T.C. Memo. 2010-98
UNITED STATES TAX COURT
MEDICAL PRACTICE SOLUTIONS, LLC, CAROLYN BRITTON, SOLE MEMBER,
Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 14664-08L. Filed May 4, 2010.
Carolyn Britton, pro se.
Nina P. Ching, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
GUSTAFSON, Judge: This case is an appeal under
section 6330(d)1 by petitioner Medical Practice Solutions, LLC
*
This opinion supplements Med. Practice Solutions, LLC v.
Commissioner, T.C. Memo. 2009-214.
1
Except as otherwise noted, all section references are to
(continued...)
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(the LLC), brought by its sole member Carolyn Britton.
Ms. Britton seeks our review of the determination by the Internal
Revenue Service (IRS) to sustain the filing of a notice of
Federal tax lien and to uphold a proposed levy against
Ms. Britton in order to collect from her the employment tax
liabilities of the LLC for the three taxable quarters ending
September 30, 2006, December 31, 2006, and June 30, 2007. Her
arguments here include some that we rejected in her prior suit,
Med. Practice Solutions, LLC, Carolyn Britton, Sole Member v.
Commissioner, 132 T.C. 125, 126 (2009), on appeal (1st Cir., July
13, 2009) (hereinafter, Medical Practice I). After our remand,2
the case is before us on the parties’ cross-motions for summary
judgment. We will deny Ms. Britton’s motion and grant
respondent’s motion.
1
(...continued)
the Internal Revenue Code (Code, 26 U.S.C.), and all Rule
references are to the Tax Court Rules of Practice and Procedure.
2
The parties originally submitted this case as fully
stipulated pursuant to Rule 122. We decided that respondent’s
Office of Appeals had abused its discretion in determining to
proceed with collection without verifying that all legal and
procedural requirements had been met (as section 6330(c)(1)
requires), and we remanded the case to the Office of Appeals to
clarify the record as to that verification. See Med. Practice
Solutions, LLC v. Commissioner, T.C. Memo. 2009-214. After
conducting a supplemental hearing, the Office of Appeals issued a
supplemental notice of determination stating that a verification
had been made. The parties have now briefed that verification
issue and have renewed their arguments about the additional
issues in the case.
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Background
At the time Ms. Britton filed her petition, she resided in
Massachusetts.
Assessment and non-payment of self-reported payroll taxes
Ms. Britton was the sole member3 of the LLC for the calendar
quarters ending September 30, 2006, December 31, 2006, and
June 30, 2007. She does not allege that she elected to treat the
LLC as a corporation (and she previously stipulated, Medical
Practice I, 132 T.C. at 126, that she did not elect to treat the
LLC as a corporation). Ms. Britton timely filed the LLC’s Forms
941, Employer’s Quarterly Federal Tax Return, for each of those
quarters. As in Medical Practice I, id., those returns named not
Ms. Britton personally but “MEDICAL PRACTICE SOLUTIONS LLC” as
the taxpayer. The returns gave the LLC’s employer identification
number (EIN) and its business address in Beverly, Massachusetts.
Ms. Britton signed the first two of those returns, and
3
Ms. Britton does not deny that she was the sole member of
the LLC. On the contrary, she stipulated the fact in Medical
Practice I, 132 T.C. at 126; and on the signature block on her
opposition in this case she identifies herself as “Carolyn
Britton, Sole Member” (as she has done in her filings in this
case since March 4, 2009). However, Ms. Britton submitted with
her opposition and cross-motion the declaration of her
representative and husband, Randy Britton, who states that he did
not ever tell the appeals officer how many members there were.
Nonetheless, the settlement officer concluded in the first CDP
hearing that Ms. Britton was the sole member; the notices of
determination identified her as “SOLE MBR”; and Ms. Britton does
not claim that she disputed the settlement officer’s conclusion
at any time in the original or supplemental hearing.
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Ms. Britton’s husband Randy Britton signed the third as “Power of
Attorney”. As in Medical Practice I, id., the LLC left unpaid
some of the tax liabilities reported on each of those returns.
The IRS duly assessed the liabilities under the LLC’s name and
EIN.4 On various dates in 2007 the IRS gave Ms. Britton notice
of the balances due for the three quarters.
IRS collection activity
On December 10, 2007, the IRS issued a Final Notice of
Intent to Levy and Notice of Your Right to a Hearing for the two
quarters ending December 31, 2006, and June 30, 2007;5 and on
December 18, 2007, the IRS issued a Notice of Federal Tax Lien
Filing and Your Right to a Hearing Under IRC 6320 for the three
quarters ending September 30, 2006, December 31, 2006, and June
30, 2007. As in Medical Practice I, id., the notices were issued
not to the LLC but to Ms. Britton. However, the notices were
sent not to Ms. Britton’s home address in Lexington but to the
Beverly address; but Ms. Britton did receive the notices. The
notices referred to the LLC’s EIN and identified the liabilities
4
Ms. Britton contends that the record does not show
assessments against the LLC, but the self-authenticating
Forms 4340, Certificate of Assessments, Payments, and Other
Specified Matters, which the appeals officer provided to
Ms. Britton during the supplemental hearing, plainly show the
assessments.
