Cropper v. Comm'r
2014 T.C. Memo. 139
Tax Ct.2014Background
- Petitioner failed to file returns for 2006–2008; IRS prepared substitutes under IRC §6020(b) and issued notices of deficiency for those years. Petitioner did not petition the Tax Court to contest those notices.
- Notices of deficiency and later collection notices (Letter 3172 and Letter 1058) were mailed to petitioner’s longstanding P.O. Box in Norwood, Colorado; petitioner had not updated his IRS address since 2003.
- Petitioner requested a CDP hearing after the NFTL deadline and later submitted a timely CDP request relating to the proposed levy; he sought a face-to-face hearing and to contest underlying liabilities.
- The settlement officer scheduled a telephone hearing, asked for financial statements and unfiled returns (which petitioner did not provide), and determined a correspondence hearing was appropriate because petitioner had unfiled returns.
- The settlement officer verified mailing and assessments by reviewing Forms 4340 and other records (in addition to PS Forms 3877), concluded procedural requirements were met, and sustained the proposed levy. Petitioner appealed to the Tax Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether petitioner could challenge underlying tax liabilities at CDP hearing | Cropper: he did not receive notices of deficiency and thus may challenge liabilities | IRS: notices of deficiency were sent to last known address; Cropper had an opportunity to contest earlier and did not | Court: Petitioner may not dispute liabilities; he failed to show error or produce evidence, so challenge fails |
| Timeliness of CDP request re: NFTL (right to contest lien filing) | Cropper implied challenge to NFTL | IRS: petitioner’s CDP request re: NFTL was filed after the statutory deadline | Court: CDP request was untimely for NFTL; Court lacks jurisdiction over lien issue; only levy reviewed |
| Denial of face-to-face CDP hearing | Cropper: entitled to in-person hearing | IRS: CDP hearings are informal and correspondence/phone hearing appropriate, especially given missing returns | Court: No abuse of discretion in denying face-to-face hearing; correspondence/phone hearing proper |
| Verification of mailing and satisfaction of procedural requirements | Cropper: IRS failed to produce admissible evidence of mailing/assessment | IRS: relied on Forms 4340 and other records in addition to PS Forms 3877 showing mailing to last known address | Court: Settlement officer reasonably verified mailing and procedures; no abuse of discretion found |
Key Cases Cited
- United States v. Zolla, 724 F.2d 808 (9th Cir. 1984) (notice of deficiency required before assessment/collection of most income tax liabilities)
- Orum v. Commissioner, 412 F.3d 819 (7th Cir. 2005) (affirming Tax Court that untimely CDP request does not permit jurisdiction to review NFTL)