Brown v. Commissioner of Internal Revenue, T.C. Summary Opinion 2009-176 (U.S.T.C. 11/25/2009)
| Decision Date | 25 November 2009 |
| Docket Number | No. 4887-08S.,4887-08S. |
| Parties | DAVID W. BROWN, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Tax Court |
David W. Brown, pro se.
Marshall R. Jones, for respondent.
This case was heard pursuant to the provisions of section 7463 of the Internal Revenue Code, as in effect when the petition was filed.1 Under section 7463(b), the decision to be entered is not reviewable by any other court, and this opinion shall not be treated as precedent for any other case.
Petitioner David W. Brown (Brown) seeks review under section 6330(d) of the IRS's determination rejecting Brown's proposal to pay his unpaid tax liabilities for the tax years 2001 through 2004 in installments of $250 per month. The issue for decision is whether the IRS abused its discretion by refusing to consider Brown's child-support obligation for one of his children in evaluating Brown's proposal.
Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated in this opinion by this reference. Brown resided in Alabama at the time he filed his petition.
Brown and his wife (the Browns) divorced in 1999. They had two children. The divorce decree was entered by the circuit court of Morgan County, Alabama, as part of a settlement between Brown and his wife. The settlement consisted not only of the Browns' consent to the divorce decree but also of a divorce agreement. This agreement contained the following child-support provision, requiring Brown to pay child support of $51.93 per child per week (which is equal to $225 per child per month) until "any child's arrival at the age of majority":
Subject to the approval of the Court, Husband shall pay to Wife through the Office of the Register of the Circuit Court, Morgan County, Alabama, for support and maintenance of the minor children the sum of Fifty-One Dollars and Ninety Three Cents ($51.93) per child per week, until the first to occur of any of the following events: (1) death of any child or Husband; (2) marriage of any child; (3) any child's becoming self-supporting; or (4) any child's arrival at the age of majority.
The dates of birth of Brown's children are listed in the agreement. From these dates we conclude that the two children were aged 8 and 13 at the time of the divorce agreement. We can also conclude that Brown's younger child turned 19 on February 17, 2009, and his older child turned 19 on July 6, 2004. The age of majority in Alabama is 19, as discussed below.
As part of the divorce decree, the state court entered an order requiring Brown's employers to withhold child-support payments from his wages and transmit the withholdings to the Alabama Child Support Payment Center for payment of child support. This withholding order was not immediately effective. Instead, the decree provided that the order "shall not be served on the employer of * * * [Brown] and shall not take effect until * * * [Brown] shall become delinquent in a dollar amount equal to one month of child support payments".
The IRS alleges that Brown failed to file timely tax returns for 2001 through 2004.2 Apparently, Brown made child-support payments of $450 per month ($225 per child) until his older son's 19th birthday in 2004. Even after his son turned 19, Brown continued to make the full $450 payment each month. These $450 payments continued until at least until January 2008.
On July 25, 2007, the IRS filed a notice of Federal tax lien against Brown regarding his unpaid tax liabilities for the tax years 2001 through 2004.3 On July 26, 2007, the IRS sent Brown a letter notifying him that the IRS had filed the lien and advising him that he had a right to a collection hearing under section 6320. Brown requested such a hearing. Brown's case was assigned to Darlene Caputo, an Appeals officer (the Appeals officer) at the IRS Branch Office in Memphis, Tennessee.
Brown mailed various documents containing evidence of his income and expenses to Caputo. These documents included IRS Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals.
