Dudley v. Comm'r of Internal Revenue

• Decision Date: 23 April 2001
• Docket Number: No. 10761–00L.,10761–00L.
• Citation: 116 T.C. No. 20,116 T.C. 263
• Parties: Dudley and Dorothy MOORHOUS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

116 T.C. 263

116 T.C. No. 20

Dudley and Dorothy MOORHOUS, Petitioners

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 10761–00L.

United States Tax Court.

April 23, 2001.

Taxpayers jointly petitioned for review of IRS' determination to proceed with collection, on notices of intent to levy filed separately on each taxpayer. IRS moved to dismiss for lack of jurisdiction as to husband and moved to strike certain taxable years. The Tax Court, Ruwe, adopted the decision of Armen, Special Trial J., which held that: (1) IRS conducting equivalent pre-levy hearing was not a waiver of time restriction for requesting collection due process hearing; (2) Court lacked jurisdiction of husband's petition for review of equivalent hearing, since IRS did not issue determination letter to husband; and (3) IRS was not required to treat husband and wife who filed joint return as single unit for collection purposes.

Motions granted.

John F. Rodgers, for petitioners.

Jeffrey E. Gold, for respondent.

OPINION

RUWE, J.

On Mar. 16, 1999, R mailed to P–H a final notice of intent to levy concerning P–H's unpaid tax liabilities for the years 1987 through 1992 and 1997. On Apr. 27, 1999, R mailed to P–W a final notice of intent to levy concerning P–W's unpaid tax liabilities for the years 1989 through 1992. On May 10, 1999, Ps filed a joint request for an administrative hearing with the Internal Revenue Service Office of Appeals (Appeals Office). P–H failed to file his request for an administrative hearing within the 30–day period prescribed in sec. 6330, I.R.C.

Despite P–H's failure to file a timely request for an Appeals Office hearing, R granted P–H a so-called equivalent hearing. P–W was granted an administrative hearing pursuant to sec. 6330, I.R.C. On Oct. 6, 2000, R issued a “decision letter” to P–H stating that R would proceed with collection against him. On Oct. 6, 2000, R issued a determination letter to P–W stating that R would proceed with collection against her and informing her of her right to challenge the determination in Court. On Oct. 16, 2000, Ps filed a joint petition for review with the Court. In response to the petition, R filed a motion to dismiss for lack of jurisdiction as to P–H and to strike as to certain taxable years.

Held: R's decision to conduct a so-called equivalent hearing did not result in a waiver by R of the time restrictions imposed upon P–H for requesting an Appeals Office hearing pursuant to sec. 6330, I.R.C. Kennedy v. Commissioner, 116 T.C. ––––, (2001), followed.

Held, further, insofar as the petition filed herein purports to be a petition for review filed by P–H, the Court lacks jurisdiction on the ground that R did not issue a determination letter to P–H pursuant to sec. 6330, I.R.C., due to P–H's failure to file a timely request for an Appeals Office hearing under sec. 6330(a)(2) and (3)(B) and (b), I.R.C.

Held, further, R was not barred from issuing separate notices of intent to levy to P–H and P–W despite the fact that they may have filed joint returns for the years in issue. The term “person” as used in sec. 6330, I.R.C., does not require R to treat a husband and wife who filed a joint return for a particular year as a single unit.

This case was assigned to Special Trial Judge Robert N. Armen, Jr ., pursuant to the provisions of section 7443A(b)(4) and Rules 180, 181, and 183.¹ The Court agrees with and adopts the Opinion of the Special Trial Judge, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

ARMEN, J.

This matter is before the Court on respondent's Motion To Dismiss For Lack Of Jurisdiction And To Strike With Respect To Dudley Moorhous And As To Taxable Years 1987, 1988, and 1997. As explained in detail below, we shall grant respondent's motion.

Background

On or about March 16, 1999, respondent mailed to petitioner Dudley Moorhous a Final Notice Of Intent To Levy And Notice Of Your Right To A Hearing (notice of intent to levy) concerning his unpaid tax liabilities for the years 1987 through 1992 and 1997.² Petitioner Dudley Moorhous received the notice of intent to levy on March 18, 1999, as reflected on the U.S. Postal Service Form 3811, Domestic Return Receipt, that was executed upon delivery of the notice. On or about April 27, 1999, respondent mailed to petitioner Dorothy Moorhous a notice of intent to levy concerning her unpaid tax liabilities for the years 1989 through 1992.³ There is no dispute that the above-described notices of intent to levy were mailed to petitioners' last known address. See sec. 6330(a)(2)(C). Both of the above-described notices of intent to levy stated in pertinent part: “If you don't pay the amount you owe, make alternative arrangements to pay, or request Appeals consideration within 30 days from the date of this letter, we may take your property”.

