussion
Section 6320(a)(1) requires the Commissioner to give any
person liable to pay tax (hereinafter referred to as a taxpayer)
written notice of the filing of a tax lien upon that taxpayer’s
property. The notice must inform the taxpayer of the right to
request a hearing in the Commissioner’s Appeals Office. Sec.
6320(a)(3)(B) and (b)(1). Section 6330(c), (d), and (e)
generally governs the conduct of a hearing requested under
section 6320. Sec. 6320(c).
At the hearing, the taxpayer may raise any relevant issues
including appropriate spousal defenses, challenges to the
appropriateness of collection actions, and collection
alternatives. Sec. 6330(c)(2)(A). However, the taxpayer may
challenge the underlying tax liability only if the taxpayer did
not receive a statutory notice of deficiency for the tax
liability and did not otherwise have an opportunity to dispute
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the tax liability. Sec. 6330(c)(2)(B). In addition to
considering issues raised by the taxpayer under section
6330(c)(2), the Appeals officer must also verify that the
requirements of any applicable law or administrative procedure
have been met. Sec. 6330(c)(1), (3).
Generally, this Court will not review issues raised under
section 6330(c)(2) if they were not raised at the Appeals
hearing. Giamelli v. Commissioner, 129 T.C. 107, 115 (2007).
This Court may, however, consider an issue raised by a taxpayer
under section 6330(c)(1) even if the issue was not raised at the
Appeals hearing. See Hoyle v. Commissioner, 131 T.C. (2008).
Where the validity of the underlying tax liability is
properly in issue, the Court will review the matter de novo.
Where the validity of the underlying tax is not properly in
issue, however, the Court will review the Commissioner’s
determination for abuse of discretion. Sego v. Commissioner, 114
T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 181-182
(2000).
Underlying Tax Liability
For purposes of section 6330(c)(2)(B), a taxpayer who has
waived his or her right to challenge the proposed assessments by
signing Form 4549 is deemed to have had the opportunity to
dispute the underlying tax liability and is precluded by such
waiver from challenging the underlying tax liability in the
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Appeals Office hearing or before this Court.4 Aguirre v.
Commissioner, 117 T.C. 324, 327 (2001). Because petitioners
signed Form 4549, they are deemed to have had the opportunity to
dispute the underlying tax liabilities reported in the Form 4549
for their tax years 1997 through 2002. Id. Accordingly,
petitioners may not dispute their underlying tax liabilities, as
stated on Form 4549, for their tax years 1997 through 2002.
Petitioners did not raise any issues concerning their Federal
income tax liability for tax year 2003 at the Appeals hearing.
Petitioners are thereby precluded from disputing their underlying
tax liability, as stated in their Federal income tax return, for
tax year 2003, see Giamelli v. Commissioner, supra at 115, except
insofar as the underlying liability deviates from those reflected
on the Form 4549, see Urbano v. Commissioner, 122 T.C. 384, 391-
392 (2004).
Determination To Sustain Notice of Federal Tax Lien
Petitioners contend that the NFTL should be withdrawn
because the amount shown on the NFTL is greater than the amount
that petitioners’ owe. Petitioners agreed, by signing Forms
1040, U.S. Individual Income Tax Return, and 4549, that their
4
A taxpayer could, however, challenge a liability that was
not reflected on the Form 4549. Urbano v. Commissioner, 122 T.C.
384, 391-392 (2004).
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total tax liability5 for tax years 1997 through 2003 was
$200,027.25.6 The NFTL notice indicated a lien amount of
$194,867.78. We conclude that the NFTL, at the time of filing,
was not significantly greater than petitioners’ outstanding
liability for tax years 1997 through 2003. Accordingly, we hold
that respondent’s settlement officer did not abuse her discretion
or err in determining that the NFTL was proper.
Petitioners also argue that respondent filed two NFTLs, each
totaling $194,867.78, against petitioners for the unpaid Federal
income tax liabilities for tax years 1997 through 2003.
Petitioners base their assertion on the fact that the lien
appears twice on their credit reports. Petitioners offer no
evidence to indicate that respondent actually filed the NFTL
twice as opposed to there being an error on their credit reports.
Accordingly, we hold that petitioners have not shown that
respondent filed the NFTL twice for the same tax liability.
Respondent’s settlement officer reviewed computer
transcripts of each of the taxable years in issue and concluded
that all requirements of applicable law were met. Petitioners
5
This includes penalties attributable to the 1997 through
2002 tax years but does not include any penalties attributable to
the 2003 tax year and does not include any accrued interest for
any of the years in issue.
