T.C. Memo. 2010-18
UNITED STATES TAX COURT
GINN DOOSE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 29738-08L. Filed February 1, 2010.
Ginn Doose, pro se.
Catherine G. Chang, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COHEN, Judge: This case was commenced in response to a
notice of determination concerning collection action with respect
to petitioner’s liabilities for 2002, 2004, and 2005. The issue
for decision is whether the determination to proceed with a levy
was an abuse of discretion. All section references are to the
Internal Revenue Code.
- 2 -
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioner resided in California at the time her petition was
filed. For many years, she has been in an ongoing dispute with
the Internal Revenue Service (IRS) about whether her tax
liability for 1990 had been determined correctly. During 1990,
petitioner was involved in bankruptcy proceedings; she argues
that the assessment of tax for that year was precluded by the
bankruptcy and later barred by the statute of limitations.
During 2002, 2003, 2004, 2005, and 2007, petitioner’s wages
as a sales associate at WalMart were garnished to pay the
disputed 1990 liability. According to petitioner, the levy for
the 1990 tax finally terminated in September 2007.
On her Federal income tax returns for 2002, 2004, and 2005,
petitioner deducted from her reported wages the amounts that had
been garnished to pay the disputed liability for 1990. She
claimed as withheld taxes amounts deducted from her wages for
Social Security and Medicare. As a result, she claimed a refund
for each year, but the refunds were never paid.
Based on the wages reported by petitioner’s employer and
shown on forms and worksheets attached to each return, the IRS
corrected petitioner’s reported tax liability, disallowing the
deductions of garnished amounts and the claimed withholdings.
- 3 -
The amounts in dispute were assessed as mathematical errors for
2002 and 2005. A notice of deficiency was sent for 2004.
Petitioner contends that her mail has been tampered with since
1988 and that she did not receive the notice of deficiency or
many of the notices mailed to her before and during the IRS
Appeals process described below.
On June 23, 2008, the IRS sent to petitioner a Final Notice,
Notice of Intent to Levy and Notice of Your Right to a Hearing,
with respect to the corrected tax liabilities for 2002, 2004, and
2005. Petitioner denies that she received the notice, but she
did acknowledge receipt and respond to the notice in a Form
12153, Request for a Collection Due Process or Equivalent
Hearing, dated June 26, 2008. Although telephone calls and
correspondence followed, petitioner denies receiving much of the
correspondence.
Petitioner completed and faxed to the Appeals conferee
financial information on a Form 433-A, Collection Information
Statement for Wage Earners and Self-Employed Individuals. The
Appeals conferee reviewed the information and concluded, applying
national and local standards, that petitioner had $367 per month
to pay toward her Federal tax liabilities and suggested that she
request an installment agreement. By letter dated October 24,
2008, petitioner insisted that the garnishments were illegal and
that she wished to have the issue “decided in Court”.
- 4 -
Petitioner claimed in her October 24, 2008, letter that she
had filed suit against the IRS and the Attorney General and that
the suit was “ordered to go to trial”. Docket records of the
U.S. District Courts for the Northern District of California and
for the Central District of California disclose that 19 cases
commenced in those courts by petitioner against defendants
including Government entities between 1991 and 2007 were closed
as of October 24, 2008. One case in the Central District was
pending but was not set for trial. It was dismissed on March 19,
2009.
OPINION
During her communications with the Appeals conferee, during
pretrial proceedings, during trial, and in her posttrial brief,
petitioner has insisted that her 1990 tax was collected illegally
and that she had a right to the deductions claimed on her 2002,
2004, and 2005 returns. She has persisted in this claim
notwithstanding being advised to the contrary by the Appeals
conferee, respondent’s counsel, and the Court during trial. She
insists on relitigating her dispute about 1990, although she has
been advised repeatedly that the Court lacks jurisdiction over
issues involving that year. The arguments that she makes in this
case about the effect of the bankruptcy and the statute of
limitations applicable to that year are patently lacking in
merit. We mention them only because she has rejected the rulings
- 5 -
of other courts throughout the years in which her dispute with
the IRS has continued, and we have no illusion that she will
change her course in this case.
The errors in petitioner’s arguments are shown by the well-
established authorities cited in respondent’s pretrial memorandum
and ignored by petitioner. The applicable authorities were
summarized in Chambers v. Commissioner, T.C. Memo. 2000-218,
affd. 17 Fed. Appx. 688 (9th Cir. 2001), as follows:
It is well established that income from personal
services must be included in the gross income of the
person who renders the services. See Lucas v. Earl,
281 U.S. 111 (1930). Even if a taxpayer delivers the
payor’s check to a third party before cashing the
check, income earned by the taxpayer for services
rendered must be included in gross income. See United
States v. Allen, 551 F.2d 208 (8th Cir. 1977).
Moreover, if the taxpayer caused the check to be issued
directly to the third party, the taxpayer must include
the compensation in gross income. See Hicks v.
Commissioner, T.C. Memo. 1982-200, affd. 718 F.2d 1110
(9th Cir. 1983).
Lack of control over the earnings does not justify
exclusion of earnings from the employee’s gross income
used to pay an obligation of the employee. See Tucker
v. Commissioner, 69 T.C. 675, 678 (1978). An
employer’s payment of an obligation of the taxpayer is
equivalent to the taxpayer’s receipt of the income in
the amount paid. See Old Colony Trust Co. v.
Commissioner, 279 U.S. 716 (1929); Minor v.
Commissioner, T.C. Memo. 1998-237. Where the transfer
of funds at least partially discharges a legal
obligation of the taxpayer, the transfer is equivalent
to receipt by the taxpayer. See Helvering v. Horst,
311 U.S. 112, 116 (1940). The fact that the transfer
is involuntary, such as by garnishment, has no
significance. See Vorwald v. Commissioner, T.C. Memo.
- 6 -
1997-15 (taxpayer was required to include in income as
a distribution from his IRA amounts transferred from
his IRA to his former spouse in a garnishment
proceeding).
There is no reasonable dispute in this case concerning
petitioners’ underlying liabilities.
When she requested a hearing under section 6330, petitioner
might have offered collection alternatives, including the
installment arrangement suggested by the Appeals officer or an
offer-in-compromise. See sec. 6330(c). If she had pursued such
alternatives, her ability to pay would have been considered and
might have been negotiated. See secs. 6343(a)(1)(D) (providing
for release of a levy creating an economic hardship), 7122(d)(2)
(providing for compromise depending on allowances for basic
living expenses).
Although petitioner has suggested that she would suffer
economic hardship and be unable to pay her basic living expenses
if the levy is allowed to proceed, her pursuit of erroneous
arguments has distracted her from a possibly meritorious issue,
and she has failed to establish her eligibility for relief on
that ground. Cf. Vinatieri v. Commissioner, 133 T.C. ___ (2009).
Given her unrelenting pursuit of meritless arguments, a remand in
this case would not be productive.
To show an abuse of discretion, petitioner must establish
that the action of the Appeals conferee was arbitrary,
capricious, or without foundation in fact or law. See Giamelli
- 7 -
v. Commissioner, 129 T.C. 107, 111 (2007); Woodral v.
Commissioner, 112 T.C. 19, 23 (1999). It was not unreasonable
for the Appeals conferee to send the notice of determination in
response to petitioner’s persistence in her erroneous arguments
and her refusal to address collection alternatives, and we cannot
conclude that there was an abuse of discretion. In view of the
foregoing,
Decision will be entered
for respondent.