Taggart v. Comm'r, T.C. Memo. 2013-113
| Decision Date | 18 April 2013 |
| Docket Number | Docket No. 24465-10L,T.C. Memo. 2013-113 |
| Parties | KENNETH J. TAGGART, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
KENNETH J. TAGGART, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
T.C. Memo. 2013-113
Docket No. 24465-10L
UNITED STATES TAX COURT
Filed April 18, 2013
Kenneth J. Taggart, pro se.
Kathleen K. Raup, for respondent.
THORNTON, Judge: Pursuant to sections 6320(c) and 6330(d) petitioner seeks review of respondent's determination sustaining the filing of a notice of
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Federal tax lien with respect to petitioner's Federal income tax for tax years 2006 and 2007.1
The parties have stipulated some facts, which we find accordingly. When petitioner filed his petition, he resided in Pennsylvania.
Background
During 2006 and 2007 petitioner worked as a real estate appraiser and a real estate broker. He conducted his business through two S corporations that he owned. He also owned four rental properties.
Petitioner's Tax Returns
On September 17, 2007, petitioner timely filed his 2006 Federal income tax return, reporting zero taxable income. On September 30, 2008, petitioner mailed to respondent an amended 2006 return, reporting taxable income of $100,796 and tax due of $20,557. He included no payment with his amended 2006 return. On
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November 10, 2008, respondent assessed $22,554 in tax and $2,449 in statutory interest for petitioner's 2006 tax year.2
On September 30, 2008, petitioner timely filed his 2007 Federal income tax return, reporting taxable income of $133,351 and tax of $29,210. He included no payment with his 2007 return. On November 3, 2008, respondent assessed $31,576 in tax, $888 in statutory interest, and a $917 addition to tax pursuant to section 6651(a)(2) for failure to pay timely.3
Petitioner's Refinancing Activities
On July 16, 2008, petitioner refinanced the mortgage loan securing one of his rental properties and used the $31,561 of refinancing proceeds to pay non-Internal Revenue Service (IRS) debts. On or about December 22, 2008, he refinanced the mortgage loan securing another rental property and used the $38,414 of refinancing proceeds to pay non-IRS debts.
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Petitioner's Offer-in-Compromise
On June 22, 2009, respondent received from petitioner an offer to compromise his 2006 and 2007 tax liabilities by paying $2,500 in monthly installments of $100 each, commencing in July 2009. The offer indicated that it was based on doubt as to collectibility.
Petitioner's offer-in-compromise was assigned to Revenue Officer Monica Wilborn (RO Wilborn). In a letter to petitioner dated February 5, 2010, RO Wilborn rejected petitioner's offer on the ground that the amount offered was less than the reasonable collection potential (RCP) she calculated in worksheets attached to the letter.4 RO Wilborn determined that petitioner could pay the full amount due. The letter stated that if petitioner disagreed with these findings, he should provide, within 30 days of the date of the letter, any additional information in writing to support his position and, if he desired reconsideration by the IRS Appeals Office, a written statement requesting such reconsideration. The letter stated: "If you do not send this written statement within 30 days of the date of this letter you will not receive consideration by the Office of Appeals". The letter also
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stated: "We may file a notice of federal tax lien in order to protect the government's interests. In order to prevent this action, please pay your liability in full. After we file a notice of federal tax lien you will have the opportunity to request a hearing with Appeals".
By letter dated March 4, 2010, petitioner advised RO Wilborn of his disagreement with her findings and sought to appeal her rejection of his offer. Petitioner claims that he faxed this letter to RO Wilborn on March 4, 2010, and placed the original letter in the mail on March 8, 2010. Respondent asserts that he received no fax of this letter but rather first received the letter on March 12, 2010, in an envelope with a March 9, 2010, postmark.
In a letter dated March 16, 2010, RO Wilborn rejected petitioner's appeal as untimely but invited him to submit a new offer-in-compromise if he wished.
Notice of Federal Tax Lien and Collection Due Process Hearing
On February 22, 2010, respondent filed a notice of Federal tax lien against petitioner in Bucks County, Pennsylvania, in the amount of $59,371 for taxable years 2006 and 2007. On February 23, 2010, respondent sent petitioner a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (notice) with respect to petitioner's 2006 and 2007 tax years. On March 31, 2010, petitioner submitted a Form 12153, Request for a Collection Due Process or
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Equivalent Hearing. In a cover letter accompanying the Form 12153 petitioner asserted that a tax lien had been placed on his property before the offer-in-compromise process had been completed. Petitioner also asserted in this letter that he "would like to submit and discuss this current offer in compromise, or if needed a resubmission of an offer and compromise to resolve the issue". Petitioner's case was assigned to Settlement Officer Robert A. Richards (SO Richards).
In a June 17, 2010, letter to SO Richards, petitioner contended that he had made a timely appeal of RO Wilborn's rejection of his offer-in-compromise. The letter also asserted that the lien had been improperly filed on February 23, 2010, before any Appeals Office consideration; that the lien would result in undue hardship to him and impede the IRS' ability to collect his tax; that he disputed the findings of the IRS with respect to his offer-in-compromise; and that the assessment was "inaccurate" in some unspecified way. Petitioner also indicated that he was interested in pursuing an installment agreement but that because of a dramatic decline in his real estate appraisal business, he was able to pay only $100 per month.5
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On July 7, 2010, SO Richards held the requested hearing with petitioner. During the hearing petitioner expressed disagreement with RO Wilborn's rejection of his offer. SO Richards indicated to petitioner that his attempted appeal of RO Wilborn's rejection of his offer was untimely. According to SO Richards' case activity record, he also advised petitioner that he was free to submit another offer but that, on the basis of his review of the financial information that petitioner had previously submitted, his determination would coincide with that of RO Wilborn. According to SO Richards' case activity record, petitioner did not otherwise raise any collection alternatives, nor did he challenge his underlying tax liabilities. SO Richards also discussed with petitioner the dissipation of the proceeds from petitioner's refinancings of rental properties in 2008, but petitioner provided no plausible reason for ignoring the IRS. According to the case activity record, SO Richards informed petitioner at the conclusion of the hearing that on the basis of their discussion he would sustain the collection, but that he would take the time to look at documents that petitioner would forward to his attention.
On or about July 12, 2010, petitioner sent SO Richards a package of documents that included a filled-out Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and Form 433-B, Collection Information Statement for Businesses, with some supporting
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documentation. Petitioner's cover letter stated in its entirety: "As requested at the hearing on June 17, 2010, I have enclosed updated financial information that you requested. Please do not hesitate to contact me with anything else you may need".
According to SO Richards' case activity record, on July 12, 2010, he made a "cursory review" of the documents received from petitioner and concluded they did not support withdrawing the lien. Another entry on September 21, 2010, indicates that after an "exhaustive review" of petitioner's circumstances, SO Richards had determined that RO Wilborn's actions had been appropriate.
On October 4, 2010, respondent issued petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice) sustaining the filing of the notice of Federal tax lien. An attachment to the notice states, among other things, that petitioner had not challenged his underlying liabilities at any time during the hearing and that his primary concern had been the adverse effect of the tax lien on his ability to earn a living as a mortgage broker. The attachment notes that during her review of petitioner's offer-in-compromise, RO Wilborn had determined that the filing of a lien would be appropriate. The attachment notes that "at the time the assessments for 2006 and 2007 were recorded, Mr. Taggert [sic] received a distribution from individual retirement
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account (IRA)/401K plans totaling close to $70,000" but he had...
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