124 T.C. 69 (T.C. 2005), 3430-03L, Kendricks v. Commissioner of Internal Revenue

Docket Nº:3430-03L
Citation:124 T.C. 69, 124 T.C. No. 6
Opinion Judge:HALPERN, Judge:
Attorney:Neal Weinberg, for petitioners. Brianna Basaraba Taylor, for respondent.
Judge Panel:Halpern, James S.
Case Date:March 09, 2005
Court:United States Tax Court

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124 T.C. 69 (T.C. 2005)

124 T.C. No. 6




No. 3430-03L

United States Tax Court

March 9, 2005

As Amended, April 22, 2005.

Commissioner's motion for summary judgment granted.


At the conclusion of a collection due process hearing (hearing), R's Appeals Office (Appeals) determined to proceed by levy to collect unpaid assessments of tax. Ps ask us to review that determination. Among other errors, Ps claim that Appeals erred in not allowing them to raise at the hearing the tax liabilities underlying the unpaid assessments because they had not had the opportunity to dispute those liabilities in a bankruptcy proceeding instituted by them.

1. Held: The bankruptcy proceeding instituted by petitioners afforded them the opportunity to dispute the underlying liabilities within the meaning of sec. 6330(c)(2)(B), I.R.C., and, as a result, Ps were precluded from raising those liabilities during the hearing.

2. Held, further, because Ps neither raised collection alternatives during the hearing nor properly made an offer in compromise, Appeals did not err in determining to proceed by levy to collect the unpaid assessments of tax.

Neal Weinberg, for petitioners.

Brianna Basaraba Taylor, for respondent.

Halpern, James S.

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This case is before the Court to review determinations made by respondent's Appeals Office (Appeals) that respondent may proceed to collect by levy amounts assessed but unpaid with respect to petitioner Juanita Kendricks's 1982 through 1984 taxable (calendar) years and petitioners Juanita and Emmanuel Kendricks' 1985 taxable (calendar) year (collectively, the unpaid assessments). [1] We review the determinations pursuant to section 6330(d)(1). [2] Petitioners (individually, Mr. or Mrs. Kendricks) assign error to the determinations on the grounds that (1) they did not receive notices of deficiency for the years in issue in time to file a petition in the Tax Court, and, therefore, Appeals should not have denied them the opportunity to dispute the underlying tax liabilities for those years; (2) Appeals abused its discretion in determining that collection by levy was the most appropriate course of action when petitioners wished to submit collection alternatives and an offer in compromise was pending; and (3) Appeals would not, in connection with petitioners' claims, consider the claims of two nominee corporations (nominees of Mrs. Kendricks), Foxy Investments, Inc., and J & K Trucking Co., Inc. (the nominee corporations). By order dated March 17, 2004, we, in effect, disposed of petitioners' third ground, by granting respondent's motion to dismiss for lack of jurisdiction (and to obtain certain other relief) with respect to the nominee corporations. [3] With respect to petitioners' remaining two grounds,

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respondent moves for summary judgment in his favor (the motion). Petitioners object.

Rule 121 provides for summary judgment. Summary judgment may be granted with respect to all or any part of the legal issues in controversy " if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." Rule 121(a) and (b). When a motion for summary judgment is made and properly supported, the adverse party may not rest on mere allegations or denials of the pleadings but must set forth specific facts showing that there is a genuine issue for trial. Rule 121(d).

We are satisfied that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law. For the reasons that follow, we shall grant the motion.



We draw the following facts from the pleadings and the declaration of respondent's counsel, Brianna Basaraba Taylor, as to (1) the documents contained in respondent's administrative files concerning the hearing accorded petitioners pursuant to section 6330, (2) the documents in respondent's possession concerning petitioners' bankruptcy proceeding, and (3) additional documents in respondent's files relating to petitioners' case. We believe the following facts to be undisputed and so find for purposes of disposing of the motion. [4]


At the time the petition was filed, petitioners resided in Albany, Ga. Respondent's Determinations of Deficiencies and Assessments On March 24, 1995, respondent mailed to petitioners statutory notices of deficiency (notices) determining the deficiencies

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in, and additions to, tax that underlie the unpaid assessments. Petitioners failed to petition the Tax Court in response to the notices, and, as a result, respondent assessed the deficiencies and additions to tax that he had determined.

Bankruptcy Case

On September 13, 1996, petitioners filed a voluntary petition in bankruptcy under Chapter 13 of the Bankruptcy Code, 11 U.S.C. ch. 13 (" Adjustment of Debts of an Individual with Regular Income" ), in the United States Bankruptcy Court for the Middle District of Georgia (the bankruptcy case and the bankruptcy court, respectively). On October 21, 1996, petitioners filed with the bankruptcy court both a Chapter 13 plan and a statement of financial affairs, which listed the Internal Revenue Service (IRS) as a secured creditor with a total claim of $ 338,571, of which $ 206,073 was listed as secured. On October 22, 1996, the IRS filed a claim against petitioners (called a " proof of claim" in bankruptcy parlance) for $ 428,780, on the basis of unpaid taxes for 1982 through 1985, all of which amount was listed as secured. On November 14, 1996, petitioners filed an objection to the IRS's proof of...

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