Savoy v. Comm'r
| Decision Date | 12 August 2014 |
| Docket Number | Docket No. 12316-12L.,T.C. Memo. 2014-162 |
| Parties | GREGORY SCOTT SAVOY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
Held, further, Appeals did not abuse its discretion in deciding (a) not to sustain the decision of the IRS to issue a levy for the 2007 tax year, (b) to place P in "currently not collectible" status, and (c) to forgo filing a notice of Federal tax lien.
Gregory Scott Savoy, for himself.
James G. Hartford, for respondent.
GUSTAFSON, Judge: This collection due process ("CDP") case brought under section 6330(d)(1)1 is before the Court on cross-motions for summary judgment filed by respondent, the Commissioner of the Internal Revenue Service ("IRS"), and petitioner, Gregory Scott Savoy. The only issues for decision are: (1) whether the IRS Office of Appeals ("Appeals") properly considered the issues raised by Mr. Savoy during his CDP hearing and supplemental hearing whenissuing its supplemental notice of determination (we hold that it did); and (2) whether Appeals abused its discretion in its final determination (a) not to sustain the collection actions of the IRS to issue a notice of intent to levy to collect Mr. Savoy's Federal income tax due for the 2007 tax year, but rather (b) to place him in "currently not collectible" ("CNC") status for all years for which he showed a balance due, and (c) not to file a notice of lien to preserve the Government's interest as a creditor (we hold that it did not). Accordingly, we will grant summary judgment for the Commissioner and will deny Mr. Savoy's cross-motion.
There is no dispute as to the following facts:
Petitioner's circumstances
Mr. Savoy is recovering from a serious and sometimes disabling illness. Despite his illness, he is often employed. From his assertions that he should be allowed time to file or amend his Federal income tax returns for a period of years evidently beginning in 2003, we assume that he was employed from 2003 through at least 2012 and that he earned income in those years.Tax liability, notice of deficiency, and notice of proposed levy
For the single year at issue in this case, 2007, Mr. Savoy was required to file a tax return by mid-April 2008 (i.e., more than 6 years ago), but he did not do so. The IRS therefore prepared a substitute for return ("SFR") pursuant to section 6020(b), issued a notice of deficiency to Mr. Savoy, and (when he did not file a petition pursuant to section 6213(a), challenging that determination) assessed the tax. Mr. Savoy alleges, and we assume for purposes of the Commissioner's motion, that he did not receive this notice. Thereafter, the IRS issued to Mr. Savoy a notice of proposed levy dated May 27, 2011.2
Request for CDP hearing
Mr. Savoy timely requested a CDP hearing before Appeals by submitting a Form 12153, "Request for a Collection Due Process or Equivalent Hearing", dated June 23, 2011 (i.e., more than three years ago). On that Form 12153 Mr. Savoy stated the relevant tax periods were the eight years 2003 through 2010. For the years 2003 through 2006, the IRS denied Mr. Savoy a CDP hearing because itconcluded that the request was not timely as to those periods; for the years 2008 through 2010, the IRS denied him a CDP hearing because it concluded that no notice of proposed levy or notice of Federal tax lien had been issued to Mr. Savoy for those tax years. For the tax year 2007, however, the IRS acknowledged Mr. Savoy's CDP request as timely and proceeded with the CDP hearing.
Initial CDP hearing
It appears that Mr. Savoy made two principal contentions in the initial CDP hearing: First, Mr. Savoy attempted to dispute his tax liability for 2007 in that CDP hearing. In that connection he filed an amended 2007 tax return on September 7, 2011 (i.e., more than three years late, and more than 2½ years ago). Mr. Savoy asserts--and we assume in his favor--that the September 7, 2011, amended return for 2007 had "copious errors". Specifically, Mr. Savoy asserted in a letter to Appeals dated March 13, 2012:
3. TAX LIABILITY IS IN ERROR-- Because of the IRS's insensitivity to * * * [Mr. Savoy's medical condition] and related side effects, a wholly unrealistic schedule was imposed on the taxpayer, under duress of further Levy, and ten years of returns3 wereassembled hastily, despite my on-going pleas for a relaxed schedule. * * * I managed to get the returns done, yet, because of the pressure, I omitted one of my larger daily deductions; my daily meals in the field as a freelancer. That comprises a large number. Many days I work 14 hours and take two meals within that work period. * * * Also, a single digit not carried over in math, resulted in the IRS incorrectly refilling [sic] my tax penalty in great error. Because I copied the taxes from a worksheet into the archival forms, I merely entered the wrong digit in the 10,000 level of dollars. If the IRS merely added my components of schedule A they would see that it equals not 12,000. In other words, this is a cosmetic error, and if that 1 is changed to a 2, then all of the math adds up.
Thus, it is possible that corrections of errors might reduce Mr. Savoy's 2007 tax liability.4
Second, on his Form 12153, Mr. Savoy had checked the box indicating he desired to make an "Offer in Compromise" ("OIC"). By letter of February 6, 2012, Appeals scheduled a telephone CDP hearing for March 2, 2012. The letter stated that "you must be in full compliance and submit financial information with a request for a face to face hearing", but it did not specify what full compliance might require (e.g., submission of returns for certain years), nor what the"financial information" was. Our record does not show all the communication that may have transpired between the parties, but on March 15, 2012, Appeals sent Mr. Savoy another letter that stated: "I never received the information from you". The record does not show that Mr. Savoy proposed an OIC on Form 656.
The Commissioner now acknowledges that "[i]t appears, based on the information in the administrative file that respondent's Office of Appeals failed to give proper weight to petitioner's illness in not allowing him sufficient time to prepare and file the delinquent returns to determine his correct liability for tax year 2007." Rather, at the premature conclusion of the initial CDP hearing, Appeals issued to Mr. Savoy a "Notice of Determination" that did not sustain the proposed levy; that determined Mr. Savoy should be put in CNC status; and that stated that "[a] Notice of Federal Tax Lien will be filed to protect the government's interest as a creditor."
Tax Court petition and remand
On May 15, 2012 (i.e., more than two years ago), Mr. Savoy timely filed his petition in this Court, alleging (among other things) errors in his assessed tax liability. The petition stated a Maryland address for Mr. Savoy. On March 27, 2013, the Commissioner moved to remand the case to Appeals. TheCommissioner acknowledged that Mr. Savoy had not been given an adequate opportunity to challenge his underlying liability for 2007 at the CDP hearing and asked the Court to remand for a supplemental hearing. Mr. Savoy objected to the remand, but the Court --over Mr. Savoy's objection--remanded the case to Appeals for further consideration. Our order of March 28, 2013, stated:
• To the extent Mr. Savoy claims that he is entitled to deductions or credits that the IRS did not previously allow, he should document the pertinent expenditures and substantiate his entitlement to those deductions and credits.
Mr. Savoy moved for reconsideration on April 9, 2013; by our order dated April 17, 2013 (issued well over a year ago), we denied the motion for reconsideration and confirmed that the case would be remanded.
Supplemental CDP hearing
Appeals conducted a supplemental CDP hearing pursuant to our order. By letter of April 9, 2013, the Appeals officer stated to Mr. Savoy: "For me to consider alternative collection methods such as an installment agreement or offerin compromise, * * * you must have filed all federal tax returns required to be filed." The letter named in particular the years 2011 and 2012 (for the latter of which the return was due April 15, 2013). The record does not show that Mr. Savoy ever submitted an OIC on Form 656 or otherwise proposed a specific collection alternative.
During the supplemental...
To continue reading
Request your trial