No. 6240-01L | Tax Ct. | Dec 26, 2002
2002 Tax Ct. Memo LEXIS 332">332' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">332 ' number="1" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*332 Respondent's determination to proceed with collection with respect to petitioner's 1987 and 1989 tax years was not an abuse of discretion.
P failed to file returns for 1987 and 1989. P received a
notice of deficiency for 1987 and 1989. P petitioned the Court.
The Court ruled for R, and P appealed. The Court of Appeals
affirmed our decision.
R sent a Notice of Intent to Levy and Notice of Your Right
to a Hearing to P for 1987 and 1989. P requested a
I.R.C., hearing. R held a
determined that R could proceed with the proposed levy action.
Held: P raised the issue of interest abatement at
the
over this issue.
(2000).
Held, further, P is not entitled to interest
abatement for amounts greater than those abated or conceded by R
because P failed to file returns for 1987 and 1989 and failed to
pay in full the amount of tax he owed for those years.
Held, further, R's determination to proceed with
collection2002 Tax Ct. Memo LEXIS 332">333' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">333 ' number="2" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*333 was not an abuse of discretion.
MEMORANDUM FINDINGS OF FACT AND OPINION
VASQUEZ, Judge: Pursuant to
FINDINGS OF FACT
None of the facts have been stipulated. At the time he filed the petition, petitioner resided in New York, New York.
Deficiency Proceedings
Petitioner did not file returns for 1987 and 1989. On October 29, 1993, respondent filed substitute returns for petitioner's 1987 and 1989 tax years.
On September 27, 1995, respondent sent petitioner a notice of deficiency for 1987 and 1989 setting forth deficiencies of $ 3,777 and $ 6,500, respectively, and additions2002 Tax Ct. Memo LEXIS 332">334' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">334 ' number="3" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*334 to tax pursuant to section 6651(a)(1) of $ 358 and $ 1,556, respectively.
On January 2, 1996, petitioner filed a petition with the Court in which he disputed that he was liable for self-employment taxes on income he received in 1987 and 1989 and for additions to tax pursuant to section 6651(a)(1) for 1987 and 1989.
On June 24, 1998, the Court issued an opinion and entered a decision in favor of respondent for the amounts set forth in the notice of deficiency. 2
On November 20, 1998, respondent assessed $ 3,777 of income tax, a $ 358 addition to tax pursuant to section 6651(a)(1), and $ 6,116.44 of statutory interest for 1987. Respondent also assessed $ 6,500 of income tax, a $ 1,556 addition to tax pursuant to section 6651(a)(1), and $ 6,542.53 of statutory interest for 1989.
On May 4, 1999, the2002 Tax Ct. Memo LEXIS 332">335' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">335 ' number="4" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*335 U.S. Court of Appeals for the Second Circuit affirmed the Court's decision.
Payments
On June 21, 1994, petitioner mailed respondent a payment of $ 6,681.22. On June 23, 1994, respondent applied the $ 6,681.22 payment to petitioner's unassessed liabilities for 1987 and 1989 -- $ 1,431 to 1987 and $ 5,250.22 to 1989.
1993 Refund
On May 1, 1995, respondent sent petitioner a refund check of $ 1,046.90 for his 1993 tax year. The check represented petitioner's refund for 1993 of $ 971.78 and $ 75.12 in interest.
On May 10, 2000, respondent sent petitioner a Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice) with respect to petitioner's 1987 and 1989 taxable years.
On June 8, 2000, petitioner filed a Form 12153, Request for a Collection Due Process Hearing for 1987 and 1989 (hearing request). Petitioner attached a two-page letter to the hearing request explaining his disagreement with the levy notice. In the two- page letter, petitioner stated, among other things: (1) That the "IRS inordinately delayed billing me for years, thereby drastically increasing the amount owed", (2) the "IRS sent what it admitted to be a wrong2002 Tax Ct. Memo LEXIS 332">336' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">336 ' number="5" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*336 bill" and "then sent an amended bill which was itself apparently wrong", (3) for 10 years "the IRS failed to respond to my timely request for an installment plan", (4) "I experienced a delay of well over 30 days and often months and years to resolve specific issues", (5) "the IRS failed to respond to my request for information about the amount owed, about installment payment procedures, about abatement", and (6) "the IRS made numerous errors and delays". Petitioner also requested an offer-in-compromise.
On December 20, 2000, Appeals Officer Phyllis Cayenne held a
Before issuing the notice of determination, Appeals Officer Cayenne reviewed petitioner's transcript of account for 1993 and determined that respondent had sent petitioner his refund for that year. After the
On April 11, 2001, respondent sent petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) for 1987 and 1989 concluding that respondent could proceed with the proposed levy action. The notice of determination stated that the levy should reflect allowance of withholding credits of $ 2,346 for 1987 and $ 278 for 1989, and that forms had been forwarded to effect this change.
Withholding Credits and Abatement of Interest
On May 7, 2001, respondent mailed petitioner two notices -- one reflecting changes to his account for 1987 and the other reflecting changes to his account for 1989. The notice for 1987 credited petitioner's account $ 2,346 for tax withheld and abated $ 3,260.71 in interest. The notice for 1989 credited petitioner's account $ 278 for tax withheld.
