T.C. Memo. 2010-46
UNITED STATES TAX COURT
ALVIN S. KANOFSKY, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24784-08L. Filed March 11, 2010.
Alvin S. Kanofsky, pro se.
Alex Shlivko, for respondent.
MEMORANDUM OPINION
LARO, Judge: Petitioner petitioned the Court under section
6330(d) to review a determination of respondent’s Office of
Appeals (Appeals) sustaining a proposed levy upon petitioner’s
property.1 In Kanofsky v. Commissioner, T.C. Memo. 2006-79
1
Unless otherwise indicated, section references are to the
(continued...)
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(Kanofsky I), affd. 271 Fed. Appx. 146 (3d Cir. 2008), we
disallowed a portion of petitioner’s claimed trade or business
expenses for 1996 through 2000 on the grounds that the disallowed
expenses were unrelated to petitioner’s business activities and
upheld a portion of respondent’s determination of a section 6662
negligence penalty against petitioner. Following our decision in
Kanofsky I, respondent sought to levy on petitioner’s property to
collect approximately $56,270 in Federal income taxes for 1996
through 2000 (subject years).2 We decide whether Appeals abused
its discretion in sustaining the proposed levy. We hold it did
not.
Background
The parties’ stipulation of facts and the accompanying
exhibits are incorporated herein by this reference and are so
found.
I. Petitioner
Petitioner has been a full-time professor of physics at
Lehigh University since approximately 1967. He resided in
Bethlehem, Pennsylvania, when his petition was filed.
(...continued)
applicable version of the Internal Revenue Code.
2
We use the word “approximately” as these amounts were
computed before this proceeding and have since increased on
account of interest.
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II. Deficiency Litigation
A. Overview
For each subject year, petitioner filed a Federal income tax
return on which he reported on a Schedule C, Profit or Loss From
Business, expense deductions which offset any tax liability for
the year. Respondent issued to petitioner a notice of deficiency
which: (i) Disallowed most of petitioner’s claimed Schedule C
expense deductions; and (ii) determined a negligence penalty for
1997 under section 6662(a).
B. Court’s Decision and Subsequent Appeals
On July 16, 2004, petitioner petitioned the Court to
redetermine the disallowed trade or business expense deductions
and the negligence penalty. In Kanofsky I, we found mostly for
respondent, and in doing so, disallowed a portion of petitioner’s
claimed trade or business expenses and found petitioner liable
for the negligence penalty. We entered our decision on November
17, 2006, and on December 20, 2006, denied a motion by petitioner
to vacate or revise the decision.
Petitioner appealed our decision to the U.S. Court of
Appeals for the Third Circuit without filing a bond under section
7485 to stay assessment and collection. The Court of Appeals
affirmed our decision on April 1, 2008. Kanofsky v.
Commissioner, 271 Fed. Appx. 146 (3d Cir. 2008). On May 16,
2008, petitioner again sought relief from the Court of Appeals by
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filing a “Petition for Rehearing on Decision of April 1, 2008
Affirming U.S. Tax Court Decision”. On June 4, 2008, the Court
of Appeals denied the petition for rehearing.
Petitioner subsequently filed a petition for writ of
certiorari with the Supreme Court of the United States to review
the Court of Appeal’s judgment. Certiorari was denied on
December 8, 2008, Kanofsky v. Commissioner, 129 S. Ct. 741
(2008), and petitioner’s petition for rehearing with the Supreme
Court was denied on February 23, 2009, Kanofsky v. Commissioner,
129 S. Ct. 1406 (2009).
III. Respondent’s Collection Action
Respondent pursued collection against petitioner during
petitioner’s various appeals. On December 22, 2007, respondent
issued to petitioner a Final Notice of Intent to Levy and Notice
of Your Right to a Hearing (final levy notice) with respect to
the collection of petitioner’s outstanding income tax liabilities
for the subject years. The final levy notice provided petitioner
with an opportunity to request a collection due process hearing
(hearing) with Appeals, which petitioner requested on January 19,
2008, by filing Form 12153, Request for a Collection Due Process
or Equivalent Hearing. On the Form 12153 petitioner reported
that he disagreed with respondent’s proposed levy because his
case was “UNDER APPEAL WITH UNITED STATES COURT OF APPEALS FOR
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THE THIRD CIRCUIT.” Petitioner did not propose any collection
alternatives on that form.
IV. Hearing and Subsequent Correspondence
On July 11, 2008, Appeals mailed to petitioner a letter
which scheduled a telephone conference on August 11, 2008. That
letter, among other things, informed petitioner that if he
desired Appeals to consider collection alternatives, then
petitioner needed to provide respondent with a completed Form
433-A, Collection Information Statement for Wage Earners and
Self-Employed Individuals, with supporting documentation and to
file Federal income tax returns for 2006 and 2007. That letter
also advised petitioner that he should be prepared to discuss
collection alternatives. Petitioner subsequently requested a
correspondence hearing, and Appeals granted petitioner’s request.
On July 28, 2008, Appeals mailed to petitioner a letter
which again directed petitioner, to the extent he desired to
propose a collection alternative to the levy action, to submit
supporting documentation within 14 days. That letter recognized
that petitioner had appealed this Court’s decision to the Court
of Appeals for the Third Circuit and advised petitioner that
Appeals does not consider “irrelevant issues, such as moral,
religious, political, constitutional, conscientious, or similar
grounds.” Petitioner did not submit any documents supporting his
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position within the specified 14-day period, nor did he propose
any collection alternatives during that time.
