Opinion
12789-20 L
12-07-2022
DASMID ALBERTY & SHERRY ALBERTY, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL
Tamara W. Ashford, Judge
This case was calendared for trial at the Session of the Court commencing on September 13, 2021, in Boston, Massachusetts; the trial session was conducted remotely. Prior to the trial session, on July 1, 2021, respondent filed a Motion to Dismiss on Ground of Mootness pursuant to Rule 53 of the Tax Court Rules of Practice and Procedure. On July 13, 2021, respondent supplemented his motion. On July 16, 2021, petitioners filed (1) a Motion to Strike and (2) an Opposition to Motion to Dismiss on Ground of Mootness. On August 16, 2021, petitioners filed another Opposition to Motion to Dismiss on Ground of Mootness, together with (1) a Memorandum in Support of Opposition to Motion to Dismiss on Ground of Mootness and (2) an Affidavit of Timothy Burke in Support of Opposition to Motion to Dismiss on Ground of Mootness.
Unless otherwise indicated, all Rule references are to the Tax Court Rules of Practice and Procedure, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all regulation references are to Code of the Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times. Some amounts are rounded to the nearest dollar.
Mr. Burke is petitioners' counsel of record in this case.
When the case was called from the calendar, the parties' counsel appeared and were heard regarding respondent's motion, as supplemented, and petitioners' motion to strike. On September 14, 2021, the case was recalled and the parties' counsel were further heard regarding the parties' motions.
Additionally, on the same day and before the case was recalled, petitioners filed an unopposed Motion to Supplement Opposition to Motion to Dismiss on Ground of Mootness, together with an Affidavit of Timothy Burke in Support of Motion to Supplement Opposition to Motion to Dismiss on Ground of Mootness. By Order served on the parties on September 20, 2021, the Court granted this motion.
As more fully appearing in the transcripts of the proceedings and for the reasons stated herein, petitioners' position is without merit and we will grant respondent's motion, as supplemented, and deny petitioners' motion.
Background
On October 3, 2019, the Internal Revenue Service (IRS) sent petitioners a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (lien notice). The lien notice advised them that a notice of federal tax lien had been filed in the amount of $11,161 concerning their unpaid federal income tax liability for the 2018 taxable year and that they had a right to a hearing to appeal the collection action and to discuss payment method options before the Internal Revenue Service Independent Office of Appeals (Appeals).
In response to the lien notice petitioners timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), which the IRS received on November 4, 2019. The CDP hearing request indicated that it was with respect to petitioners' federal income tax liability for 2018 and requested (1) an offer-in-compromise and (2) discharge or withdrawal of the lien. The CDP hearing request also requested that a CDP hearing be held with petitioners' authorized representative, Mr. Burke.
Appeals Settlement Officer Michael R. Santos (SO Santos) was assigned to petitioners' CDP hearing request and on December 27, 2019, he sent petitioners (and Mr. Burke) a letter acknowledging receipt of their CDP hearing request and scheduling a telephonic CDP hearing for January 28, 2020. Additionally, prior to this hearing, petitioners were requested to provide: (1) a completed Form 656, Offer in Compromise, together with any documentation required for the form's completion; (2) a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals; and (3) proof that they paid their estimated tax payments in full for the year to date.
On January 17, 2020, petitioners submitted Form 656-L, Offer in Compromise (Doubt as to Liability), which listed their federal income tax assessments for the 2008-2012 taxable years.
On January 28, 2020, Mr. Burke and SO Santos participated in the scheduled telephonic CDP hearing. During the hearing, SO Santos advised Mr. Burke that he would forward petitioners' Form 656-L for processing, but the offer was not properly at issue before Appeals as the offer did not provide any information suggesting that the 2018 assessment was erroneous. In response, Mr. Burke stated that (1) petitioners had the procedural right to submit the offer within this CDP administrative proceeding and (2) the 2018 assessment had been paid in full, but the IRS had misapplied some intended payments. During the hearing, Mr. Burke faxed to SO Santos payment information for his review; SO Santos advised Mr. Burke that he would review the faxed information and would take action to correct any misapplied payments but reaffirmed that any liability challenge for taxable years before 2018 was not properly an issue in the CDP hearing.