5
The record does not show why the notice of intent to levy
covered only two periods, while the notice of Federal tax lien
covered three periods.
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as arising from Forms 941. The notices informed Ms. Britton of
her right to request a collection due process (CDP) hearing
before the IRS’s Office of Appeals and enclosed for that purpose
blank Forms 12153, Request for a Collection Due Process or
Equivalent Hearing.
Before Ms. Britton’s CDP hearing was conducted by the IRS
Office of Appeals (discussed below), IRS collection personnel
continued their work on her liabilities to some extent.
Beginning January 16, 2008, collection personnel corresponded
with Ms. Britton’s husband about the Brittons’ request that the
lien on her home be released, because (the Brittons alleged)
Ms. Britton had no equity in the house, since Ms. Britton owed a
mortgage to Mr. Britton. According to the collection personnel’s
record, Ms. Britton alleged that she “gave her husband Randy a
$100,000 mortgage after the LLC taxes accrued and were assessed,
and one week before the NFTL [notice of Federal tax lien] was
recorded”, but “Mr. Britton did not provide proof that there was
actual transfer of value in exchange for the mortgage granted to
him”. In late January the collection personnel decided not to
discharge the lien, and on February 6, 2008, the IRS sent the
Brittons a letter advising them that their application for a
discharge was not accepted.
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CDP proceedings
Ms. Britton timely requested a collection due process (CDP)
hearing before the Office of Appeals with respect to both
collection notices by submitting to the IRS on January 9, 2008, a
Form 12153.6 The Form 12153 names Ms. Britton as the person
requesting the hearing, gives the LLC’s EIN, states the Beverly
address, and refers to the Form 941 liabilities. Ms. Britton did
not propose a collection alternative on her Form 12153 but rather
requested withdrawal of the lien and requested penalty abatement.
As in Medical Practice I, 132 T.C. at 126-127, she argued in her
Form 12153 that the “[c]ollection action is against the wrong tax
payer [sic]; the IRS check the box rules are invalid”.
On February 19, 2008, an IRS appeals officer7 sent a letter
to Ms. Britton scheduling her CDP hearing before the Office of
Appeals for March 4, 2008. The letter was addressed to--
6
The Form 12153 bore Ms. Britton’s name (not the name of the
LLC) and was signed by Ms. Britton’s husband and attorney-in-
fact, Randy Britton.
7
The employee who conducted the CDP hearing is identified in
the hearing record as a “settlement officer”. Section 6330(c)(1)
and (c)(3) refers to the person who conducts the CDP hearing as
an “appeals officer”; but section 6330(b)(3) refers to the person
as “an officer or employee”, and section 6330(b)(1) and (d)(2)
refers more generally to the “Internal Revenue Service Office of
Appeals”. We use the statutory term “appeals officer” throughout
this opinion.
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MEDICAL PRACTICE SOLUTIONS LLC
CAROLYN BRITTON SOLE MBR
--at the Beverly address. On March 3, 2008, Ms. Britton’s
husband and representative requested a face-to-face hearing. To
accommodate this request the appeals officer rescheduled the CDP
hearing to March 6, 2008. On March 6, 2008, the CDP hearing was
held between Mr. Britton and the appeals officer. Mr. Britton
disputed whether the notice of lien was properly filed under
section 6323 because it listed Ms. Britton and her personal
address, but the notice required by section 6320 was sent to the
Beverly address. The appeals officer advised Mr. Britton that he
would look into the lien issue. Mr. Britton inquired about an
installment agreement, but he did not propose one. As a result,
the appeals officer advised Mr. Britton that Ms. Britton had
until April 9, 2008, to provide proof of the LLC’s compliance
with filing and payment obligations and to propose any collection
alternatives for consideration.
Following the CDP hearing, the appeals officer researched
the lien issue and determined that the lien had been properly
filed against Ms. Britton because the LLC is a disregarded
entity. During the course of the appeals officer’s research he
discovered that Ms. Britton had petitioned this Court (i.e., in
Medical Practice I, docket No. 14668-07L) with respect to a
notice of determination for prior tax periods of the LLC. Those
other periods were still under the jurisdiction of the IRS’s
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Office of Chief Counsel and this Court. As a result, the appeals
officer phoned Ms. Britton’s attorney-in-fact to inform him that
the IRS’s Office of Appeals could not consider any collection
alternatives because of the pending CDP appeal with respect to
the other periods. Furthermore, the appeals officer determined
in his final review of Ms. Britton’s case on April 22, 2008, that
even apart from the pending CDP appeal, Ms. Britton would not be
eligible for any collection alternatives because the LLC was not
current with Federal tax deposit requirements.
