Westcott v. Commissioner of Internal Revenue, T.C. Memo. 2010-36 (U.S.T.C. 2/23/2010)
| Decision Date | 23 February 2010 |
| Docket Number | No. 22690-07L.,22690-07L. |
| Parties | PERRY B. AND GLADYS M. WESTCOTT, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. |
| Court | U.S. Tax Court |
Perry B. Westcott and Gladys M. Westcott, pro se.
Marty J. Dama, for respondent.
This case arises from a petition filed by Perry and Gladys Westcott in response to the IRS's "Notice of Determination Concerning Collection Actions(s) Under Section 6320 and/or Section 6330."1 We decide that the IRS did not abuse its discretion in making the determinations reflected in the notice.
Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated in this opinion by this reference. At the time they filed the petition, the Westcotts resided in Texas.
The Westcotts jointly filed their 1998 income tax return on July 2, 2001. The return had a blank for the Westcotts to fill in their tax liability and a blank for the amounts they had already paid towards that liability, but the record does not reveal how the Westcotts reported these amounts on their 1998 return. On the return, the Westcotts reported that they owed $46,721.87, i.e., $46,721.87 was their tax liability minus the amounts they had already paid. The Westcotts did not pay the $46,721.87 owed. They used the money with which they could have paid the amount owed to buy a business. On March 4, 2002, the IRS assessed the tax liability shown on the 1998 return, assessed some penalties (the nature of which was not disclosed by the record), and assessed underpayment interest.
On August 17, 2002, the IRS sent the Westcotts a "Final Notice of Intent to Levy and a Notice of Your Right to a Hearing." On August 20, 2002, Mr. Westcott alone filed Form 12153, "Request for a Collection Due Process Hearing," in which he claimed that The Westcotts subsequently filed their 1999 return. The exact date that the 1999 return was filed is not revealed by the record— except that the date was before February 24, 2003. The return showed a business loss of $82,592 (reported on Schedule C, Profit or Loss From Business), gross income of negative $80,090, and adjusted gross income of negative $80,090. By letter dated February 24, 2003, the Appeals officer notified Mr. Westcott that the IRS had accepted the 1999 return and that he had accordingly reduced the Westcotts' unpaid 1998 tax liability to "approximately" $29,000 by carrying back the 1999 business loss as a net operating loss.2 He warned Mr. Westcott that he could not entertain any collection alternatives (i.e., alternatives to levying) because the Westcotts had not filed their 2000 and 2001 returns.3 The Appeals officer referred them to low-income tax preparation services in their area to assist them in preparing their unfiled returns. But on March 7, 2003, he issued a notice of determination to Mr. Westcott for the 1998 taxable year sustaining the proposed levy. The notice acknowledged that only the reduced 1998 tax liability of "about" $29,000 would be subject to levy.
In June 2005, more than 2 years after the issuance of the notice of determination, the Westcotts filed an income-tax return for the 2000 tax year. They reported a business loss of $36,514 on Schedule C, negative $17,299 of total gross income, and negative $17,299 of adjusted gross income. Sometime after March 7, 2003, the Westcotts filed income-tax returns for the tax years 2001 through 2004.
Mr. Westcott alone filed a petition with the Tax Court challenging the IRS's 2003 notice of determination regarding the levy for the 1998 tax year. The Court issued a Memorandum Opinion on November 9, 2006. See Westcott v. Commissioner, T.C. Memo. 2006-245. The Court held that Mr. Westcott did not introduce "any reliable evidence" to substantiate the 2000 loss. Thus the Court did not reduce his unpaid 1998 tax liability by carrying back the 2000 loss to the 1998 year. The Court also rejected two arguments Mr. Westcott advanced in support of his position that the Court should have invalidated the notice of determination because the IRS failed to assist him in preparing his 2000 tax return. Mr. Westcott's first argument was, in the words of the Court, that "section 6404(d) relating to the abatement of tax implicitly required the IRS to prepare, or to assist him in preparing, his tax return for his taxable year 2000."4 Id. The Court responded:
Neither section 6404(d) nor any other provision in the Internal Revenue Code requires the IRS to prepare, or to assist in the preparation of, a tax return for any taxpayer. See United States v. Barnett, 945 F.2d 1296, 1300 (5th Cir. 1991). We reject petitioner's argument that the IRS had a legal duty to prepare, or to assist him in preparing, a tax return for his taxable year 2000 (or any other taxable year).