On January 8, 2008, a telephone conversation took place between Brown and the Appeals officer. The Appeals officer generally explained two of the collection alternatives described in section 6330: (1) an installment agreement, by which the taxpayer pays the entire tax liability over time by making monthly payments, and (2) an offer-in-compromise, under which the IRS forgives a portion of the tax debt. See sec. 6330(c)(2)(A)(iii). According to the case activity record written by the Appeals officer, the only collection alternative she and Brown discussed in detail was the possibility of an installment agreement covering the tax years 2001-04. Brown did not dispute the underlying tax liabilities nor did he dispute that the notice of Federal tax Lien was filed or whether it should have been filed. His sole contention was that he could afford an installment payment of only $250 per month because of his monthly expenses, expenses that he claimed included $450 per month in child-support payments for his two children. By contrast, the Appeals officer told Brown he could afford $700 per month because she determined that Brown no longer had any legal obligation to make child-support payments for his two children.
The record does not reflect whether either party's respective proposal at the hearing ever detailed the duration of a proposed installment plan or how many monthly payments Brown was to make.4
After the January 8 telephone conversation, Brown submitted to the Appeals officer a letter signed by his ex-wife stating that Brown "is at this time, January [9, 2008,] current with child support payments in the amount of $450 dollars per month."5 He had told the Appeals officer that he paid some of the child-support payments by check to his wife and that the other part he paid by cash directly to his children. Brown also sent to the Appeals officer a copy of the final divorce decree, attached to which was the divorce agreement.
After the January 8 telephone conversation, the Appeals officer conducted research on the Web site Google.com and concluded that the age of "majority for child support is 18 yrs [sic] of age." Therefore she would "not allow for child support, which [would] increase monthly disposable income to $700.00 a month." According to the case activity record, the Appeals officer decided on January 18, 2008, to sustain the notice of tax lien. She sent a written determination to Brown on January 25, a determination that we describe further below. At trial Brown claimed that he was in fact able to speak with the Appeals officer at some point during January 2008 when, he says, the Appeals officer purportedly called him with news of the final determination.6 During the call, he allegedly explained to her that the age of majority in the state of Alabama was 19, not 18. According to Brown, neither party to this subsequent conversation discussed a monthly installment payment amount greater than the $250 Brown initially proposed but less than the $700 figure the Appeals officer had arrived at.
On January 25, 2008, the IRS sent Brown a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330. The notice stated that the IRS was correct to assess tax against Brown and to file a tax lien against him and that he could make full monthly installment payments. The notice asserted that the "monthly child support payment for $450.00 was disallowed because of the ages of your children." It noted: "You sent the court documents, which show that you are no longer required to make child support payments for the older child, age 2-3, and the younger child, age 18 as of February of 2008." This was an apparent reference to the requirement in the divorce agreement of February 11, 1999, that Brown pay child support until his children reached the age of majority.
Brown timely filed a petition with this Court on February 26, 2008, challenging the Appeals officer's determination. In his petition, he claims that "I am still paying child support and will continue to pay child support until Feb. 2009." He also stated: "I am willing to pay a monthly payment but can not afford $700.00/month."
At trial in Birmingham, Alabama, on October 14, 2008, Brown submitted into evidence an order from the Circuit Court of Morgan County, Alabama, that ordered Brown to change the way in which he was to make child-support payments. Attached to this September 22, 2008 order was a separate document entitled "Responsibilities of Individuals Under Child Support Orders". The document stated that
You must continue to make all payments until the court order is changed. If your child's status changes (turns 19, marries, moves in with a different relative, obtains a full-time job, etc.), you must continue to make the same payments until the court changes the amount you must pay.
It is unclear who wrote the document; it is not signed. The IRS objected to admission of the document into evidence because:
it's a document dated more than eight months after the date of the hearing. Therefore, it could not possibly have been part of the administrative record when Darlene Caputo considered * * * [Brown's] case, and under the statutory scheme and the case law, it's not relevant, and it may not be admissible.
The court took the IRS's objection under advisement. The IRS did not elaborate further on the issue in its post-trial brief.
Brown's testimony at trial focused on the IRS's failure to consider his child-support payments in determining how much he could pay to the IRS in monthly installments; he submitted no brief. He conceded that he was liable for all taxes, interest, and penalties due and stated that the sole issue in dispute was the dollar amount of his monthly payment under an installment plan. He implicitly...
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