Opinion
17693-18L
12-09-2021
Mark McCarthy & Shannan McCarthy, Petitioners v. Commissioner of Internal Revenue, Respondent
ORDER
Peter J. Panuthos, Special Trial Judge.
On September 7, 2018, the Court received and filed a petition to commence this case. Petitioners checked the box indicating that the petition was in response to a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 (notice of determination) for years or periods "Dec312008-dec31 2013". No such notice, however, was attached to the petition. Instead, petitioners attached a partial Letter 4473C, Collection Due Process or Equivalent Hearing (Forward to Appeals), dated August 6, 2018, addressed to petitioner Shannan McCarthy.
Unless otherwise indicated, all section references are to the Internal Revenue Code in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
A. The Parties' Filings
By Order dated April 24, 2019, the Court required respondent to file a jurisdictional motion in an attempt to resolve the ambiguity as to the tax periods in issue in this case. In response, respondent filed a Motion to Dismiss for Lack of Jurisdiction and Motion to Dismiss on Grounds of Mootness, on May 15, 2019 (motion to dismiss for lack of jurisdiction). As further discussed below, respondent moves that this case be dismissed as to the taxable quarters ending
December 31, 2008, through and including December 31, 2013, and the taxable years ending December 31, 2008, through and including December 31, 2013 (periods in issue). By Order dated May 17, 2019, the Court provided petitioners an opportunity to file an objection to respondent's motion to dismiss for lack of jurisdiction. On June 10, 2019, petitioners filed their objection, disputing both receipt of a notice of determination related to the taxable year ending December 31, 2012, and respondent's assertion that they had waived their right to judicial review or had withdrawn their hearing request for that tax year.
On July 23, 2019, the Court ordered respondent to file a First Supplement to the motion to dismiss for lack of jurisdiction further clarifying the Court's jurisdiction in this case with respect to the periods in issue and specifically addressing entries listed in the certified copies of IRS account transcripts (account transcripts) for petitioners' Forms 941, Employer's Quarterly Federal Tax Return, for the taxable quarters ending September 30, 2009, March 31, 2013, and June 30, 2013, and petitioners' Forms 940, Employer's Annual Federal Unemployment Tax Return, for the taxable years ending December 31, 2009, and December 31, 2012. On September 13, 2019, respondent filed a First Supplement to the motion to dismiss for lack of jurisdiction, to which petitioners objected on October 8, 2019. On July 8, 2020, respondent filed a First Amendment to Motion to Dismiss for Lack of Jurisdiction and Motion to Dismiss on Ground of Mootness (amended motion to dismiss for lack of jurisdiction). By Order dated July 13, 2020, the Court provided petitioners an opportunity to file an objection to respondent's amended motion to dismiss for lack of jurisdiction. Petitioners filed a response on August 17, 2020.
By Order dated July 21, 2021, the motion to dismiss for lack of jurisdiction, as supplemented and amended, was set for hearing at the Court's Los Angeles, California, remote trial session commencing on October 25, 2021, at a time and date certain of October 26, 2021, at 10:00 am (PT). Petitioners filed a Motion for Continuance, received by the Court on October 25, 2021. Petitioners had previously filed multiple motions for continuance (on December 12, 2019, March 16, 2020, and April 28, 2021) and prior to the October 25, 2021, trial session had been advised by the Court that it was not inclined to grant any further continuances in this matter. As such, the Court denied petitioners' October 25, 2021, continuance motion. When this case was called for hearing respondent appeared and was heard on the motion to dismiss for lack of jurisdiction, as supplemented and amended. There was no appearance by or on behalf of petitioners.
B. The Parties' Jurisdictional Arguments
With the filing of the amended motion to dismiss for lack of jurisdiction, respondent took the position that this Court lacks jurisdiction with respect to all the periods in issue. As described below, respondent disputes whether the Court has jurisdiction over certain of the tax periods because no notice of determination was issued and for others because the petition was filed many years after the issuance of the notices of determination, and therefore well past the 30-day filing period prescribed in section 6330(d)(1). Respondent moves that this case be dismissed for lack of jurisdiction because:
(1) the petition was not timely filed in response to notices of determination issued
• for employment taxes reportable on Form 941 for the taxable quarters ending September 30, 2009, March 31, 2013, and June 30, 2013; and
• for unemployment taxes reportable on Form 940 for the taxable years ending December 31, 2009, and December 31, 2012; and
(2) no notice of determination was issued to petitioners
• for employment taxes reportable on Form 941 for the taxable quarters ending December 31, 2008, through and including June 30, 2009; December 31, 2009, through and including December 31, 2012; September 30, 2013; and December 31, 2013; and
• for unemployment taxes reportable on Form 940 for the taxable years ending December 31, 2008, December 31, 2010, December 31, 2011, and December 31, 2013.
