119 T.C. 252 (T.C. 2002), 14649-01L, Craig v. Commissioner of Internal Revenue
|Citation:||119 T.C. 252, 119 T.C. No. 15|
|Opinion Judge:||LARO, Judge:|
|Party Name:||MICHAEL CRAIG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent|
|Attorney:||Michael Craig, pro se. Anne W. Durning, for respondent.|
|Judge Panel:||Laro, David|
|Case Date:||November 14, 2002|
|Court:||United States Tax Court|
An appropriate order and decision will be entered for respondent.
On Feb. 22, 2001, R mailed to P a final notice of intent to levy (final notice) for 1990, 1991, and 1992. On the same day, R mailed to P a final notice for 1995. On March 17, 2001, P timely requested a hearing under sec. 6330, I.R.C. (Hearing), as to both final notices. Subsequently, R's Appeals officer (A) held with P an " equivalent hearing" under sec. 301.6330-1(i), Proced. & Admin. Regs. A informed P at the equivalent hearing that P was not allowed a Hearing because, A mistakenly believed, P's request for a Hearing was untimely. A later issued to P a decision letter sustaining the proposed levy.
Held: The determination reflected in the decision letter, coupled with P's timely petition to this Court with respect thereto, serves to invoke this Court's jurisdiction under sec. 6330(d)(1), I.R.C.
Petitioner, while residing in Scottsdale, Arizona, petitioned the Court under section 6330(d)(1) to review respondent's determination as to his proposed levy upon petitioner's property. Respondent proposed the levy to collect Federal income taxes of approximately $ 10,656.55 for 1990, $ 12,192.27 for 1991, $ 18,437.01 for 1992, and $ 307.63 for 1995.  Currently, the case is before the Court on respondent's motion for summary judgment under Rule 121 and to impose a penalty against petitioner under section 6673(a). Petitioner has filed with the Court a response to respondent's motion.
We decide as a matter of first impression whether the Court has jurisdiction under section 6330(d)(1), given that respondent has never issued to petitioner a notice of determination
with respect to a hearing described in section 6330 (Hearing).  Respondent acknowledges that petitioner was entitled to and should have been given a Hearing. All the same, respondent argues, the Court has jurisdiction to decide this case. Respondent argues that respondent's failure to grant petitioner's timely request for a Hearing was harmless error because petitioner was offered and attended an " equivalent hearing" under section 301.6330-1(i), Proced. & Admin. Regs. (equivalent hearing), and received a decision letter (decision letter) as to the equivalent hearing.
We hold that we have jurisdiction. Also, we shall grant respondent's motion for summary judgment, and we shall impose a $ 2,500 penalty against petitioner. Unless otherwise noted, section references are to the applicable versions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.
A. Income Tax Returns for 1990, 1991, and 1992
Petitioner and his wife, Lorraine Craig (Ms. Craig), did not file timely Federal income tax returns for 1990 and 1991. On February 18, 1993, respondent prepared and filed substitutes for returns for those years under section 6020. In preparing the substitutes for returns, respondent relied on information received from the Bureau of Labor Statistics. On October 27, 1994, and on December 14, 1994, petitioner and Ms. Craig filed joint 1990 and 1991 Federal income tax returns, respectively. Those returns were treated by respondent as amended returns. On February 3, 1995, petitioner and Ms. Craig filed a joint 1992 Federal income tax return.