On August 28, 2008, petitioner sent to respondent via
facsimile, a three-page letter stating that petitioner was unable
to provide “detailed comments” in response to the July 28, 2008,
letter. Petitioner did not propose any collection alternatives,
nor did he file the requested financial forms and missing tax
returns.
On September 8, 2008, respondent denied petitioner’s request
for relief from the proposed levy action by issuing to petitioner
a Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330 (notice of determination), with
attachment. The attachment stated that the proposed levy was
sustained because petitioner did not present any information to
dispute the appropriateness of the collection actions, nor did
petitioner submit a collection alternative. Appeals’ case
activity report, which is a written record of Appeals’ actions
during the hearing, references the purported claims of fraud and
corruption which petitioner asserted, and deems them irrelevant
to the hearing.
V. Current Case
On October 14, 2008, petitioner petitioned the Court to
determine whether Appeals abused its discretion in sustaining the
proposed levy on petitioner’s property. The Court held a hearing
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on October 19, 2009, during which petitioner was the only witness
called by either party.
Discussion
I. Overview
Where, as here, the underlying tax liability is not at
issue, we review an Appeals determination solely for abuse of
discretion. See Sego v. Commissioner, 114 T.C. 604, 610 (2000).
Abuse of discretion exists where Appeals acts arbitrarily,
capriciously, or without a sound basis in law or fact. Woodral
v. Commissioner, 112 T.C. 19, 23 (1999). Petitioner advances two
theories to support his argument that Appeals abused its
discretion: First, that respondent’s levy should have been
stayed because of petitioner’s appeals to the Court of Appeals
and the Supreme Court; and second, that Appeals should have been
more “cooperative” in its collection methods.3 We are not
persuaded by either argument.
3
Petitioner also advances numerous assertions and arguments
regarding fraud and corruption within the Pennsylvania
legislature and judiciary that, he states, impacted his ability
to be fairly treated. Those assertions and arguments relate to
the determination of petitioner’s underlying tax liabilities, an
issue which was the subject of Kanofsky I. Therefore, even if we
were to assume that these assertions are true, such arguments
relate to the determination of petitioner’s tax liabilities,
which the Court may not consider at this proceeding. See
Giamelli v. Commissioner, 129 T.C. 107, 114-115 (2007). Of
course, res judicata would otherwise appear to bar us from
considering the tax liability.
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II. Stay of Collection Action on Account of Appeal
The first issue petitioner raised concerns the
appropriateness of a collection action where the underlying tax
liability is the subject of a pending appeal. Petitioner argues
that Appeals abused its discretion by pursuing collection while
his appeal of Kanofsky I was still pending. We disagree.
Section 6213(a) bars the Commissioner from assessing a tax
liability until our decision becomes final, and section 7481
makes our decisions final when opportunities for appeal have been
exhausted. Section 7485(a)(1), however, supersedes section
6213(a) by providing that assessment shall not be stayed during
an appeal unless a taxpayer such as petitioner files a bond with
the Tax Court on or before the time his notice of appeal is
filed. See Burke v. Commissioner, 124 T.C. 189, 191 n.4 (2005);
Kovacevich v. Commissioner, T.C. Memo. 2009-160 n.4; see also
Home Group, Inc. v. Commissioner, 92 T.C. 940, 945-946 (1989)
(discussing the reasons behind enactment of section 7485). The
record does not indicate that petitioner posted bond before his
notice of appeal was filed or at any time. Accordingly,
petitioner is subject to immediate collection action on the
deficiency determined in Kanofsky I. See Inverworld, Ltd. v.
Commissioner, 979 F.2d 868, 872 (D.C. Cir. 1992), affg. 98 T.C.
70 (1992); Schroeder v. Commissioner, T.C. Memo. 2005-48; Hromiko
v. Commissioner, T.C. Memo. 2003-107.
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III. Appeals’ Cooperative Efforts in Installment Payment Program
Petitioner also contends that Appeals abused its discretion
in failing to be more “cooperative” in the collection of the
amounts to be levied. We disagree.
Before a taxpayer’s property may be levied upon, section
6330 requires the Commissioner to give the taxpayer notice of his
intent to levy and notice of the right to a fair hearing before
an impartial officer of Appeals. Secs. 6330(a) and (b), 6331(d).
At the hearing a taxpayer may challenge the appropriateness of
collection actions and offer collection alternatives. Sec.
6330(c)(2)(A)(ii) and (iii). At the hearing Appeals must
generally consider the above-stated issues raised by the
taxpayer, verify that the requirements of applicable law and
administrative procedure have been met, and consider whether “any
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.” Sec. 6330(c)(3).
We find that Appeals fully complied with its obligations to
petitioner under section 6330. Appeals verified that respondent
met the requirements of applicable law and administrative
procedure in assessing and demanding payment for the tax
liabilities petitioner owed, in issuing the final levy notice,
and in providing him with the hearing. Appeals was unable to
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consider any collection alternative because petitioner did not
make an offer or comply with its requests to provide the
financial information required to support any collection
alternative and to file delinquent tax returns.
Accordingly, petitioner has not shown that Appeals abused
its discretion in furthering its collection efforts by levying on
petitioner’s property.
IV. Conclusion
We conclude that Appeals did not abuse its discretion in
sustaining the notice of intent to levy, and we hold that
collection by levy may proceed. In so concluding, we have
considered all arguments made, and, to the extent that we have
not specifically addressed them we conclude that it is
unnecessary to do so or that they are without merit. To reflect
the foregoing,
Decision will be entered
for respondent.