For lien and levy notices issued for each of the periods in which no notice of determination was issued, respondent asserts that petitioners either failed to request a CDP hearing, or that they were only entitled to a CDP equivalent hearing for which there is no judicial review. With respect to the taxable year ending December 31, 2008, respondent contends in the alternative that this case is moot because petitioners have paid the Federal employment tax liability for that period.
As discussed supra, the Court ordered respondent to file a First Supplement to the motion to dismiss for lack of jurisdiction to address three entries pertaining to five periods in the account transcripts. In the First Supplement, respondent addressed the following account transcript entries:
• Entry dated December 18, 2010, pertaining to a notice of determination issued for the taxable quarter ending September 30, 2009, and taxable year ending December 31, 2009 (2010 Notice);
• Entry dated December 5, 2014, pertaining to a notice of determination issued for the taxable quarters ending March 31, 2013, and June 30, 2013, and taxable year ending December 31, 2012 (2014 Notice).
On the basis of IRS records, respondent asserts that the 2010 Notice was mailed to petitioners' last known address more than seven years prior to the filing of the petition in this case. Respondent further indicates that the 2014 Notice was mailed to petitioners' last known address more than three years prior to the filing of the petition. In each case, respondent argues that the petition was filed long after the 30-day period for timely filing expired with respect to the 2010 Notice dated December 18, 2010, and the 2014 Notice dated December 5, 2014.
Respondent addressed an additional entry related to the taxable quarter ending March 31, 2013. The entry, which was also dated December 5, 2014, relates to a decision letter issued following an "equivalent hearing." See sec. 301.6320-1(i)(1), Proced. & Admin. Regs. Respondent explained that on or about July 23, 2013, petitioners were issued a Notice of Federal Tax Lien Filing and Your Rights to a Hearing Under Sec. 6320 (CDP Lien Notice) for that quarter. IRS records show that petitioners did not request a CDP hearing pursuant to section 6320 within the 30-day period to do so. Respondent contends, with the support of official records, that petitioners' request for a hearing in response to the CDP Lien Notice was not received until April 23, 2014, nine months after issuance of the notice. As the request was untimely, respondent offered petitioners an equivalent hearing. At the conclusion of the equivalent hearing, respondent issued a decision letter to petitioners. Respondent asserts that no notice of determination sufficient to confer jurisdiction on the Court pursuant to section 6320 was issued to petitioners with respect to the taxable quarter ending March 31, 2013.
In their October 8, 2019, objection to the First Supplement, petitioners objected to dismissal on the following grounds: (1) the 2014 Notice dated December 5, 2014, was never received, and the copy of the notice provided by respondent is undated; and (2) petitioners were in contact with the revenue agent listed on the 2014 Notice in relation to obtaining a CDP hearing with respect to unspecified tax periods when all communication ceased. Thus, petitioners assert that they were denied collection due process.
Petitioners have not disputed the issuance of the 2010 Notice dated December 18, 2010. Therefore, petitioners have made no objection to the dismissal of this case with regard to the taxable quarter ending September 30, 2009, and taxable year ending December 31, 2009. Similarly, petitioners have not made any argument against dismissal of the case regarding the employment taxes reportable on Form 941 for the periods ending December 31, 2008, through and including June 30, 2009; December 31, 2009, through and including December 31, 2012; September 30, 2013; and December 31, 2013; or for unemployment taxes reportable on Form 940 for the taxable periods ending December 31, 2010, December 31, 2011, and December 31, 2013.
Discussion
The Tax Court is a court of limited jurisdiction and may exercise jurisdiction only to the extent expressly authorized by Congress. Sec. 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985). In addition, jurisdiction must be proven affirmatively, and a party invoking our jurisdiction bears the burden of proving that the Court has jurisdiction over the party's case. See Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180 (1960).
The Court's 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. Secs. 6320(c), 6330(d)(1); Rule 330(b); Orum v. Commissioner, 123 T.C. 1, 8 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005); Offiler v. Commissioner, 114 T.C. 492, 498 (2000). A condition precedent to the issuance of a notice of determination is the requirement that a taxpayer requests a hearing before the IRS Office of Appeals within the 30-day period specified in section 6320(a) or 6330(a). A late or untimely request for a hearing nonetheless made within a one-year period calculated with reference to one of the types of notice of intent to levy or final notice of lien will result only in an equivalent hearing and corresponding decision letter. Kennedy v. Commissioner, 116 T.C. 255, 262-263 (2001); secs. 301.6320-1(i)(1) and 301.6330-1(i)(1). Such a decision letter is not a notice of determination sufficient to permit the filing of a petition and invoke the Court's jurisdiction under section 6320 or section 6330. Kennedy v. Commissioner, 116 T.C. at 262-263.
