Opinion
30616-21P
03-08-2024
JOHN F. PAVEL, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL
Mary Ann Cohen Judge
Pending before the Court is respondent's Motion to Dismiss for Failure to State a Claim upon Which Relief Can Be Granted. Therein, respondent requests that this case be dismissed on the ground that petitioner's assignment of error is a challenge to his underlying liability, which this Court lacks jurisdiction to determine in an action brought under section 7345.
All statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The following facts are derived from the pleadings and the parties' exhibits attached thereto. Petitioner resided in Washington when he petitioned this Court.
In 2012, petitioner closed a business that he and his wife operated. Petitioner and his wife did not fully pay their employment taxes in 2012, and respondent assessed trust fund recovery penalties against them.
On November 1, 2021, respondent issued petitioner a Notice CP508C, "Notice of certification of your seriously delinquent federal tax debt to the State Department" (notice of certification). The notice of certification stated that petitioner's tax debt for the tax period ending December 31, 2012, was $231,815.45, with additional interest charges of $35,251.32.
On November 15, 2021, petitioner electronically filed the Petition to commence this case. In the Petition, petitioner challenged the notice of certification on the grounds (1) that the amount of tax debt on the notice of certification was incorrect because it failed to account for a $91,365 payment made by petitioner's wife; and (2) that the trust fund recovery penalties constituting the assessed tax debt were improper because they lacked proper managerial approval.
Discussion
When reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, we assume that all allegations stated in the petition are true and then determine whether the claim asserted fails as a matter of law. See Cohen v. Commissioner, 139 T.C. 299 (2012), aff'd, 550 Fed.Appx. 10 (D.C. Cir. 2014). We must construe pleadings to do justice. See Rule 31(d).
Section 7345(a) provides that, if the IRS certifies that a taxpayer has "a seriously delinquent tax debt," that certification shall be transmitted "to the Secretary of State for action with respect to denial, revocation, or limitation of [the taxpayer's] passport." The IRS is responsible for notifying the taxpayer contemporaneously with the making of such certification. I.R.C. § 7345(d). A "seriously delinquent tax debt" is a federal tax liability that has been assessed, exceeds $50,000 (adjusted for inflation), is unpaid and legally enforceable, and with respect to which a lien notice has been filed or a levy made. I.R.C. § 7345(b)(1), (f). The adjusted threshold amount for 2021, the year of petitioner's certification, was $54,000. See Rev. Proc. 2020-45, § 3.59, 2020-46 I.R.B. 1016, 1027.
A taxpayer who has been certified as having a seriously delinquent tax debt may petition this Court to determine "whether the certification was erroneous or whether the [IRS] has failed to reverse the certification." I.R.C. § 7345(e)(1). If we find that a certification was erroneous, we "may order the Secretary to notify the Secretary of State that such certification was erroneous." I.R.C. § 7345(e)(2). We are not empowered to review or redetermine a taxpayer's underlying liability in a section 7345(e)(1) proceeding. See Adams v. Commissioner, 160 T.C. 1, 6-7 (2023).
Petitioner first challenges the notice of certification on the ground that the amount of tax debt was improperly calculated. On October 1, 2021, petitioner's wife made payments totaling $91,365.96 against the tax debt total, but these payments had not yet been processed at the time the notice of certification was issued. After application of these payments, petitioner's account balance for the tax period ending December 21, 2012, is $140,449.49, not including interest. This amount still exceeds the $54,000 threshold.
Petitioner next argues that because respondent did not obtain supervisory approval prior to the assessment of the trust fund recovery penalties, the assessment was improper and the resulting tax debt was not "legally enforceable," as required by section 7345(b)(1). This argument regarding the propriety of the assessment constitutes a challenge to the validity of petitioner's underlying tax liability. See Adams, 160 T.C. at 7-8. We lack jurisdiction to review petitioner's underlying liability in this proceeding, and thus petitioner's arguments to that effect fail to state a claim under section 7345 and Rule 351(b). See id. As petitioner has not alleged any other error in the certification, he has failed to raise any issue for which we can grant him relief in this proceeding.
We have considered all other arguments that the parties made, and to the extent they are not addressed herein, we find the arguments to be moot, irrelevant, or without merit.
Upon due consideration, and for cause, it is
ORDERED that respondent's Motion to Dismiss for Failure to State a Claim upon Which Relief Can Be Granted, filed December 21, 2021, is granted and this case is dismissed for failure to state a claim upon which relief can be granted.