On May 9, 2008, the Office of Appeals issued two Notices of
Determination Concerning Collection Action(s) Under Section 6320
and/or 6330: one sustaining the filing of the notice of Federal
tax lien for tax periods ending September 30, 2006, December 31,
2006, and June 30, 2007, and one sustaining the proposed levy to
collect the unpaid taxes for tax periods ending December 31,
2006, and June 30, 2007. As in Medical Practice I, both notices
were “sent to Britton as the sole member of the LLC”. 132 T.C.
at 127. That is, the name of the recipient stated on the notice
was--
MEDICAL PRACTICE SOLUTIONS LLC
CAROLYN BRITTON SOLE MBR
--and the address used for the notice was the Beverly address.
In attachments to the notices, the appeals officer stated:
“With the best information available, the requirements of various
applicable law or administrative procedures have been met”.
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However, the attachments to the notices did not describe the
“best information available” that the appeals officer used to
verify that the requirements had been met. The attachments do
state that “[t]ranscripts of the taxpayer’s accounts show the
Service Center issued [notice and demand]” for payment. However,
the attachments do not indicate that transcripts were also
consulted to verify that proper assessments had been made.
Prior proceedings in this case
On June 16, 2008, Ms. Britton timely petitioned this Court
to review the notices of determination. The petition alleges
seven points of error that can be grouped into the following four
issues (which we discuss below in parts II.A through II.D):
(A) whether the appeals officer obtained the requisite
verification that “applicable law or administrative
procedure” had been satisfied under section
6330(c)(1);8
(B) whether Ms. Britton is personally liable for the tax
liabilities of the LLC;
(C) whether the appeals officer erred in refusing to
consider a collection alternative; and
8
We construe broadly the petition of Ms. Britton as a pro se
litigant. See Rule 31(d); Swope v. Commissioner, T.C. Memo.
1990-82. The petition’s references to defects in the assessment
and in the issuance of notices and to lack of “proper procedure”
were sufficient to plead a dispute as to whether verification was
obtained as required by section 6330(c)(1).
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(D) whether the lien on Ms. Britton’s house should have
been released given her alleged lack of equity in it.9
On March 16, 2009, the parties jointly moved under Rule 122
that the case be decided on the basis of a stipulated record. We
found that the stipulated record showed verification of only one
of the four legal and administrative requirements that should
have been verified (i.e., it showed that Ms. Britton was given
notice of intent to levy, see secs. 6330(a)(1), 6331(d)(1), and
notice of the filing of a Federal tax lien, see sec. 6320(a)(1),
and of her right to a hearing, see secs. 6320(a)(3)(B),
6330(a)(3)(B), 6331(d)(4)(C)). However, we found that the record
did not show verification of the other three requirements (i.e.,
the IRS’s timely assessment of the liability, see
secs. 6201(a)(1), 6501(a); the taxpayer’s failure to pay the
liability, see secs. 6321, 6331(a); and the giving to the
taxpayer of notice and demand for payment of the liability, see
sec. 6303, before any levy, see sec. 6331(a)). Consequently, we
did not address issues (B), (C), and (D) above. Rather, by our
9
We previously stated that Ms. Britton did not raise her
contention as to equity in her home in her Form 12153 (requesting
the CDP hearing) nor at the CDP hearing. Med. Practice
Solutions, LLC v. Commissioner, T.C. Memo. 2009-214 n.7.
Respondent allows, however, that if her Form 12153 is “liberally
constru[ed]”, then the issue may have been implicitly raised in
the contention in Form 12153 that “the filing of the notice [of
lien] was * * * not in accordance with administrative
procedures”. We therefore assume that the issue was raised in
Ms. Britton’s request for a CDP hearing, and we discuss it below
in part II.D.
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order of September 16, 2009, we remanded the case to the Office
of Appeals so that it could “clarify the record as to
verification”.
Compliance with the order of remand
The appeals officer who had conducted the first CDP hearing
had retired, and a different appeals officer was appointed to
conduct the supplemental hearing. She examined the file
developed during the first CDP hearing, and she found transcripts
and other documents that had been consulted by the prior appeals
officer. She concluded that the documents showed the prior
appeals officer had verified the fulfillment of the legal and
administrative requirements.
The appeals officer also did her own independent review and
verified that the legal and administrative requirements had been
satisfied. On November 3, 2009, she mailed to Mr. and
Ms. Britton copies of a Form 4340 for each of the periods, each
of which shows a timely assessment, an unpaid balance, and the
mailing of a “Statutory Notice of Balance Due” before the mailing
of a “Statutory Notice of Intent to Levy” and “Federal Tax Lien”.