On May 10, 1999, petitioners filed with the Internal Revenue Service Office of Appeals (Appeals Office) a joint request for a collection hearing, Form 12153, with respect to their tax liabilities for the years 1987 through 1992 and 1997. Although the Appeals Office concluded that petitioner Dudley Moorhous failed to file his request for a hearing within the time prescribed in section 6330, the Appeals Office granted petitioner Dudley Moorhous a so-called equivalent hearing. See sec. 301.6330–1T(i), Temporary Proced. & Admin. Regs., 64 Fed.Reg. 3413 (Jan. 22, 1999).

On October 6, 2000, the Appeals Office issued to petitioner Dudley Moorhous a “decision letter” stating that respondent would proceed with collection by way of levy for the years 1987 through 1992 and 1997. The decision letter stated in pertinent part:

Your due process hearing request was not filed within the time prescribed under Section 6320 and/or 6330. However, you received a hearing equivalent to a due process hearing except that there is no right to dispute a decision by the Appeals Office in court under IRC Sections 6320 and/or 6330.

On October 6, 2000, the Appeals Office issued to petitioner Dorothy Moorhous a Notice of Determination Concerning Collection Action(s) Under Sections 6320 and/or 6330 (notice of determination). The notice of determination stated that petitioner Dorothy Moorhous was not eligible for an offer-in-compromise. The notice of determination further stated that respondent would proceed with collection with respect to petitioner Dorothy Moorhous' tax liabilities for the years 1989 through 1992 and that petitioner Dorothy Moorhous would have 30 days to file a petition with the Tax Court contesting the matter.

On October 16, 2000, petitioners filed with the Court a joint Petition For Lien Or Levy Action Under Code Sections 6320(c) Or 6330(d). See Rule 331(b). The petition states in pertinent part that petitioners challenge petitioner Dudley Moorhous' individual liabilities for the years 1987 and 1988 and petitioners' joint liabilities for the years 1989 through 1992 and 1997. The petition includes an allegation that respondent erred in failing to decide the offer-in-compromise that petitioners filed with respondent in 1997.

In response to the petition, respondent filed a Motion To Dismiss For Lack Of Jurisdiction And To Strike With Respect To Dudley Moorhous And As To Taxable Years 1987, 1988, And 1997. Respondent asserts that the Court lacks jurisdiction with respect to petitioner Dudley Moorhous on the ground that the “decision letter” issued to him does not constitute a determination letter sufficient to invoke the Court's jurisdiction pursuant to section 6330(d). Respondent contends that petitioner Dorothy Moorhous is the only proper petitioner before the Court. However, respondent asserts that the Court lacks jurisdiction with respect to petitioner Dorothy Moorhous as to the taxable year 1997 on the ground that neither the notice of intent to levy nor the determination letter that was issued to her included that taxable year. ⁴

Petitioner Dudley Moorhous filed an objection to respondent's motion to dismiss asserting: (1) Respondent failed to file his motion to dismiss in a timely manner; (2) where a husband and wife have filed a joint return, the term “person” as used in section 6330 should be read as referring to both husband and wife, thereby barring respondent from issuing separate notices of intent to levy to petitioners; and (3) to the extent that respondent's determination letter to petitioner Dorothy Moorhous rejected petitioners' joint offer-in-compromise, petitioner Dudley Moorhous should be permitted to file a petition challenging the determination letter.

This matter was called for hearing at the Court's motions session held in Washington, D.C. Counsel for both parties appeared at the hearing and offered argument in respect of respondent's motion to dismiss. During the hearing, counsel for respondent clarified that respondent's motion to dismiss and to strike should only have requested that the taxable year 1997 be stricken, inasmuch as the petition clearly states that petitioners are challenging petitioner Dudley Moorhous' individual liability for the taxable years 1987 and 1988 and not petitioner Dorothy Moorhous' liability for those years.

Discussion

Section 6331(a) provides that if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by way of a levy upon the person's property. Section 6331(d) provides that at least 30 days prior to proceeding with enforced collection by way of a levy on a person's property, the Secretary is obliged to provide the person with a final notice of intent to levy, including notice of the administrative appeals available to the person.

In the Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. 105–206, sec. 3401, 112 Stat. 685, 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide protections for taxpayers in tax collection matters. Section 6330 generally provides...