Unpaid Balance
As of March 11, 2002, petitioner had unpaid income tax liabilities, including penalties and interest, for 1987 and 1989 of $ 3,213.73 and $ 9,070.31, 2002 Tax Ct. Memo LEXIS 332">338' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">338 ' number="7" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*338 respectively.
OPINION
Pursuant to
Petitioner received a notice2002 Tax Ct. Memo LEXIS 332">339' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">339 ' number="8" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*339 of deficiency for 1987 and 1989, and he litigated the underlying tax liability in this Court.
Did Petitioner Raise Interest Abatement at the
The parties disagree on whether petitioner raised the issue of interest abatement2002 Tax Ct. Memo LEXIS 332">340' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">340 ' number="9" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*340 at the
If, as part of a
Petitioner's hearing request is peppered with references to Internal Revenue Service (IRS) errors and delays, including the IRS's failure to respond to petitioner, and it specifically mentions abatement. Petitioner's testimony made it clear to the Court that he raised the issue of interest abatement any time he was in contact with respondent. 4
2002 Tax Ct. Memo LEXIS 332">341' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">341 ' number="10" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*341 Furthermore, Appeals Officer Cayenne testified that she recalled petitioner's mentioning at the
We conclude that petitioner raised the issue of interest abatement at the
2002 Tax Ct. Memo LEXIS 332">342' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">342 ' number="11" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*342 This Court may order abatement where the Commissioner abuses his discretion by failing to abate interest.
Congress intended for the Commissioner to abate interest where the failure to abate interest would be perceived as grossly unfair.
An error or delay is taken into account only (1) if no significant aspect of the error or delay can be attributed to the taxpayer and (2) after the IRS has contacted the taxpayer in writing with respect to the deficiency or payment.
Petitioner's complaint essentially is that because respondent failed to restore his withholding credits totaling $ 2,624 until 2001, if he had paid his tax liability for 1987 and 1989 before 2001 he would have paid the wrong amount. Petitioner's argument has no merit.
Even though2002 Tax Ct. Memo LEXIS 332">343' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">343 ' number="12" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*343 respondent did not give petitioner credit for his withholdings until 2001, this delay did not prevent petitioner from filing tax returns for 1987 and 1989. In fact, respondent mailed petitioner seven taxpayer delinquency notices informing him that he had not filed his 1987 or 1989 tax return.
If petitioner had filed returns for 1987 and 1989, respondent would then have been able to assess the taxes petitioner owed. Sec. 6201(a)(1). Petitioner did not file returns for those years; therefore, respondent was forced to issue a notice of deficiency for 1987 and 1989. Secs. 6211-6213. The conference committee report for the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, states in pertinent part as follows: "if a taxpayer files a return but does not pay the taxes due, this provision would not permit abatement of this interest regardless of how long the IRS took to contact the taxpayer and request payment."
Respondent could not send petitioner a bill until after respondent assessed the taxes for 1987 and 1989. Secs. 6213, 6303(a). In this case, petitioner's returns for 1987 and 1989 were due on April 15, 1988, and April 16, 1990, respectively. Secs. 6072(a), 7503. Petitioner failed to file these returns.
On September 27, 1995, pursuant to sections 6213(a) and 6501(c)(3), 6 respondent issued a notice of deficiency to petitioner. Petitioner then chose to petition the Court regarding his underlying tax liabilities and to appeal the Court's decision.
On September 18, 1998, petitioner filed a notice of appeal in the underlying tax case. Petitioner, however, did not post a bond to stay assessment2002 Tax Ct. Memo LEXIS 332">345' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">345 ' number="14" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*345 and collection as required by
The record shows that on November 20, 1998, respondent assessed the taxes, additions to tax, and interest for 1987 and 1989. That same day, respondent issued to petitioner a statutory notice of balance due. On February 8, 1999, respondent issued to petitioner a notice of balance due, and on March 15, 1999, respondent issued2002 Tax Ct. Memo LEXIS 332">346' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">346 ' number="15" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*346 to petitioner a statutory notice of intent to levy.
Any "delay" in sending petitioner a final bill for his 1987 and 1989 tax years was attributable to petitioner's failure to file tax returns for those years. Additionally, the mere passage of time in the litigation phase of a tax dispute does not establish error or delay by the Commissioner in performing a ministerial act.
While at one point petitioner's account may not have been credited with his $ 6,681.22 payment or his withholding credits totaling $ 2,624, as of the date of trial, his account was credited with those amounts. 8 Furthermore, the evidence established that petitioner's 1993 refund was mailed to him. Therefore, petitioner's 1993 refund could not be applied against his outstanding liabilities for 1987 and 1989, as he argues.