The Forms 4340 identify the taxpayer as--
MEDICAL PRACTICE SOLUTIONS LLC
BRITTON CAROLYN SOLE MBR
--and they all bear the LLC’s EIN. Having thus obtained the
verification required by section 6330(c)(1), the Office of
Appeals issued a supplemental notice of determination.
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The parties reported on their compliance with the Court’s
remand order, and they then cross-moved for summary judgment.
Discussion
I. Applicable legal principles
A. Collection review principles
1. Agency-level action
If a taxpayer fails to pay any Federal income tax liability
after notice and demand, chapter 64 of the Code provides two
means by which the IRS can collect the tax: First, section 6321
imposes a lien in favor of the United States on all the property
of the delinquent taxpayer, and section 6323(f) authorizes the
IRS to file notice of that lien. Second, section 6331(a)
authorizes the IRS to collect the tax by levy on the taxpayer’s
property.
However, Congress has added to chapter 64 of the Code
certain provisions (in subchapter C, part I, and in subchapter D,
part I) as “Due Process for Liens” and “Due Process for
Collections”. The IRS must comply with those provisions after
filing a tax lien and before proceeding with a levy. Within five
business days after filing a tax lien, the IRS must provide
written notice of that filing to the taxpayer. Sec. 6320(a).
After receiving such a notice, the taxpayer may request an
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administrative hearing before the Office of Appeals.10
Sec. 6320(b)(1). Similarly, before proceeding with a levy, the
IRS must issue a final notice of intent to levy and notify the
taxpayer of the right to an administrative hearing before the
Office of Appeals. Sec. 6330(a) and (b)(1). Administrative
review is carried out by way of a hearing before the Office of
Appeals under section 6330(b) and (c); and if the taxpayer is
dissatisfied with the outcome there, it can appeal that
determination to this Court under section 6330(d), as Ms. Britton
has done.
The pertinent procedures for the agency-level CDP hearing
are set forth in section 6330(c). First, the appeals officer
must obtain verification from the Secretary that the requirements
of any applicable law or administrative procedure have been met.
Sec. 6330(c)(1) (discussed below in part II.A). Second, the
taxpayer may “raise at the hearing any relevant issue relating to
the unpaid tax or the proposed levy,” including challenges to the
appropriateness of the collection action and offers of collection
alternatives. Sec. 6330(c)(2)(A). (Such issues are discussed
below in parts II.C, II.D, and II.E.) Additionally, the taxpayer
may contest the existence and amount of the underlying tax
10
To the extent practicable, a CDP hearing concerning a lien
under section 6320 is to be held in conjunction with a CDP
hearing concerning a levy under section 6330, and the conduct of
the lien hearing is to be in accordance with the relevant
provisions of section 6330. See sec. 6320(b)(4), (c).
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liability, but only if he did not receive a notice of deficiency
or otherwise have an opportunity to dispute the tax liability.
Sec. 6330(c)(2)(B). (Ms. Britton’s challenge of the underlying
liability is discussed below in part II.B.) After considering
those issues, the Office of Appeals issues its notice of
determination. See sec. 6330(c)(3).
2. Judicial review
If the taxpayer is not satisfied with the determination of
the Office of Appeals, the taxpayer may “appeal such
determination to the Tax Court”. Sec. 6330(d)(1). Where
underlying liability is at issue (pursuant to section
6330(c)(2)(B)), we review de novo the determination of the Office
of Appeals as to the underlying tax liability. We review IRS
determinations of issues other than liability for abuse of
discretion, Goza v. Commissioner, 114 T.C. 176, 182 (2000)--that
is, whether the determination was arbitrary, capricious, or
without sound basis in fact or law, see Murphy v. Commissioner,
125 T.C. 301, 320 (2005), affd. 469 F.3d 27 (1st Cir. 2006); Sego
v. Commissioner, 114 T.C. 604, 610 (2000).
This Court has held that an appeal pursuant to section 6330
is resolved by a de novo trial, Robinette v. Commissioner, 123
T.C. 85 (2004), revd. 439 F.3d 455 (8th Cir. 2006), but the Court
of Appeals for the First Circuit follows the “record rule”. That
is, subject to “limited exceptions”, “the administrative record
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rule * * * applies to a taxpayer’s CDP hearing appeal to the Tax
Court”, so that the Tax Court “could not consider evidence
outside of the administrative record in ruling on a taxpayer’s
CDP hearing appeal”, and “judicial review normally should be
limited to the information that was before the IRS when making
the challenged rulings.” Murphy v. Commissioner, 469 F.3d at 31.
In this case, because an appeal would lie to the U.S. Court of
Appeals for the First Circuit, we follow its precedent. See
Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985
(10th Cir. 1971). Consistent with Murphy, respondent’s motion
for summary judgment relies solely on the record of the CDP
hearing.
