Jackling v. I.R.S., CIV. 03-263-JD.

• Decision Date: 23 November 2004
• Docket Number: No. CIV. 03-263-JD.,CIV. 03-263-JD.
• Citation: 352 F.Supp.2d 129
• Parties: Christopher JACKLING v. INTERNAL REVENUE SERVICE
• Court: U.S. District Court — District of New Hampshire

352 F.Supp.2d 129

Christopher JACKLING v. INTERNAL REVENUE SERVICE

No. CIV. 03-263-JD.

United States District Court, D. New Hampshire.

November 23, 2004.

Christopher Jackling, Honeoye Falls, NY, pro se.

Karen Wozniak, US Dept. of Justice, Washington, DC, for Defendant.

ORDER

DICLERICO, District Judge.

The Internal Revenue Service moves to affirm its determination to proceed with the collection of trust fund recovery penalties assessed against plaintiff Christopher Jackling pursuant to 26 U.S.C. § 6672(a). The IRS argues that this court lacks subject matter jurisdiction over Jackling's pro se challenge to the determination because he failed to avail himself of the opportunity to challenge his liability for those penalties and, furthermore, that the IRS did not abuse its discretion in deciding to proceed with their collection. Jackling has not filed a response.¹

Background

On June 9, 1994, the IRS sent Jackling a "Proposed Assessment of Trust Fund Recovery Penalty" indicating that it intended to charge him $35,121.70 for the unpaid trust fund taxes of a business called "Brothers & Sisters of Mendon New York, Inc." As explained in the form "Letter 1153" that accompanied the proposed assessment, "trust fund taxes" consist of employment and excise taxes which, if not paid by the business in question, can be assessed as a penalty against "individuals who were required to collect, account for, and pay taxes for the business...." See also 26 U.S.C. § 6672(a). The letter advised Jackling that he had sixty days to appeal or protest the proposed assessment and set forth detailed instructions on how to do so. On October 3, 1994, the IRS proceeded to assess the penalty.

The IRS sent Jackling another "Proposed Assessment of Trust Fund Recovery Penalty" on August 29, 1994, this time stating that it intended to charge him $18,056.52 for the unpaid trust fund taxes of "Brothers & Sisters of Mendon N.Y. Two Inc — Impostors," together with another Letter 1153. The IRS proceeded to assess the penalty against Jackling on December 26, 1994, sending him a notice to that effect. The notice stated the amount of the penalty, a prior balance equal to the sum previously assessed against Jackling in connection with the first "Brothers & Sisters" entity, and interest. The notice also explained that Jackling would need to file a suit for a refund if he disagreed, and explained how to do so.

On July 19, 2002, the IRS notified Jackling that it intended to levy against his property to collect the outstanding tax liability. The notice indicated that Jackling could forestall the levy by requesting a collection due process hearing, which he did on August 20, 2002. Jackling's request states that "the penalty was attached to [him] in error and requires clarification.... Secondly, payment has been made on this account whereas the debt should be settled at this time." The hearing officer, Michael G. Blais, later sent Jackling statements of both his account and those of the businesses associated with the trust fund recovery penalty, together with a letter stating that a review of those accounts indicated that Jackling still owed $25,741.67. After some further correspondence between Blais and Jackling's representative, the IRS issued a notice of determination to Jackling on May 6, 2003, indicating that it would proceed with the proposed levy.

An attachment to the notice summarized the issues Jackling had presented at the collection due process hearing and Blais's resolution of those issues. As an initial matter, Jackling had claimed he did not qualify as a person responsible for collecting the trust fund taxes of the Brothers & Sisters entities so as to become liable for the recovery penalties under 26 U.S.C. § 6672. Blais found, however, that Jackling had failed to come forward with any information that would tend to undermine the IRS's contrary conclusion.²

Jackling had also argued that "the proposed collection action is not warranted due to the disputed amount due and the taxpayers [sic] limited economic circumstances," but failed to submit any "specific collection proposal" as an alternative. Relatedly, Jackling's representative requested a month to come up with a compromise offer, but Blais denied the request because Jackling already "had sufficient time to address the liability and collectibility issues and the additional delay will serve only to impede the efficient collection of the taxes." Blais therefore concluded that "[t]he determination to proceed with collection action balances a need for the efficient collection of taxes with the taxpayers [sic] legitimate concerns of intrusiveness...."