Id. Second, Mr. Westcott argued that the IRS violated his equal protection rights by failing to assist him in preparing his Form 1040 (the income tax return for individuals) and Schedule C for the 2000 tax year. The Court held that Mr. Westcott did not meet his burden of establishing that the IRS's failure to assist him was premised on an impermissible basis such as race, religion, or a desire to prevent the exercise of his constitutional rights. Westcott v. Commissioner, supra. The Court therefore sustained the notice of determination.
On March 23, 2007, the IRS filed a notice of tax lien against the Westcotts in the amount of $22,589.28 for their unpaid 1998 tax liability.5 On April 3, 2007, ths IRS mailed to the Westcotts a "Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320." On April 15, 2007, the IRS timely received Form 12153, "Request for a Collection Due Process Hearing," from both Mr. and Mrs. Westcott. The Appeals officer held a hearing with Mr. Westcott on August 16, 2007. At the hearing, Mr. Westcott requested an abatement of tax and penalties for the 1998 tax year because the IRS would not help him prepare the couple's tax returns for the taxable years 1998 through 2000. In the words of the Appeals officer, Mr. Westcott felt "he could never find anyone to help him file his returns and therefore should not be penalized for the length of time it took to file his returns." He asserted that section 6020(a) required the IRS to assist him in preparing his return. But he said that IRS employees at a walk-in center refused to help him because they thought that his return was too complicated and beyond their level of training. Mr. Westcott did not challenge the collection method, i.e., the filing of the notice of tax lien. He did not offer an alternative means of collection, or raise a spousal defense to collection. Nevertheless, he expressed an interest in having an opportunity to go to court to resolve his tax dispute.
On August 29, 2007, the IRS issued a notice of determination in which it sustained the filing of the tax lien. The notice stated that the Westcotts had not disputed their unpaid tax liability in the second hearing, had not offered any collection alternative on their own accord, and had failed to provide a financial information statement and supporting documents required for the Appeals officer to consider collection alternatives.
Mr. Westcott filed a one-page letter with this Court on October 2, 2007 stating his "intention to appeal a `Letter of Determination' decision of the [IRS]." He requested that appropriate forms be sent to him so that he could file a petition. This Court considered his one-page letter to be a petition and issued an order requiring that the Westcotts file an amended petition. Together, the Westcotts timely filed an amended petition on November 13, 2007, in which they stated:
Title 26, Section 6020a of the Tax Code requires (dozens of case law define "may" as meaning "must" in statutes or constitutional provisions). I.R.S. errs in refusing taxpayer one-on-one assistance in preparing tax return. Since 1999 taxpayer has requested assistance and has been refused. The attached determination notice does not address this issue. However, taxpayer appealed the determination notice solely on 6020a grounds. Appeals ignored taxpayer position. Taxpayer requests all taxes — penalties + interest be abated for years 1998 thru 2004.6 [sic]
The IRS filed its answer to the amended petition on January 16, 2008. In the answer, the IRS did not argue that the new case was barred by collateral estoppel. (Collateral estoppel, explained in greater detail below, is a doctrine that prevents parties from relitigating an issue heard and decided by a court.) At a pretrial hearing in Dallas on December 2, 2008, Mr. Westcott appeared before the Court and admitted that the only argument he was asserting was that section 6020(a) of the Internal Revenue Code requires the IRS to assist taxpayers individually in preparing their returns. The pretrial hearing continued on the next day. Mr. Westcott stated Respondent's position that the previous case I had in Tax Court settled the issue that I'm bringing is actually incorrect.
The issue at that time of filing that case, I had no idea that 6020(a) existed. I was filing on a constitutional basis because I felt it was just grossly unfair to assist one group of taxpayers and not assist others.
I had no empirical evidence of that other than just an instinctive sense of fairness that that doesn't seem to be right, so that's why I brought that case. It didn't have anything to do with 6020(a).
At the pretrial hearing, Mr. Westcott executed a stipulation of facts and agreed to submit the case without a trial under Rule 122. Mrs. Westcott subsequently ratified the stipulation of facts and consented to submit the case under Rule 122 on October 12, 2009.
...
To continue reading
Request your trial