On October 5, 1995, respondent issued a notice of deficiency to petitioner and Ms. Craig. The notice determined that petitioner and Ms. Craig were liable for deficiencies in their 1990, 1991, and 1992 Federal income taxes as follows:
Additions to Tax Year Deficiency Sec. 6651(a)(1) Sec. 6654 1990 $ 6,700 $ 1,675 $ 441 1991 50,686 12,672 2,913 1992 6,814 1,704 294
Petitioner and Ms. Craig petitioned the Court with respect to the notice on December 21, 1995. On February 24, 1997, petitioner and Ms. Craig signed a stipulated decision. This decision listed the deficiencies in Federal income tax due from petitioner and Ms. Craig in accordance with the notice of deficiency and provided that " effective upon the entry of the decision by the Court, petitioners [petitioner and Ms. Craig] waive the restriction contained in Internal Revenue Code 6213(a) prohibiting assessment and collection of the deficiencies and additions to the tax (plus statutory interest) until the decision of the Tax Court has become final." That stipulated decision was entered by the Court on February 27, 1997. On May 5, 1997, on the basis of the stipulated decision, respondent assessed the 1990, 1991, and 1992 Federal income tax liabilities of petitioner and Ms. Craig. B. Income Tax Return for 1995 On December 4, 1997, petitioner filed a 1995 Federal income tax return. On the basis of this return, respondent assessed petitioner's tax liability for 1995 on January 12, 1998. C. Request for a Hearing On February 22, 2001, respondent mailed to petitioner and Ms. Craig a letter, " Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing" (final notice), for 1990, 1991, and 1992. On the same day, respondent mailed to petitioner a final notice for 1995. Both final notices were signed by a chief of the IRS Automated Collection Branch in Ogden, Utah. These notices informed petitioner and Ms. Craig of (1) respondent's intent to levy upon their property pursuant to section 6331 and (2) their right under section 6330 to a Hearing with respondent's Office of Appeals (Appeals). Enclosed with the final notices were copies of Page 255 Forms 12153, Request for a Collection Due Process Hearing. On March 17, 2001, petitioner requested timely the referenced Hearing for 1990, 1991, 1992, and 1995 by mailing to respondent a letter accompanied by two Forms 12153, the first for 1990, 1991, and 1992, and the second for 1995. Petitioner signed the letter, but he did not sign the Forms 12153. In that letter, petitioner requested a Hearing and stated the following disagreement with the proposed levy:
this letter constitutes my request for a Collection Due Process Hearing, as provided for in Code Sections 6320 and 6330, with regards to the Final Notice -- Notice of Intent to Levy at issue * * * Since Section 6330(c)(1) requires that " The appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met," I am requesting that the appeals officer have such verification with him at the Collection Due Process Hearing and that he send me a copy such verification within 30 days from the date of this letter. In the absence of any such hearing, and if you fail to send me the requested Treasury Department Regulations and Delegation Orders within 30 days from the date of this letter, then I will consider this entire matter closed. If you do attempt to take any enforcement action against me without according me the hearing requested, and without sending me the documentation requested, you will be violating numerous laws which I will identify in a 7433 lawsuit against you and the government.
On April 12, 2001, the Ogden Service Center returned the requests to petitioner and Ms. Craig because the Forms 12153 were not signed. Two identical letters with respect to 1990, 1991, 1992, and with respect to 1995, sent to petitioner with Forms 12153 stated:
We are returning your Form 12153, Request for a Collection Due Process Hearing, because you did not sign it. If you have not been able to work out a solution to your tax liability and still want to request a hearing with the IRS Office of Appeals, you need to complete and sign the Form 12153. If we do not hear from you by May 3, 2001, we may take enforcement action without notifying you further.
On May 6, 2001, the Ogden Service Center received from petitioner two signed Forms 12153 for 1990, 1991, and 1992, and for 1995, respectively, which stated:
This Form 12153 WAS NOT SIGNED VOLUNTARILY, but UNDER DURESS, not wishing to give the I.R.S. or it's agents any cause to deny or delay the Due Process Hearing guaranteed to me by law as per I.R.C. Section 6330. My signature on this document DOES NOT give even TACIT AGREEMENT that the " statutory period of limitations for collection be Page 256
suspended during the Collection
Due Process Hearing and any subsequent judicial review" . On September 28, 2001, the Appeals officer held with petitioner an equivalent hearing. At the equivalent hearing, the Appeals officer explained to petitioner that it was an equivalent hearing and not a Hearing. The Appeals officer then reviewed and showed to petitioner Forms 4340, Certificate of Assessments, Payments and Other Specified Matters. The Forms 4340 were dated July 17, 2001, and were for 1990, 1991, 1992, and 1995. On September 28, 2001, after the equivalent hearing, the Appeals officer sent the Forms 4340 to petitioner. On October 27, 2001, the Appeals officer issued to petitioner a " Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330" (i.e., the decision letter) for 1990, 1991, 1992, and 1995. The decision letter sustained the proposed collection action against petitioner. The decision letter stated that petitioner did not have the right to judicial review of the decision set forth in the decision letter. The decision letter stated:
Your due process hearing request was not...
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