Additionally, on May 7, 2001, respondent abated $ 3,260 in interest associated with2002 Tax Ct. Memo LEXIS 332">347' document="" https:="" label='2002 Tax Ct. Memo LEXIS 332">347 ' number="16" pagescheme="<a href=" wright-v-commr-4334169?utm_source='webapp"'>2002 Tax Ct. Memo LEXIS 332">*347 1987 for the $ 2,346 credit for tax withheld. Furthermore, respondent concedes that the interest associated with the $ 278 withholding credit for 1989 should be abated. 9
The evidence does not establish that petitioner is entitled to abatement of interest in amounts greater than those abated or conceded by respondent. We conclude that respondent did not abuse his discretion in not abating interest for 1987 or 1989 for any amounts greater than those he abated or conceded.
Petitioner stated that he wanted to make an offer-in- compromise at the
Petitioner has failed to raise a spousal defense, make a valid challenge to the appropriateness of respondent's intended collection action, or offer alternative means of collection. These issues are now deemed conceded.
Accordingly, we conclude that respondent's determination to proceed with collection with respect to petitioner's 1987 and 1989 tax years was not an abuse of discretion.
No motions remain outstanding. In reaching all of our holdings herein, we have considered all arguments made by the parties, and to the extent not mentioned above, we conclude they are irrelevant or without merit.
To reflect the foregoing,
An appropriate decision will be entered.
Footnotes
1. Unless otherwise indicated, all section references are to the Internal Revenue Code, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. In our Memorandum Opinion, we found that petitioner did not file returns for 1987 and 1989.
Wright v. Commissioner, T.C. Memo 1998-224">T.C. Memo. 1998-224 , affd. without published opinion173 F.3d 848">173 F.3d 848↩ (2d Cir. 1999).3. The doctrine of res judicata also precludes relitigation of the issues decided in petitioner's underlying tax case.
Katz v. Commissioner, 115 T.C. 329" court="Tax Ct." date_filed="2000-10-13" href="https://app.midpage.ai/document/katz-v-commissioner-4474070?utm_source=webapp" opinion_id="4474070">115 T.C. 329 ">115 T.C. 329" court="Tax Ct." date_filed="2000-10-13" href="https://app.midpage.ai/document/katz-v-commissioner-4474070?utm_source=webapp" opinion_id="4474070">115 T.C. 329, 115 T.C. 329" court="Tax Ct." date_filed="2000-10-13" href="https://app.midpage.ai/document/katz-v-commissioner-4474070?utm_source=webapp" opinion_id="4474070">115 T.C. 329">340↩, n.16 (2000).4. We also note that in the underlying tax case petitioner raised the issue of interest abatement as to his 1987 and 1989 tax years, but the Court concluded that petitioner's request for abatement of interest was premature -- at that time there was neither an assessment of such interest nor a final determination by respondent not to abate interest.
Wright v. Commissioner, supra. ↩5. In 1996,
sec. 6404(e) was amended under sec. 301 of the TaxpayerBill of Rights 2, Pub. L. 104-168, 110 Stat. 1452, 1457 (1996), to permit the Commissioner to abate interest with respect to an "unreasonable" error or delay resulting from "managerial" and ministerial acts. The new provision applies to interest accruing with respect to deficiencies or payments for tax years beginning after July 30, 1996; therefore, it is not applicable to the case at bar.Woodral v. Commissioner, 112 T.C. 19" court="Tax Ct." date_filed="1999-01-12" href="https://app.midpage.ai/document/woodral-v-commissioner-4473095?utm_source=webapp" opinion_id="4473095">112 T.C. 19 ">112 T.C. 19" court="Tax Ct." date_filed="1999-01-12" href="https://app.midpage.ai/document/woodral-v-commissioner-4473095?utm_source=webapp" opinion_id="4473095">112 T.C. 19, 112 T.C. 19" court="Tax Ct." date_filed="1999-01-12" href="https://app.midpage.ai/document/woodral-v-commissioner-4473095?utm_source=webapp" opinion_id="4473095">112 T.C. 19">25↩ n.8 (1999).6. Pursuant to
sec. 6501(c)(3)↩ , in the case of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.7. If a taxpayer files a notice of appeal from a Tax Court decision, assessment and collection of the deficiency are not stayed unless the taxpayer posts a bond secured by the guaranty of an approved surety company or furnishes other satisfactory collateral.
Sec. 7485(a) ;Barnes Theater Ticket Serv., Inc. v. Commissioner, 50 T.C. 28" court="Tax Ct." date_filed="1968-04-04" href="https://app.midpage.ai/document/barnes-theatre-ticket-service-inc-v-commissioner-4480978?utm_source=webapp" opinion_id="4480978">50 T.C. 28 ">50 T.C. 28" court="Tax Ct." date_filed="1968-04-04" href="https://app.midpage.ai/document/barnes-theatre-ticket-service-inc-v-commissioner-4480978?utm_source=webapp" opinion_id="4480978">50 T.C. 28, 29↩ (1968).8. Petitioner admits that he has received credit for his withholding for 1987 and 1989.↩
9. As of the time of trial, respondent had not abated this interest. In his reply brief, respondent proffered that as of the date of the filing of his reply brief, respondent had abated the interest associated with petitioner's withholding credit for 1989. The record does not contain evidence that the aforementioned interest has been abated; therefore, we will incorporate respondent's concession of this issue into our decision.↩