Shortly after the CDP hearing, SO Santos forwarded petitioners' offer to the appropriate office within the IRS and reviewed petitioners' payment information. The offer was returned as not processable, and SO Santos found and credited to petitioners' account all of the payments that they had alleged were misapplied, with the result that the balance of their 2018 liability was substantially reduced.
On or about April 3, 2020, petitioners submitted a new Form 656-L listing the 2008-2012 taxable years and the 2018 taxable year. The 2018 taxable year was simply added to the new Form 656-L; no information was submitted with the new Form 656-L for 2018.
On August 28, 2020, petitioners made an $11.70 payment, which satisfied in full their federal income tax liability for 2018.
On October 8, 2020, Appeals sent a Letter 3193, Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330 of the Internal Revenue Code, to each petitioner (with a copy to Mr. Burke), making the following determination:
A liability challenge is no longer properly at issue as the income tax assessment for tax year 2018 was paid in full on August 28, 2020. All payments relative to the 2018 assessment have been applied as intended. The Notice of Federal Tax Lien was properly filed in accordance with IRS procedures and is sustained. However, the underlying tax assessment has now been paid in full with the Notice of Federal Tax Lien to be released in accordance with administrative procedures.[ You have not provided an appropriate basis for the withdrawal or discharge of the Notice of Federal Tax Lien.
The IRS released the lien on September 18, 2020.
On November 2, 2020, petitioners timely filed a petition with the Court for review of each notice of determination. In their petition petitioners acknowledge that their account balance for 2018 is zero but allege, citing section 6330(c)(2)(B) and (3), that they had a statutory right in the CDP administrative hearing to raise the issue of the amount of their federal income tax liabilities for 2008-2012 and that therefore Appeals' failure to consider that issue, including the OIC they submitted that included those taxable years, "was unlawful and in direct contravention of the plain meaning of the statute."
According to petitioners, as of October 26, 2020, IRS account transcripts show their balances as the following: for 2008, $40,334; for 2009, $16,244; for 2010, $72,887; for 2011, $136,534; for 2012, $134,695; and for 2018, $0.
On July 1, 2021, respondent filed a Motion to Dismiss on Ground of Mootness. Therein, respondent states that, prior to the filing of the petition in this case, petitioners paid in full their outstanding federal income tax liability for 2018 and consequently the lien has been released, making the proposed collection action no longer necessary. Respondent thus contends, citing Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), that we lack any further basis for review under sections 6320 and 6330 and should dismiss this case as moot.
On July 13, 2021, respondent filed a Supplement to Motion to Dismiss on Ground of Mootness. Therein, respondent states that (1) he has diligently searched the IRS' records and determined that pursuant to sections 6320 and 6330 no notice of determination was sent to petitioner with respect to 2008-2012; (2) although the IRS' records do show that notices of deficiency were issued to petitioners for 2008- 2012, these notices were issued several years ago and thus the 90-day period set forth in section 6213(a) for timely filing a petition with this Court from these notices of deficiency expired several years ago; and (3) so far as can be determined, no other determination has been made with respect to 2008-2012 that would confer jurisdiction on this Court. Respondent thus contends that to the extent petitioners' petition raises claims with respect to 2008-2012, such claims should be dismissed for lack of jurisdiction. In support of his statements and contention, respondent attached to his supplement (1) copies of the notice of deficiency issued to each petitioner in 2012 for 2008 and 2010, (2) a copy of the notice of deficiency issued to petitioner Dasmid Alberty in 2013 for 2009, and (3) a copy of the notice of deficiency issued to petitioners in 2014 for 2011 and 2012.
All notices of deficiency were addressed to an address that is the same address of record for petitioners in this case.
In response to respondent's motion, as supplemented, on July 16, 2021, petitioners filed a Motion to Strike, and on August 16, 2021, they filed an Opposition to Motion to Dismiss on Ground of Mootness, together with (1) a Memorandum in Support of Opposition to Motion to Dismiss on Ground of Mootness and (2) an Affidavit of Timothy Burke in Support of Opposition to Motion to Dismiss on Ground of Mootness.