B. Summary judgment standards
Where the pertinent facts are not in dispute, a party may
move for summary judgment to expedite the litigation and avoid an
unnecessary trial. Fla. Peach Corp. v. Commissioner, 90 T.C.
678, 681 (1988). Summary judgment may be granted where there is
no genuine issue as to any material fact and a decision can be
rendered as a matter of law. Rule 121(a) and (b); see Sundstrand
Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965
(7th Cir. 1994).
The party moving for summary judgment bears the burden of
showing that there is no genuine issue as to any material fact,
and factual inferences will be drawn in the manner most favorable
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to the party opposing summary judgment. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985). Respondent’s motion
carries that burden and is fully supported by the appeals
officer’s declaration and by the Forms 4340, which are self-
authenticating under Rule 902(11) of the Federal Rules of
Evidence.
II. Respondent’s entitlement to summary judgment
Respondent has shown that there is no genuine issue as to
any material fact and that he is entitled to judgment as a matter
of law. We discuss here the issues that Ms. Britton has raised,
none of which effectively contradicts respondent’s showing.
A. Respondent has shown verification as required by
section 6330(c)(1).
Section 6330(c)(1) requires the appeals officer conducting a
CDP hearing to “verify that the requirements of any applicable
law or administrative procedure have been met.” Hoyle v.
Commissioner, 131 T.C. 197, 199, 201-203 (2008). In the case of
a self-reported tax liability, the basic legal requirements for
which the appeals officer must obtain verification in order to
sustain the filing of a notice of Federal tax lien or to
determine to proceed with a levy are:
• the IRS’s timely assessment of the liability,
secs. 6201(a)(1), 6501(a);
• the taxpayer’s failure to pay the liability,
secs. 6321, 6331(a);
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• the giving to the taxpayer of notice and demand for
payment of the liability, sec. 6303, before any levy,
sec. 6331(a); and
• the giving to the taxpayer of notice of intent to levy,
secs. 6330(a)(1), 6331(d)(1), or notice of the filing
of a Federal tax lien, sec. 6320(a)(1), and of the
taxpayer’s right to a hearing, secs. 6320(a)(3)(B),
6330(a)(3)(B), 6331(d)(4)(C).
We previously found that the documents from the initial CDP
hearing that were put into the record of this case by the
stipulation of the parties did not show verification of the first
three of those requirements, and we remanded the case to the
Office of Appeals to clarify those matters.
Respondent has now demonstrated that the verification was
obtained--i.e., that the IRS made timely assessments, that it
gave Ms. Britton notice and demand for payment, that Ms. Britton
did not fully pay the liabilities, and that the IRS gave her
notice of the lien and the proposed levy and of her right to a
hearing. At the supplemental hearing, the appeals officer both
reconstructed the information available at the original CDP
hearing (which she confirmed by reviewing documents in the
administrative record that had not previously been included in
our record in this appeal) to confirm that these requirements
were verified at that hearing and made her own verification of
these requirements with, inter alia, updated information on
Forms 4340 from the IRS’s records. Respondent’s motion sets out
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in detail, with citations of the IRS’s records, its compliance
with the applicable requirements.
Ms. Britton suggests no error in respondent’s analysis.
Rather, her principal contention as to verification is in effect
a restatement of her contention that she is not liable for the
LLC’s employment taxes. That is, she contends that the Office of
Appeals did not obtain verification that the liabilities had been
assessed against her, rather than against the LLC. We now turn
to that contention.
B. Ms. Britton and the LLC are not distinct taxpayers, and
she is liable for its taxes.
As is noted above, section 6330(c)(2)(B) permits some
taxpayers to “raise at the [CDP] hearing challenges to the
existence or amount of the underlying tax liability”, and
respondent does not dispute that Ms. Britton was eligible to
raise such challenges at her hearing. Ms. Britton makes several
related arguments that challenge her liability, and they all rest
on her insistence that she and the LLC are distinct taxpayers
with distinct liabilities and the right to distinct notices and
filings. This premise, however, is flawed both as a matter of
law and as a matter of fact.
