Adams v. Comm'r of Internal Revenue
| Decision Date | 24 January 2023 |
| Docket Number | 1527-21P |
| Parties | BLAKE M. ADAMS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
160 T.C. No. 1
BLAKE M. ADAMS, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
No. 1527-21P
United States Tax Court
January 24, 2023
P had more than $1.2 million in unpaid, legally enforceable federal income tax liabilities for eight taxable years (relevant years). R attempted to collect those liabilities, but had little success.
Ultimately, R certified to the Secretary of State that P had a "seriously delinquent tax debt" within the meaning of I.R.C. § 7345(b) for the relevant years. P filed a Petition with this Court under I.R.C. § 7345(e)(1) to challenge the certification.
R filed a Motion for Summary Judgment maintaining that the certification was proper.
P filed a competing Motion for Summary Judgment arguing that (1) the certification was erroneous because R has not shown that the tax liabilities for the relevant years have been properly assessed and (2) declining to renew P's passport because of unpaid taxes is an unconstitutional denial of P's right to international travel.
Held: To the extent P raises a substantive challenge to the liabilities underlying the I.R.C. § 7345 certification (that is, to the extent he claims he owes no tax for the
relevant years), we lack jurisdiction to review the liabilities underlying the I.R.C. § 7345 certification.
Held, further, to the extent P raises a definitional challenge based on the text of I.R.C. § 7345(b)(1)(A), P's statutory argument fails because I.R.C. § 7345(b)(1)(A) requires that the unpaid, legally enforceable tax liability underlying a seriously delinquent tax debt "has been assessed," not that it "has been properly assessed," and there is no dispute here that the underlying liabilities for the relevant years have been assessed.
Held, further, we lack jurisdiction to review the constitutionality of passport-related actions taken by the Secretary of State under the Fixing America's Surface Transportation Act, Pub. L. No. 114-94, § 32101, 129 Stat. 1312, 1729-33 (2015).
Held, further, P is not entitled to summary judgment.
Held, further, R's certification was not erroneous, and R is entitled to summary judgment.
Blake M. Adams, pro se.
Christina L. Holland and John S. Hitt, for respondent.
OPINION
TORO, Judge
In this passport case, petitioner, Blake M. Adams, seeks review pursuant to section 7345(e)[1] of the Commissioner of Internal Revenue's certification to the Secretary of State that Mr. Adams has a "seriously delinquent tax debt" related to tax years 2007, 2009, 2010, 2011, 2012, 2013, 2014, and 2015 (relevant years).
Now before the Court are competing Motions for Summary Judgment. As we explain below, we will grant the Commissioner's Motion and deny Mr. Adams's.
Background
The following facts are derived from the parties' pleadings and Motion papers and the Declarations and Exhibits attached thereto as well as from Responses to the Court's Order served October 4, 2022. They are stated solely for the purpose of ruling on the Motions before us and not as findings of fact in this case. See Rowen v. Commissioner, 156 T.C. 101, 103 (2021).
Mr. Adams failed to file federal income tax returns for the relevant years, and the Commissioner prepared a substitute for return under section 6020(b) for each year. In due course, the Commissioner assessed the tax shown in the substitutes for returns together with penalties and interest. In total, the Commissioner assessed more than $1.2 million in federal income tax, including interest and penalties, for the relevant years. But Mr. Adams did not pay the assessed amounts.