As noted infra p. 1, petitioners also filed an Opposition to Motion to Dismiss on Ground of Mootness on July 16, 2021. This filing was essentially a "notice filing" to apprise the Court of their objection to respondent's motion, as supplemented, and that their reasons for their opposition would be further developed in a later filing. Petitioners' later filing is their August 16, 2021, filing.
In their motion to strike, petitioners seek to have this Court strike respondent's motion, as supplemented, taking issue with the notices of deficiency attached to respondent's motion, as supplemented, and the legal analysis based on those notices on the ground that (1) respondent has failed to provide any proof of mailing of the notices of deficiency for 2008-2012 and (2) review of this matter is limited to the administrative record.
In their opposition and supporting memorandum and affidavit (just like in their petition), petitioners do not dispute that during the CDP administrative proceeding they paid in full their 2018 federal income tax liability. Petitioners instead argue that the basis for their petition-i.e., that the IRS' alleged failure to consider an offer-in-compromise they properly submitted covering the taxable years 2008-2012 and 2018-has not been resolved. Consequently, petitioners contend that, notwithstanding their paying in full their 2018 federal income tax liability, their case is not moot and ask this Court to deny respondent's motion, as supplemented, and to adjudicate their case.
Discussion
This Court, like all federal courts, is a court of limited jurisdiction. § 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985). We may exercise jurisdiction only to the extent provided by statute. Breman v. Commissioner, 66 T.C. 61, 66 (1976).
Sections 6320(c) and 6330(d) confer jurisdiction on this Court to review lien (and levy) determinations of Appeals when the conditions set forth in those sections, as applicable, have been met. See Rule 330(b). To that end, our jurisdiction under sections 6320 and 6330 depends upon the issuance of a valid notice of determination and the filing of a timely petition for review. See Orum v. Commissioner, 123 T.C. 1, 8 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005); Sarrell v. Commissioner, 117 T.C. 122, 125 (2001).
Additionally, in the light of the statutory framework for lien (and levy) determinations of Appeals, see §§ 6320(c), 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001), the relief that we can provide to a petitioner in adjudicating CDP actions is limited, amounting to giving a "thumbs-up or thumbs-down" on whether the IRS may proceed with the collection action in question. Indeed, if we conclude that the existence and amount of the underlying tax liability is correct and Appeals' determination did not constitute an abuse of discretion, we may uphold the determination and sustain the collection action. If we conclude that the existence and amount of the underlying tax liability is incorrect or that Appeals' determination constituted an abuse of discretion because of Appeals' failure to consider relevant information or for some other reason, we may remand the case for further consideration by Appeals or reject Appeals' determination and overrule the collection action. See Freije v. Commissioner, 125 T.C. 14, 33, 37 (2005).
As a result, if subsequent to the filing of a petition in this Court commencing an action under sections 6320(c) and 6330(d), the IRS no longer intends to pursue collection of the outstanding tax liability and has released the lien, then there is no further relief that we are able to grant under sections 6320 and 6330 and the case must be dismissed as moot, even if the petitioner maintains some dispute regarding the propriety of the liability. See Greene-Thapedi v. Commissioner, 126 T.C. at 8 ("[W]hatever right petitioner may have to challenge the existence and amount of her underlying tax liability in this proceeding arises only in connection with her challenge to the proposed collection action."); see also Willson v. Commissioner, 805 F.3d 316, 320 (D.C. Cir. 2015) ("[I]f a case raises a question within the jurisdictional purview of the tax court, and that question is subsequently resolved, the case is moot notwithstanding the existence of other live controversies between the taxpayer and the IRS that do not fall within the tax court's jurisdiction."); Kelby v. Commissioner, 130 T.C. 79, 84-85 (2008); Gerakios v. Commissioner, T.C. Memo. 2004-203; Chocallo v. Commissioner, T.C. Memo. 2004-152; Internal Revenue Manual (IRM) 8.22.8.2 (Nov. 8, 2013) ("If the CDP liability is fully paid, the taxpayer may not raise a liability issue other than innocent spouse or interest abatement."); IRM 8.22.5.5.4 (Sept. 30, 2014) ("Taxpayers may not raise a non-CDP tax period liability by characterizing it as a 'relevant issue' under IRC 6330(c)(2)(A).").