As for the law, Ms. Britton attempts to dispute here the
validity of the “check-the-box” regulations, 26 C.F.R. section
301.7701-3(b), Proced. & Admin. Regs., pursuant to which an LLC
that does not elect corporate status is treated as a disregarded
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entity. In Ms. Britton’s prior case, however, we held that the
regulation is valid and that when a single-member LLC fails to
pay its employment taxes, collection may proceed against the
single member as if “the LLC and its sole member are a single
taxpayer or person to whom notice is given.” Medical Practice I,
132 T.C. at 127.11
Consequently, Ms. Britton’s arguments about the liability of
the LLC versus her own liability, or assessments being made
against the LLC and not herself, or the use of the LLC’s EIN
rather than her Social Security number, or the presence of both
her name and the LLC’s name on the demand for payment and the
Forms 4340, or notices of the lien and of the proposed levy being
given to herself rather than to the LLC--all of these arguments
fail because Ms. Britton and the LLC are, as we explicitly held,
“a single taxpayer or person to whom notice is given.” Id. When
the IRS thereafter issued notices of lien and proposed levy to
Ms. Britton, it addressed the correct taxpayer. When the Office
of Appeals sustained the lien and proposed levy in notices of
11
Our decision in Medical Practice I aligned itself with
uniform authority, including the judgment of two Courts of
Appeals. See McNamee v. Dept. of the Treasury, 488 F.3d 100 (2d
Cir. 2007); Littriello v. United States, 484 F.3d 372 (6th Cir.
2007). We note, however, that for employment taxes related to
wages paid on or after January 1, 2009 (i.e., after the periods
in issue), a disregarded entity is treated as a corporation for
purposes of employment tax reporting and liability. 26 C.F.R.
sec. 301.7701-2(c)(2)(iv), Proced. & Admin. Regs.
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determination issued to Ms. Britton as sole member of the LLC, it
made no mistake.
Ms. Britton seems to lay special stress on the fact that
respondent “admits” that the IRS “only assessed the tax liability
against MPS under its Employee Identification Number”, rather
than under Ms. Britton’s number. However, the IRS’s issuance of
an Employer Identification Number does not necessarily indicate
the existence of a distinct taxpayer. On the contrary, some
individuals have “both a social security number * * * and an
employer identification number”. 26 C.F.R. sec. 301.6109-
1(d)(4)(ii), Proced. & Admin. Regs.12 An individual who is an
employer or a sole proprietor is instructed to apply for and use
an EIN for use in the employment context. See 26 C.F.R.
sec. 31.6011(b)-1(a)(ii), Employment Tax Regs.; sec. 301.6109-
1(a)(ii)(D), Proced. & Admin. Regs. Ms. Britton put the LLC’s
EIN on the returns, thereby inducing the IRS to record the
employment tax assessments under that number. She could not, by
that act, frustrate the principle that a disregarded entity’s
employment tax liability is the liability of the LLC’s sole
12
“Social security number” is defined in 26 C.F.R.
sec. 301.7701-11, Proced. & Admin. Regs., and “employer
identification number” is defined in 26 C.F.R. sec. 301.7701-12,
Proced. & Admin. Regs. See also 26 C.F.R. sec. 301.6109-1(a)(1),
Proced. & Admin. Regs. (describing the principal types of
taxpayer identifying numbers).
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member. If her use of that EIN was a technical error,13 it was
her error; and she could not by such an error avoid her liability
for employment taxes. Consequently, when the IRS assessed the
employment taxes under the LLC’s EIN, Ms. Britton became liable.
As for the facts, there can be no plausible suggestion that
Ms. Britton was confused or misled about the IRS’s assertion of
her liability for the LLC’s employment taxes. She signed and
filed two of the LLC’s three Form 941 returns that gave rise to
the liabilities, and her husband and representative signed the
third. On her own Form 12153 requesting the CDP hearing, she
gave her own name and the LLC’s EIN and the Beverly address. The
IRS’s notice of lien and notice of intent to levy for the “941”
taxes were both issued in Ms. Britton’s name; and the notices of
determination included her name along with the name of the LLC.
Ms. Britton’s petition insists that the notices of lien and
proposed levy “were improperly sent to the business address of
Medical Practice Solutions, LLC”,14 and respondent states that
13
26 C.F.R. sec. 301.6109-1(h)(2), Proced. & Admin Regs.,
provides that “a single owner entity that is disregarded as an
entity separate from its owner under § 301.7701-3, must use its
owner’s taxpayer identifying number (TIN) for federal tax
purposes.” The record in this case does not show that
Ms. Britton has ever obtained a distinct TIN for herself (apart
from the LLC’s EIN), and we therefore cannot rule out the
possibility that the LLC’s EIN is in fact Ms. Britton’s TIN.
14
It is not clear whether the use of the Beverly address on
the notices was incorrect. The Code requires that such notices
be “(A) given in person; (B) left at the dwelling or usual place
(continued...)
- 22 -
instead they “should have been sent to petitioner’s home address”
in Lexington; but respondent correctly asserts that any such
error was harmless, since Ms. Britton did in fact receive the
notices in time to request a CDP hearing and did in fact request
and receive a hearing.15
As we held in Medical Practice I, Ms. Britton and the LLC
“are a single taxpayer”. She is liable for its employment taxes.
C. Ms. Britton has abandoned her contention that the
Office of Appeals abused its discretion by failing to
consider an installment agreement.