Aiming to collect Mr. Adams's substantial outstanding liabilities, the Commissioner filed a notice of federal tax lien (NFTL) pursuant to section 6323(f) for each of the relevant years. As required by section 6320, the Commissioner notified Mr. Adams of the filing of the NFTLs and of his rights under section 6320, including the right to request a collection due process hearing. The dates of the NFTL filings and notices of the NFTL filings are as follows:
Year
Date of NFTL Filing
Date of Notice of NFTL Filing
2007
2009
2010
2011
2012
2013
2014 August 16, 2019
August 20, 2019
2015 December 13, 2019
December 17, 2019
Mr. Adams did not request a collection due process hearing for any of the relevant years. There is no dispute that the time for doing so has lapsed. I.R.C. § 6320(a)(2), (3)(B).[2]
The Commissioner's collection efforts proved unsuccessful, and on March 16, 2020, the Commissioner certified to the Secretary of State that Mr. Adams had a "seriously delinquent tax debt," which at the time of certification totaled $1,206,083.95 for the relevant years.[3] Nearly nine months later, on January 4, 2021, Mr. Adams petitioned this Court to review the Commissioner's certification pursuant to section 7345(e)(1).
In time, the Commissioner moved for summary judgment, arguing that Mr. Adams had a seriously delinquent tax debt as of the time of the certification and that, therefore, the certification was correct and should be sustained. Mr. Adams responded with his own Motion for Summary Judgment. The Commissioner filed a Response to Mr. Adams's Motion. Although we directed Mr. Adams to file a response, if any, to the Commissioner's Motion, and extended the deadline for doing so twice, Mr. Adams did not file a response.
Because the record did not establish whether the Secretary of State had taken any adverse action with respect to Mr. Adams's passport, by Order served October 4, 2022, we directed the parties to file a status report advising the Court on this point.
On October 17, 2022, the Commissioner filed a Status Report advising that (1) the State Department issued a passport to Mr. Adams on May 20, 2017, (2) the passport will expire on May 19, 2027, and (3) "the State Department did not advise that any adverse action had been taken" with respect to Mr. Adams's passport. Resp't's Status Report 1. The Status Report also noted that counsel for the Commissioner spoke with Mr. Adams on October 17, 2022, and that Mr. Adams "did not dispute any of the above information but said that
he had lost his passport and intended to apply for a new passport." Id. at 2.
On November 14, 2022, after we extended the deadline for complying with the Court's October 4 Order, Mr. Adams filed a Status Report advising that he had "scheduled an appointment with Miami Passport Agency OMNI Center for October 21, 2022, at 7:30 a.m. to apply for a passport." Pet'r's Status Report 1. Mr. Adams further indicated that he had received a letter dated October 21, 2022, from "the United States Department of State . . . denying issuance of a passport due to the Department of Treasury's IRS certification of seriously delinquent tax de[b]t." Id. at 2. Mr. Adams attached to the Status Report a copy of the letter he received from the Department of State. Id. Ex. 1. In relevant part, the letter reads:
Thank you for your recent passport application. Unfortunately, you are ineligible to receive passport services because the Department of Treasury's Internal Revenue Service (IRS) certified that you have a seriously delinquent tax debt. . . . . You must contact and make appropriate arrangements with the IRS within ninety (90) days from the date of this letter.
Once the Secretary of the Treasury has certified to the Secretary of State that you have satisfied the seriously delinquent tax debt, your name will be removed from the certified list. If satisfactory payment arrangements have not been made within 90 days of the date of this letter, your application will be denied. The Department of State cannot change, override, or appeal this policy.
Id.
Discussion
I. Background Law
A. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988).
Generally, in cases that are subject to a de novo scope of review, this Court may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In such cases, the moving party bears the burden of proving that summary judgment is warranted. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Espinoza v. Commissioner, 78 T.C. 412, 416 (1982). And, in deciding whether to grant summary judgment in such cases, we construe factual materials and inferences drawn from them in the light most favorable to the adverse party. Sundstrand Corp., 98 T.C. at 520.
But, as we recognized in Van Bemmelen v. Commissioner, 155 T.C. 64, 78 (2020), in cases in which the Court "must confine [itself] to the administrative record to decide whether there has been an abuse of discretion," the ordinary "summary judgment standard is not generally apt." In those cases, "summary judgment serves as a mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. at 79.
Our Court has not yet decided the scope of review and the standard of review for cases arising under section 7345. As we observed in Rowen, 156 T.C. at 106, we need not consider them when "there is no dispute...
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