Here, the IRS had sent petitioners a lien notice concerning their unpaid federal income tax liability for 2018 and no other taxable year. Then ultimately, Appeals issued to each petitioner a valid notice of determination with respect to 2018 only and petitioners timely petitioned for review of those determinations. However, because petitioners have paid in full their outstanding federal income tax liability for 2018 (a fact that they readily acknowledge (and thus do not dispute)), and the IRS has released the lien for that year, there is no longer any basis for us to exercise jurisdiction over this case and we must dismiss it.
Petitioners contend that Vigon v. Commissioner, 149 T.C. 97 (2017), keeps the current controversy alive even though their 2018 federal income tax liability has been paid in full. However, we find Vigon distinguishable from this case. In Vigon, the IRS assessed against Mr. Vigon nine separate penalties under section 6702 which were not subject to deficiency procedures and not subject to a statute of limitations. After Mr. Vigon appealed to this Court the Appeals' determination sustaining the lien filing, the IRS abated the penalties and released the liens against Mr. Vigon. Respondent then moved to dismiss the case as moot but did not concede that Mr. Vigon was not liable for the penalties and acknowledged that the IRS could reassess the penalties. We denied respondent's motion to dismiss on ground of mootness because the IRS could reassess the penalties; therefore, we needed to resolve the underlying liability.
None of the concerns in Vigon are present in this case. Petitioners' federal income tax liability for 2018 has been paid in full and there is no concern that respondent will make a further determination regarding that year. As such, there is no controversy for us to resolve. Indeed, we stated in Vigon that "[i]n CDP cases involving no liability challenge but only collection issues, the full payment of the liability makes further collection unnecessary and does render the case moot." Vigon v. Commissioner, 149 T.C. at 107-08. This is precisely the situation here.
Petitioners patently misread or misapprehend section 6330(c)(2)(B). They seem to think that this statutory provision allows them to dispute their underlying liabilities for (any) years prior to 2018, the "determination" year. However, the law is clear: section 6330(c)(2)(B) allows a taxpayer to dispute his or her underlying liability for any taxable period specified on a CDP notice if he or he did not receive a statutory notice of deficiency for that liability or did not otherwise have an opportunity to dispute that liability. See Treas. Reg. § 301.6330-1(e)(1), (e)(3) Q&A-E2; Freije v. Commissioner, 125 T.C. at 28 ("In exercising . . . jurisdiction [under section 6330(d)(1)], we do not determine whether any collection action with respect to the nondetermination year may proceed, but only whether collection action may proceed in the determination year."); Savoy v. Commissioner, 589 T.C. 2014-162, at *17-19, aff'd, 589 Fed.Appx. 187 (4th Cir. 2015). Indeed, to this end (and as respondent correctly asserts), to the extent petitioners seek to dispute the amounts determined in the notice of deficiency issued to each of them in 2012 for 2008 and 2010, the notice of deficiency issued to Mr. Alberty in 2013 for 2009, and the notice of deficiency issued to them in 2014 for 2011 and 2012, their petition was not timely filed; the 90-day period set forth in section 6213(a) for timely filing a petition from each of these notices of deficiency expired many years ago and thus we lack jurisdiction over 2008-2012. See Hallmark Research Collective v. Commissioner, No. 21284-21, 159 T.C. (Nov. 29, 2022).
We also note that jurisdiction must be shown affirmatively, and the taxpayer, as the party invoking our jurisdiction, bears the burden of proving all facts necessary to establish jurisdiction in this Court. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001). Petitioners have neither produced nor otherwise demonstrated that any other determination was made by the IRS and mailed to petitioners with respect to 2008-2012 that would confer jurisdiction on this Court for those years.
In the light of the foregoing and upon due consideration, it is hereby
ORDERED that petitioners' Motion to Strike, filed July 16, 2021, is denied as moot. It is further
ORDERED that respondent's Motion to Dismiss on Ground of Mootness, filed July 1, 2021, and as supplemented on July 13, 2021, is granted and this case is dismissed.