Jackling subsequently filed a pro se complaint in this court challenging the May 6, 2003, notice of determination. The complaint charges that the attachment to the notice contains "misleading and false" claims. Specifically, Jackling reiterates that he was not responsible for the Brothers & Sisters entities. He also claims that he cannot pay the liability without liquidating his entire retirement fund and that he should therefore be allowed to compromise his debt for $3,000.

Discussion

A district court has jurisdiction over an appeal of an IRS determination regarding collection action only if the Tax Court "does not have jurisdiction of the underlying tax liability." 26 U.S.C. § 6330(d)(1); see also Marino v. Brown, 357 F.3d 143, 145-46 & n. 5 (1st Cir.2004); Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir.2004). Because the Tax Court lacks jurisdiction over trust fund recovery penalties, 26 U.S.C. § 6672(c)(2), this court has jurisdiction over Jackling's appeal. See, e.g., Borges v. United States, 317 F.Supp.2d 1276, 1281 (D.N.M.2004); Abu-Awad v. United States, 294 F.Supp.2d 879, 886-87 (S.D.Tex.2003); Moore v. Commissioner, 114 T.C. 171, 175, 2000 WL 283865 (2000).

In reviewing a determination of collection action, however, a court considers only issues properly raised at the collection due process hearing. 26 C.F.R. § 301.6330-1(f)(2)A-F5; Jewett v. Commissioner, 292 F.Supp.2d 962, 966 (N.D.Ohio 2003); Loofbourrow v. Commissioner, 208 F.Supp.2d 698, 706 (S.D.Tex.2002). Challenges to the "existence or amount of the underlying tax liability" can be raised at the collection due process hearing only "if the person did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability." 26 U.S.C. § 6330(c)(2)(B); 26 C.F.R. § 301.6330-1(e)(1) & A-E2. Accordingly, "[w]here a taxpayer receives notice of a tax liability and has been afforded an opportunity to dispute such tax liability at the administrative level, he may not subsequently raise a judicial challenge to the underlying liability pursuant to 26 U.S.C. § 6330(d)(1)." Abu-Awad, 294 F.Supp.2d at 888 (citing cases); see also Konkel v. Commissioner, 2000 WL 1819417, at *3 (M.D.Fla. Nov.6, 2000).

The IRS argues that Jackling is not entitled to judicial review of his liability for the trust fund recovery penalties because he received notice of their proposed assessment in the form of the Letters 1153 of June 9 and August 29, 1994, but did not avail himself of the opportunity to dispute the liability as explained in the letters. In Pelliccio v. United States, 253 F.Supp.2d 258 (D.Conn.2003), the court reached the same conclusion on nearly identical facts. There, the plaintiff received a number of Letters 1153 notifying him of trust fund recovery penalty assessments, but "did not avail himself of his right to appeal or to a hearing." Id. at 261. After receiving a notice of intent to levy, however, the plaintiff requested a collection due process hearing at which he claimed that he was not the person responsible for the trust fund taxes. Id. at 259. The hearing officer concluded that he could not consider this issue due to the plaintiff's failure to raise it in response to the Letters 1153, but nevertheless addressed the argument, finding it to lack merit and proceeding to issue a notice of determination. Id. at 260. On appeal from that decision, the district court ruled that it lacked jurisdiction to consider the plaintiff's liability. Id. at 262.

Jackling has put himself in the same situation as the plaintiff in Pelliccio. Despite receiving a Letter 1153 notifying him of a proposed assessment of trust fund recovery penalty in connection with each of the Brothers & Sisters entities, Jackling failed to challenge those assessments. He therefore forfeited his right to dispute the liabilities at the collection due process hearing or, subsequently, in this court. See Pelliccio, 253 F.Supp.2d at 262; Konkel, 2000 WL 1819417, at *3. The fact that Blais nevertheless considered Jackling's challenges to the legitimacy and the amount of the liability as part of the due process hearing does not change this outcome. 26 C.F.R. § 301.6330-1(e)A-E11; Pelliccio, 253 F.Supp.2d at 262; Behling v. Commissioner, 118 T.C. 572, 577-79, 2002 WL 1315806 (2002). Accordingly, the court cannot consider Jackling's appeal insofar as it challenges his trust fund liability for the Brothers & Sisters entities.

Jackling also claims that the IRS should allow him to compromise his tax liability for $3,000. To the extent this claim is intended to challenge Blais's decision, the court reviews that determination for abuse of discretion, because the legitimacy of the underlying tax liability is not at issue here. See, e.g., Jones v. Commissioner, 338 F.3d 463, 466 (5th Cir.2003); Abu-Awad, 294 F.Supp.2d at 887 (citing cases). In making a determination...