The petition in this case broadly lists the tax periods at issue as those ranging from December 31, 2008, through December 31, 2013. Nevertheless, in their filings petitioners have only specifically objected to the dismissal of the tax periods associated with the 2014 Notice (the taxable quarters ending March 31, 2013, and June 30, 2013, and the taxable year ending December 31, 2012). Petitioners' response to the amended motion to dismiss for lack of jurisdiction consisted of a single paragraph in which they assert that "collection due process was violated by procedural issues in both illegal collection activity (levy) and a truncated collection due process hearing that left the petitioner without recourse, preventing entitled further due process." Petitioners have not supplied any evidence to support their claims or to establish jurisdiction more generally.
As relevant to the 2014 Notice, the record in this case consists of: (1) IRS account transcripts for each relevant tax period, (2) Forms 4340, Certificate of Assessments, Payments, and Other Specified Matters, (certified transcripts) for each relevant tax period, and (3) a copy of the 2014 Notice provided by the settlement officer who prepared it. The account transcripts for each of the tax periods associated with the 2014 Notice include the following entry dated December 5, 2014: "Collection due process (hearing) resolved by Appeals -Notice of Determination letter issued, you waived judicial review or withdrew the hearing request." The certified transcripts for each relevant tax period contain an entry dated December 5, 2014, which states: "Issuance of CDP Notice of Determination."
Although respondent is not entitled to a presumption of mailing, we conclude that, in this case, the copy of the 2014 Notice provided by the settlement officer who prepared it, in combination with the account transcripts and certified transcripts, is sufficient to show that the notice was mailed to petitioners at their last known address on December 5, 2014. Petitioners did not appear at the Court's hearing on the motion to dismiss for lack of jurisdiction and therefore did not provide testimony or other evidence regarding their assertion that the notice was not received.
Consequently, the last date that petitioners could have timely mailed/timely filed the petition in response to the 2014 Notice was January 5, 2015. The petition was filed with the Court on September 7, 2018, and the envelope bearing the petition displayed a postage postmark dated September 4, 2018. Each of these dates occurred years after the period for timely filing expired. The Court's jurisdiction is statutorily prescribed under sections 6320 and 6330, and we may not extend the 30-day period for filing a petition for lien or levy action. Weber v. Commissioner, 122 T.C. 258, 263 (2004); Axe v. Commissioner, 58 T.C. 256, 259 (1972). Accordingly, since the petition was not filed or mailed within the required statutory period, this case must be dismissed for lack of jurisdiction with respect to the taxable quarters ending March 31, 2013, and June 30, 2013, and taxable year ending December 31, 2012.
Although petitioners have not specifically objected to dismissal of the tax periods related to the 2010 Notice, respondent has produced sufficient evidence in this case that said notice was issued on December 18, 2010. The record includes account transcripts, certified transcripts, and a certified mailing list to support this premise. Therefore, we conclude that petitioners had an earlier opportunity to dispute their liability in relation to the 2010 Notice before this Court and declined to do so. See sec. 6330(c)(2)(B). Therefore, this case must be dismissed for lack of jurisdiction as to the taxable quarter ending September 30, 2009, and the taxable year ending December 31, 2009.
As to any other potential basis for an action herein, the record is equally bereft of any evidence or suggestion that respondent has at any time issued any relevant notice of determination for the taxable quarters December 31, 2008, through and including June 30, 2009; December 31, 2009, through and including December 31, 2012; September 30, 2013; and December 31, 2013; or for the taxable years ending December 31, 2008, December 31, 2010, December 31, 2011, and December 31, 2013 -- each of which is a period disputed in the petition -- that would confer jurisdiction on this Court. Nor have petitioners provided evidence of a notice of deficiency issued pursuant to section 6212 or any other narrow class of specified determinations by the IRS that can open the door to the Tax Court for any of these tax periods as of the date the petition was filed. Consequently, the Court does not have jurisdiction in this case.
Accordingly, upon due consideration and for cause, it is
ORDERED that respondent's motion to dismiss for lack of jurisdiction, filed May 15, 2019, as supplemented on September 13, 2019, and amended on July 8, 2020, is granted in that we lack jurisdiction to review each of the periods in issue in this case.