Opinion
20860-18
11-30-2021
William A. Hammond & Irma Hammond, Petitioners v. Commissioner of Internal Revenue, Respondent
ORDER
Travis A. Greaves Judge.
This case is before the Court on petitioners' Motion to Restrain Assessment or Collection or to Order Refund of Amount Collected (motion to restrain) filed pursuant to Rule 55 and respondent's Notice of Objection to Motion to Restrain Assessment or Collection or to Order Refund of Amount Collected.
Unless otherwise noted, all Rule references are to the Tax Court Rules of Practice and Procedure, all section references are to the Internal Revenue Code in effect at all relevant times, and all dollar amounts are rounded to the nearest dollar.
I. Background
The following facts are based on the parties' motion papers and the attached exhibits, unless otherwise stated. Petitioners resided in Texas when they filed the petition.
On or around October 15, 2008, petitioners filed Form 1040, U.S. Individual Income Tax Return, for their 2007 tax year (2007 return). On or around October 15, 2009, petitioners filed Form 1040 for their 2008 tax year (2008 original return), reporting a balance due of $694,644. Petitioners failed to remit full payment with respect to the tax shown on their 2008 original return, and on November 23, 2009, respondent summarily assessed (following correction for a mathematical error) their 2008 tax liability in the amount of $721,463 (plus late payment penalties and interest).
Respondent summarily assessed on December 1, 2008, the tax shown on the 2007 return (plus late payment penalties and interest).
On or around October 15, 2012, co-petitioner William A. Hammond filed an amended return for tax year 2008 under Form 1040NR, U.S. Nonresident Alien Income Tax Return.
Respondent issued a "CP 0011 Notice" (math error notice) to petitioners on the same day as the assessment. See Internal Revenue Manual pt. 3.14.1.6.12 (Jan. 1, 2008).
Sometime around 2012 respondent commenced an examination of petitioners' 2007 return and 2008 original return. On July 24, 2018, respondent issued to petitioners a notice of deficiency determining deficiencies in income tax for tax years 2007 and 2008 (years in question) in the amounts of $15,464 and $37,820, respectively, plus penalties under section 6662 for both years. In response petitioners timely filed a petition with this Court in October 2018 for a redetermination of the deficiencies. On October 29, 2021, respondent filed a notice of federal tax lien (NFTL) on petitioners' real property, seeking to secure payment with respect to petitioners' 2008 original return in the total amount of $705,575.
II. Discussion
Petitioners assert that because they filed a timely petition for redetermination for the years in question, respondent is precluded by section 6213(a) from collecting the taxes assessed for such years. Section 6213(a) provides that the Commissioner is generally precluded from either assessing a deficiency or making, beginning, or prosecuting the collection of the same through a levy or court proceeding until a notice of deficiency is mailed to the taxpayer with respect to the deficiency and until the expiration of the 90-day (or 150-day, if applicable) period for filing a timely petition for a redetermination of the alleged deficiency. Powerstein v. Commissioner, 99 T.C. 466, 471 (1992). In the event a petition is filed with this Court, the Commissioner is further precluded from assessing or collecting the deficiency until the decision of the Court becomes final. Id (citing Powell v. Commissioner, 96 T.C. 707, 710-711 (1991)).
The term "deficiency" is generally defined as the amount by which the taxpayer's correct tax for the year exceeds "the amount shown as the tax by the taxpayer upon his return" plus any "amounts previously assessed * * * as a deficiency." Sec. 6211(a).
Conversely, the Commissioner is authorized to immediately assess and collect the amount of taxes that are computed and shown due on a taxpayer's original income tax return (as well as the amount of any additional taxes computed and shown due on a subsequently filed amended income tax return). Sec. 6201(a)(1); Meyer v. Commissioner, 97 T.C. 555, 559 (1991); sec. 301.6211-1(a), Proced. & Admin. Regs. The Commissioner can also summarily assess and collect any additional tax due as a result of a mathematical error made on the taxpayer's return if the Commissioner sends an explanation of such error to the taxpayer and the taxpayer either agrees to the error or fails to request an abatement of the assessment within 60 days. Sec. 6213(b)(1) and (2); Meyer v. Commissioner, 97 T.C. at 559; see also sec. 6213(g)(2) (defining "mathematical error"). Such summary assessments are not subject to normal deficiency procedures and are beyond the scope of this Court's jurisdiction, and no action or proceeding may be commenced to enjoin the IRS' actions. Sec. 7421(a); Meyer v. Commissioner, 97 T.C. at 560. Similarly, the Court "shall have no jurisdiction to enjoin any action or proceeding or order any refund under * * * [section 6213(a)] unless a timely petition for a redetermination of the deficiency has been filed and then only in respect of the deficiency that is the subject of such petition." Sec. 6213(a) (emphasis added).
The collection activities sought to be enjoined by petitioners are based on a self-reported liability by petitioners (plus applicable penalties, interest, and a mathematical error correction) under their 2008 original return and summarily assessed by respondent on November 23, 2009. Thus the outstanding income tax liability that respondent is attempting to collect is not subject to deficiency procedures. Meyer v. Commissioner, 97 T.C. at 559-560. Nor is there evidence that respondent's NFTL relates to any of the deficiencies that are validly the subject of the petition pending before us. We therefore have no authority under section 6213(a) to grant petitioners the relief they seek. See Powell v. Commissioner, 96 T.C. at 713. Accordingly, petitioners' motion to restrain for an order enjoining respondent from collection activities must be denied.
The record does not show that petitioners requested under sec. 6213(b) an abatement of the assessment specified in the math error notice.
Upon due consideration, it is
ORDERED that petitioner's motion to restrain, filed November 1, 2021, is denied.