6
It is not clear from the record exactly what petitioners’
balance, as decreased by withholdings and other payments and
increased by accrued interest and penalties, was at the time the
NFTL was filed.
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did not challenge, in their petition to this Court or in their
posttrial brief, the settlement officer’s verification of
compliance with applicable law.7 The settlement officer did not
consider a collection alternative for petitioners because
petitioners had indicated that they planned to submit an
offer-in-compromise in the future. The settlement officer
concluded that none of the conditions existed that would allow
withdrawal of a lien without full payment pursuant to section
6323(j). For the foregoing reasons, we hold that respondent’s
settlement officer did not abuse her discretion in determining
that respondent could proceed with collection of petitioners’
outstanding liabilities for tax years 1997 through 2003.
Abatement of Interest and Penalties
Petitioners have also requested an abatement of interest and
penalties. Section 6404(e) authorizes the Commissioner to abate
interest assessments that are attributable to errors or delays by
the Internal Revenue Service in performing ministerial or
7
Petitioners did assert in their posttrial brief that they
never received a notice of deficiency. Petitioners’ tax
liabilities were based on Federal income tax returns they filed
and amounts shown on Form 4549, which they signed, consenting to
immediate assessment and collection of the amounts shown thereon.
Accordingly, no notice of deficiency was required before the
assessment of the liabilities in issue, so the mailing of a
notice of deficiency was not a requirement of applicable law.
See sec. 6201; Manko v. Commissioner, 126 T.C. 195, 200 n.2
(2006); Aguirre v. Commissioner, 117 T.C. 324 (2001).
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managerial acts. Pursuant to section 6404(h),8 this Court has
jurisdiction to review the Commissioner’s failure to abate
interest (but not penalties) if such an action is brought within
180 days after the mailing of the Commissioner’s final
determination not to abate such interest. The Commissioner’s
final determination “is a prerequisite to the Court’s
jurisdiction and serves as a taxpayer’s ‘ticket’ to the Tax
Court.” Bourekis v. Commissioner, 110 T.C. 20, 26 (1998).
Petitioners’ request for abatement was sent to respondent in
September 2007, more than a year after respondent issued the
notice of determination that is in issue in the instant
proceeding. Accordingly, that notice of determination could not
possibly have been respondent’s final determination on an
abatement request that respondent had not yet received, and
therefore the abatement issue is not properly before the Court.9
8
The provision for Tax Court review of interest abatement
determinations was enacted as sec. 6404(g). Taxpayer Bill of
Rights 2 (TBOR 2), Pub. L. 104-168, sec. 302(a), 110 Stat. 1457
(1996). The provision was then redesignated after some of the
years in issue, first as sec. 6404(i) by the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
secs. 3305(a), 3309(a), 112 Stat. 743, 745, and then as sec.
6404(h) by the Victims of Terrorism Tax Relief Act of 2001, Pub.
L. 107-134, sec. 112(d)(1)(B), 115 Stat. 2435 (2002). The
provision as enacted and redesignated applies to requests for
abatement after July 30, 1996. TBOR 2 sec. 302(b), 110 Stat.
1458. To avoid confusion, references herein will be to the
current designation.
9
Because petitioners did not raise the issue of abatement
during the Appeals hearing, the instant case is distinguishable
(continued...)
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Giamelli v. Commissioner, 129 T.C. 107 (2007). Petitioners point
to nothing else in the record that could be construed as a final
determination by respondent on petitioners’ request for
abatement. Moreover, respondent’s failure to act on a request
for abatement within a reasonable time does not constitute a
final determination for section 6404(h) purposes. See Ward v.
Commissioner, T.C. Memo. 2007-374; Cho v. Commissioner, T.C.
Memo. 1998-363. Accordingly, we hold that this Court does not
have jurisdiction to consider petitioners’ request for abatement
of interest and penalties. See Giamelli v. Commissioner, supra.
To reflect the foregoing,
Decision will be entered
for respondent.
9
(...continued)
from Wright v. Commissioner, 571 F.3d 215 (2d Cir. 2009), revg.
T.C. Memo. 2006-273, which held that a notice of determination
issued after a sec. 6330 hearing may serve as a final
determination for purposes of sec. 6404(h) where abatement was
raised during the hearing. See also MacDonald v. Commissioner,
T.C. Memo. 2009-240.