In her petition Ms. Britton argued that she should have been
allowed to enter into an installment agreement to pay the
14
(...continued)
of business of such person; or (C) sent by certified or
registered mail, return receipt requested, to such person’s last
known address”. See sec. 6330(a)(2) (emphasis added); see also
sec. 6320(a)(2). If Ms. Britton and the LLC are “a single
taxpayer or person to whom notice is given”, Medical Practice I,
132 T.C. at 127 (emphasis added), then a notice mailed to the
LLC’s address has arguably been mailed to the sole member’s
address.
15
Cf. Estate of Brandon v. Commissioner, 133 T.C. ___, ___
(2009) (slip op. at 8) (“the intent of section 6320 was fulfilled
because the estate received notice, made a timely request for,
and received, a hearing relating to the” notice of Federal tax
lien); Mulvania v. Commissioner, 81 T.C. 65, 67-68 (1983) (an
erroneously addressed notice of deficiency under sec. 6212 is
nevertheless valid if the taxpayer receives actual notice of the
Commissioner’s determination in a timely fashion); Barmes v. IRS,
116 F. Supp. 2d 1007, 1014 (S.D. Ind. 2000) (an erroneously
addressed notice and demand under sec. 6303 is nevertheless valid
where the notice “contained * * * [the taxpayer’s] name, stated
the amount of tax owing, and reached * * * [the taxpayer] at the
address of his business. Therefore, the formal requirements of
the statute have been met. To be sure, [the taxpayer] * * * had
actual notice of the assessment”).
- 23 -
liabilities at issue. However, while her representative did
express to the appeals officer an interest in such an agreement,
Ms. Britton never actually proposed any installment agreement;
and the appeals officer determined in April 2008 that she was
ineligible for an installment agreement because she was “not in
compliance with federal tax deposits”.16 In our previous opinion
in this case we did not decide this issue, but we noted “the
apparent lack of merit in her contentions about collection
alternatives” and observed that “[t]he Office of Appeals does not
abuse its discretion to reject a collection alternative where (as
appears, from the record before us, to be the case here) the
taxpayer did not propose a specific alternative, see Cavazos v.
Commissioner, T.C. Memo. 2008-257”. Med. Practice Solutions, LLC
v. Commissioner, T.C. Memo. 2009-214 (slip op. at 14-15 and
n.14).
Ms. Britton has not renewed this argument in any subsequent
filing; and we find that she has abandoned it.
D. The Office of Appeals did not abuse its discretion by
declining to discharge the lien on Ms. Britton’s house.
Before Ms. Britton’s CDP hearing with the Office of Appeals,
IRS collection personnel had decided not to discharge the lien on
16
See Giamelli v. Commissioner, 129 T.C. 107, 111-112 (2007)
(“Internal Revenue Service guidelines require a taxpayer to be
current with filing and payment requirements to qualify for an
installment agreement”); see Internal Revenue Manual pt.
5.14.1.4.1(19) (Sept. 26, 2008) (“Compliance with filing, paying
estimated taxes, and federal tax deposits must be current from
the date the installment agreement begins” (emphasis added)).
- 24 -
her house. She had argued that she had no equity in the house,
but the IRS determined that Ms. Britton “gave her husband Randy a
$100,000 mortgage after the LLC taxes accrued and were assessed,
and one week before the NFTL [notice of Federal tax lien] was
recorded”, and that “Mr. Britton did not provide proof that there
was actual transfer of value in exchange for the mortgage granted
to him”. We assume, see supra note 9, that general language in
her initial request for a CDP hearing-- “the filing of the notice
[of lien] was * * * not in accordance with administrative
procedures”--raised this issue in the CDP context. For purposes
of respondent’s motion for summary judgment, we also assume (as
Mr. Britton states in his declaration) that at the first hearing
with the original appeals officer, Mr. Britton “raised the issue
of equity in the home”.
However, there is no other information in the CDP hearing
record that relates to this issue. In particular, there is no
information in the CDP hearing record about the value of the
house or about any mortgage loans or their unpaid balances.17
17
The only information that Mr. Britton’s declaration cites
is from prior communication not with the Office of Appeals but
with collection personnel--i.e., the “ICS History Transcript”
that does recount, at 19-27, exchanges of information about
mortgages. “The Integrated Collection System (ICS) provides
workload management, case assignment/tracking, inventory control,
electronic processing, and case analysis tools to support the
SB/SE [Small Business/Self-Employed] organization collection
fieldwork.” IRM 5.1.20.2.2.1(1) (May 27, 2008) (emphasis added).
Thus, the information exchanges recounted in the ICS History
Transcript are communications not with Appeals but with SB/SE
collection personnel. The transcript therefore does nothing to
(continued...)
