Magee v. Commissioner, Docket No. 5682-04L.
| Decision Date | 16 November 2005 |
| Docket Number | Docket No. 5682-04L. |
| Citation | 90 T.C.M. 489 |
| Parties | Dorothy Ann Magee v. Commissioner. |
| Court | U.S. Tax Court |
Dorothy Ann Magee, pro se,
Fred E. Green, Jr., for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
This proceeding arises from a petition filed in response to a Notice of Determination Concerning Collection Action under Section 6330 and a Notice of Determination Concerning Your Request for Relief pursuant to section 6015(f).1
The issues for decision are:
(1) Whether petitioner was required to file a Federal income tax return for 1996;
(2) whether respondent abused his discretion in determining that collection action under section 6330 was appropriate; and
(3) whether respondent abused his discretion in denying petitioner's request for relief from joint and several liability under section 6015(f).
Some of the facts have been stipulated and are so found. The stipulations of the parties, with accompanying exhibits, are incorporated herein by this reference. At the time this petition was filed, petitioner resided in Las Vegas, Nevada.
Petitioner and Keith R. Magee (Mr. Magee) were married, but they separated at some time during calendar year 1996. Petitioner and Mr. Magee had a daughter during their marriage who was born in 1993. Petitioner has custody of her daughter and has struggled very hard to support herself and her daughter despite difficult circumstances. During 1996, petitioner was a newspaper carrier. Following her divorce from Mr. Magee, petitioner filed for bankruptcy, but she has since then purchased a home. Other than the fact that Mr. Magee failed to make court-ordered child support payments, the record does not provide any specific information regarding Mr. Magee or any information with respect to the manner in which petitioner and Mr. Magee conducted their financial affairs.
Petitioner and Mr. Magee filed a joint Form 1040, U.S. Individual Income Tax Return, for the 1996 taxable year on July 26, 1998, prepared at the behest of Mr. Magee by a professional tax return preparer. The tax return showed the following: Total income of $38,177; tax of $4,474; tax paid of $2,469 (by Mr. Magee's withholdings); and a balance of tax due of $2,005. As reported on Schedule C, Profit or Loss From Business Income, of the joint tax return, petitioner grossed $11,032 from the delivery of newspapers and claimed $7,376 in expenses. The return was processed, and the tax shown due on the return was assessed on August 24, 1998.
A notice and demand was mailed to petitioner on August 24, 1998, at petitioner's last known address as listed on her 1996 return. Respondent transferred and applied petitioner's tax credits from 2000 and 2002 in the amounts of $500 and $400 on September 30, 2001, and August 4, 2003, respectively, to partially offset petitioner's and Mr. Magee's unpaid 1996 joint liability. Petitioner was notified of these transfers at her last known address.
A notice of intent to levy was mailed to petitioner's last known address on September 30, 2003. A Final Notice of Intent to Levy and Notice of Your Right to a Hearing was sent to petitioner on October 7, 2003, with an account summary showing an amount due of $3,570.80, which amount, at that time, included the assessed balance, accrued interest, and an addition to tax. Petitioner submitted her Form 12153, Request for a Collection Due Process Hearing, on or about October 21, 2003, and submitted Form 8857, Request for Innocent Spouse Relief, on or about October 23, 2003.
On February 6, 2004, the requested collection hearing with an Appeals officer was held by telephone. At the hearing, petitioner did not discuss any collection alternatives with the Appeals officer. On March 12, 2004, the Appeals officer issued a Notice of Determination Concerning Collection Action under Section 6330 informing petitioner that the decision to upon levy petitioner's property was an appropriate action. Also on March 12, 2004, the Appeals officer issued a Notice of Determination Concerning Your Request for Relief under the Equitable Relief Provision of Section 6015(f) stating that no relief under section 6015(f) would be granted because petitioner requested relief more than 2 years after the first collection action following July 22, 1998, took place.2
Petitioner attempted to file with the Internal Revenue Service (IRS) Form 1040-SS, U.S. Self-Employment Tax Return,3 for 1996 on or about March 15, 2004, showing a net loss of $435 from self-employment. Petitioner attached the Form 1040-SS as an exhibit to a Form 843, Claim for Refund and Request for Abatement, which she filed in her attempt to obtain a refund of her total tax credits of $900. Petitioner also stated at trial that she attempted to file her own 1996 tax return with her signature on it, but the return was not accepted.4 However, this statement was made before petitioner was sworn in as a witness and, therefore, does not constitute evidence in this case. Also on or about March 15, 2004, petitioner filed Form 941c, Supporting Statement to Correct Information, as an adjustment to her Form 843 for the 1996 taxable year claiming an adjustment of $900.5 Petitioner attached to the Form 843 a Form 1040, Schedule C showing a net loss of $435 for 1996, and she also attached a Form 8863, Education Credits, Hope and Lifetime Learning Credits, purportedly for the 1996 taxable year, showing that she was entitled to tentative education credits in the amount of $240.
On March 16, 2004, petitioner filed the above-mentioned Form 843 alleging, among other things, that her former husband forged her signature on their 1996 joint tax return, that the IRS "has kept [her] rebates", and that she was not required to file a Federal tax return for 1996. However, at trial she stated: Petitioner later testified: 6
In response to respondent's March 12, 2004, determination letters, petitioner on March 31, 2004, timely filed a Petition for Lien or Levy Action Under Code Section 6320(c) or 6330(d) with this Court for the 1996 taxable year. On May 21, 2004, respondent filed an answer to petitioner's petition and a certification under Rule 325(b). See King v. Commissioner [Dec. 53,994], 115 T.C. 118 (2000). The certification confirmed that respondent notified Mr. Magee that petitioner filed a claim for relief from joint and several liability and that he could intervene. Despite the notice, Mr. Magee has not intervened in this case.
OPINIONPetitioner contends that she is not required to file a Federal income tax return for 1996. Specifically, she asserts that she did not generate a sufficient amount of income to require her to file a return. In addition, with respect to the 1996 joint return, petitioner maintains that she is entitled to relief from joint and several liability because her former spouse forged her signature on the return. Ultimately, petitioner claims that she never received a notice of deficiency for 1996, that 1996 joint return was invalid, that liability on the 1996 joint return was incorrect, and that she was not given a proper hearing with respect to respondent's intent to levy.7 Petitioner also asserts that she should be entitled to recover her litigation and/or administrative costs for, among other things, her time in preparing her defense.8
Respondent, on the other hand, claims that petitioner earned self-employment income in 1996 and was required to file an income tax return for 1996. Respondent does not contend that petitioner is liable for a deficiency or that an understatement exists; rather, he states that this case concerns petitioner's failure to pay her tax liability as shown on her joint return filed for 1996. Furthermore, respondent argues that he did not abuse his discretion in determining collection action was appropriate under section 6330 or in denying relief from joint and several liability under section 6015(f).
The Code imposes a Federal tax on the taxable income of every individual. Sec. 1. Gross income for the purpose of calculating taxable income is defined as "all income from whatever source derived". Sec. 61(a). Every U.S. resident individual whose gross income for the taxable year equals or exceeds the exemption amount is (with enumerated exceptions not applicable here) required to file an income tax return. Sec. 6012(a)(1)(A). Petitioner had gross income totaling at least $11,000 from receipts or sales from her newspaper delivery business for taxable year 1996.9 The filing threshold for a taxpayer under age 65 filing a single return for taxable year 1996 was $6,550.10 Petitioner's gross income exceeded the filing threshold for the 1996 taxable year, and petitioner was, therefore, required to file an income tax return.
Section 6331(a) authorizes the Commissioner to collect any unpaid tax by levy upon all "property and rights to property" of a person liable for such tax within 10 days after notice and demand of payment for such tax. However, before a levy commences under section 6331(a), the Commissioner must give the taxpayer at least 30 days' written notice of the Commissioner's intent to make such a levy in order for any collection action to proceed. Sec. 6331(d). Such notice must also include a brief statement setting forth, among other things, any available administrative appeals. Sec....
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