- 25 -
From the Court’s previous opinion Ms. Britton was on notice that
the issue was not even apparent--much less substantiated--in the
CDP hearing record. In this appeal Ms. Britton did not allege
that any information was omitted from the CDP record, did not
attempt to supplement the record in any way, and did not request
or attempt to substantiate this issue in the supplemental hearing
on remand.
Given this cursory and paperless “rais[ing]” of this issue,
we cannot find, even entertaining all presumptions in
Ms. Britton’s favor, that the appeals officer abused her
discretion by failing to consider whether the lien on
Ms. Britton’s house should be discharged. The record before her
included nothing to support an argument that a discharge was
warranted.
E. Ms. Britton shows no lack of an “Impartial Officer”.
After the supplemental CDP hearing, Ms. Britton raised an
additional argument under the rubric of “ex-parte communica-
tions”. Sections 6320(b) (concerning notices of liens) and
6330(b) (concerning notices of proposed levy) are both entitled
“Right to Fair Hearing”, and they both set out, in equivalent
language, certain principles that are to govern the CDP hearing.
One of those principles is in sections 6320(b)(3) and 6330(b)(3),
17
(...continued)
show what information (if any) Ms. Britton provided during her
CDP hearing.
- 26 -
which are both entitled “Impartial Officer” and which both
provide:
The hearing under this subsection shall be conducted by
an officer or employee who has had no prior involvement
with respect to the unpaid tax * * * before the first
hearing under this section * * *.
To further implement this impartiality principle, the
Commissioner promulgated Revenue Procedure 2000-43, 2000-2 C.B.
404, which provides that appeals officers are not allowed to have
ex-parte communications with other IRS employees that would
appear to compromise the independence of their review function.
See Indus. Investors v. Commissioner, T.C. Memo. 2007-93,
93 T.C.M. (CCH) 1126, 1128 (2007), affd. 353 Fed. Appx. 90 (9th
Cir. 2009). Ex-parte communications are “communications that
take place between Appeals and another Service function without
the participation of the taxpayer or the taxpayer's
representative” and are “prohibited to the extent that such
communications appear to compromise the independence of Appeals.”
Rev. Proc. 2000-43, sec. 3, Q&A-1, 2000-2 C.B. at 405.
Ms. Britton invokes this ex-parte communications principle
in an attempt to invalidate the CDP proceedings that have been
conducted in this case, but she distorts the actual principle.
She seems to argue that because printouts of IRS transcripts were
generated by personnel other than the appeals officer herself who
made the verification, her work involved impermissible “ex parte
communications”, and she lacked independence and failed to be an
impartial officer. However, by requiring the appeals officer to
- 27 -
“obtain verification from the Secretary”, sec. 6330(c)(1)
(emphasis added), the statute plainly reflects the expectation
that information will be obtained from other personnel, see also
Rev. Proc. 2000-43, sec. 3, Q&A-5, 2000-2 C.B. at 405-406
(describing permissible communication with non-Appeals
personnel).
“Ex parte communications” with IRS collection personnel
might compromise the independence of the Office of Appeals; but
if (as it appears) Ms. Britton objects to the appeals officer’s
consultation with her colleagues in the Office of Appeals, then
she misunderstands the applicable principles. Generally,
“[i]ntra-Appeals communications during the deliberation process
do not compromise or appear to compromise that independence.
Appeals employees may communicate freely with other Appeals
employees without inviting the taxpayer/representative to
participate.” Id., Q&A-3, 2000-2 C.B. at 405.
To the extent Ms. Britton complains about the appeals
officer’s consultation with attorneys from the Office of Chief
Counsel who are responsible for this litigation, she similarly
misunderstands the ex-parte communications principles. Revenue
Procedure 2000-43, sec. 3, Q&A-11, 2000-2 C.B. at 406-407, states
that “[d]ocketed cases will be handled in accordance with
Rev. Proc. 87-24, [sec. 2.06] 1987-1 C.B. 720 [, 721],” which
sensibly allows consultation between Appeals and the Office of
Chief Counsel.
- 28 -
Focusing on the statutory requirement that the appeals
officer must have had “no prior involvement”, Ms. Britton seems
to argue that once an employee in the Office of Appeals has had
any connection with her case, he is disabled by that “prior
involvement” from working on the next phase of her case and
therefore taints the proceedings by his involvement. However,
what sections 6320(b)(3) and 6330(b)(3) actually prohibit is
“prior involvement with respect to the unpaid tax * * * before
the first hearing under this section”. (Emphasis added.) This
prohibition has no application to Office of Appeals personnel
who, before Ms. Britton requested her CDP hearing, had no prior
involvement with the LLC’s employment taxes for the three periods
at issue here. Any personnel eligible to work on her CDP hearing
are thereafter eligible to work on any supplemental hearing.
To reflect the foregoing,
An appropriate order and
decision will be entered.