Opinion
6446-19L
04-11-2022
WENDELL C. ROBINSON & MAY T. JUNG-ROBINSON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER TO SHOW CAUSE
David Gustafson Judge
This is a "collection due process" ("CDP") case brought under section 6330. Petitioners Wendell C. Robinson and May T. Jung-Robinson invoke our jurisdiction under section 6330(d)(1) to review a notice of determination by the Internal Revenue Service ("IRS") Independent Office of Appeals ("IRS Appeals") sustaining a notice of intent to levy to collect unpaid Federal income tax liabilities for the 2009 and 2012 years. This case was tried on December 15, 2021, in Washington, D.C., and the Court rendered its oral findings of fact and opinion (Doc. 90) on December 17, 2021. The parties thereafter submitted proposed computations under Rule 155 (Docs. 92, 94-95). We will overrule the Robinsons' objections to the Commissioner's computation, but we will order the Commissioner to show cause why he should not be required to file a supplemental computation making certain corrections, and we will order the Robinsons to reply to the Commissioner's response to this order.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, references to regulations are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and references to Rules are to the Tax Court Rules of Practice and Procedure. Some dollar amounts are rounded. Parenthetical references to "Doc." are to documents as they are numbered in the docket record of this case, and the page numbers cited in such references are according to the numbering in the portable document format ("PDF") of the digital file.
Background
The pertinent facts are as follows.
2009 tax return and IRS treatment
The Robinsons filed a tax return for the year 2009 reporting a total tax liability of $217,246. (Doc. 82 at 126; Doc. 90 at 4.) Subtracting from that figure $166,608 of income tax withheld from Forms W-2 and 1099, the Robinsons reported a total amount of tax due of $50,637 on their return. The Robinsons included a check with their return for $15,000, leaving $35,637 of their self-reported liability unpaid. (Doc. 90 at 6, 17, 27, 35.)
The IRS assessed, under section 6213(b)(1) and (g)(2), additional tax attributable to "mathematical or clerical errors" on the Robinsons' 2009 return. The corrected errors were: (1) the failure to limit total itemized deductions on Schedule A, "Itemized Deductions", in accordance with section 68(a); (2) the overstatement of the amount of self-employment tax on Form 1040, line 56; and (3) the failure to limit personal exemptions in accordance with section 151(d)(3). The IRS assessed total tax of $220,564-an increase of $3,318 over the Robinsons' reported total tax attributable to the mathematical or clerical errors. (Doc. 90 at 6.)
The IRS also assessed an addition to tax under section 6651(a)(2) for failure to pay the amount of tax shown on the Robinsons' 2009 return. (Doc. 90 at 10.) After notice and demand for payment, the IRS began assessing an addition to tax under section 6651(a)(3) on the portion of the increased liability arising from mathematical or clerical errors that remained unpaid after the notice. (Doc. 90 at 10-11.)
2012 tax return and IRS treatment
The Robinsons filed a tax return for the year 2012 (Doc. 82 at 135; Doc. 90 at 12), and the IRS assessed additional tax attributable to correction of mathematical or clerical errors on this return, as well. (Doc. 90 at 13.) We ultimately disallowed the IRS's additional assessment for 2012 (Doc. 90 at 36); and so, for the purpose of this order, we will incorporate the details of those errors here by reference to our bench opinion (Doc. 90 at 12-14).
Notice of intent to levy and CDP hearing
The Robinsons received a notice of intent to levy their assets for outstanding tax liabilities for 2009 and 2012 and timely requested a CDP hearing. The CDP hearing was conducted by correspondence and telephone, and thereafter IRS Appeals sent to the Robinsons a notice of determination sustaining the proposed levy. (Doc. 82 at 112; Doc. 90 at 17-18.) The Robinsons contested the notice of determination by filing a timely petition in this Court.
Trial and bench opinion
Trial in this case was conducted December 15, 2021, in Washington, D.C. On December 17, 2021, the Court read (via Zoomgov) a bench opinion that addressed the Robinsons' liability for Federal income tax and additions to tax under sections 6651(a)(2) and (3) for 2009 and 2012. Regarding the 2009 tax year, the bench opinion (Doc. 90 at 35-36) stated:
The Robinsons are liable for the interest and additions to tax that accrued on the unpaid portion of their self-reported liability (i.e., $35,637 of the $217,246).
The Robinsons are liable for the portion of the $3,318 addition to their 2009 tax liability assessed by the IRS that was attributable to the mathematical and clerical error (i.e., excess itemized deductions) for which they properly received notice pursuant to section 6213(b)(2)(A), and for interest and additions to tax under section 6651(a)(3) for failure to pay that portion of the liability. [Emphasis added.]
We held further that the Robinsons were not liable for the additional liability assessed by the IRS attributable to mathematical or clerical errors on their 2012 return, and that IRS Appeals abused its discretion in sustaining the proposed levy as to that amount. (Doc. 90 at 36.)
In light of our holdings, we asked the parties to submit proposed computations of the Robinsons' liabilities for 2009 and 2012 so that we may enter decision under Rule 155.
Rule 155 submissions
On March 18, 2022, the Commissioner submitted his proposed computation (Doc. 92) under Rule 155. On March 30, 2022, the Robinsons filed a "Computation for Entry of Decision" (Doc. 94), with exhibits attached, and an additional filing entitled "Memorandum in Support of Computation for Entry of Decision" (Doc. 95) but in fact consisting simply of additional exhibits. All of the exhibits thus submitted by the Robinsons in Docs. 94 and 95 are already in the record of this case (in Doc. 85). One of the newly submitted exhibits in Doc. 94 and several in Doc. 95 include social security numbers that have not been redacted.
Discussion
I. Rule 155
In some CDP cases where the taxpayer properly challenges the underlying tax liability, the final resolution may be divided-with one party prevailing on some issues and the other party prevailing on others. In such instances, the Commissioner's original assessment cannot be unqualifiedly sustained, and the Tax Court must redetermine the taxpayer's tax liability in the same manner as we would redetermine a deficiency pursuant to section 6214. See Washington v. Commissioner, 120 T.C. 114, 129 (2003). To facilitate those redeterminations, Rule 155 sets forth procedures for resolving computational matters after the Court has decided the issues.
However, Rule 155 is decidedly not a remedy for correcting errors in a Tax Court opinion. Rule 155(c) explicitly provides:
(c) Limit on Argument: Any argument under this Rule will be confined strictly to consideration of the correct computation of the amount to be included in the decision resulting from the findings and conclusions made by
the Court, and no argument will be heard upon or consideration given to the issues or matters disposed of by the Court's findings and conclusions or to any new issues. This Rule is not to be regarded as affording an opportunity for retrial or reconsideration. [Emphasis added.]
II. Analysis
A. The Robinsons' purported computation
Neither the "computation" nor the memorandum submitted by the Robinsons contains a computation of their ultimate liability as determined by our bench opinion. Instead, the Robinsons explicitly attempt what Rule 155(c) flatly forbids: They "seek modification and reversal of the Court's decision, based on Petitioner's [sic] belief that the Court's decision is based on a mistake of fact and law". The Robinsons attach various exhibits (all of which were previously admitted into evidence) to support their argument that the Court should adopt the calculations in their original 2009 return.
The Robinsons' argument in their submission targets an issue that we disposed of in our bench opinion (namely, whether the Robinsons "committed a mathematical and/or clerical error on [their] 2009 tax return[]"), and therefore Rule 155(c) provides no proper occasion for our consideration of the Robinsons' "computation" or accompanying memorandum. We note, however, that their argument has no merit. They most certainly did commit an error on their return (i.e., reporting their estimated payments as if they had been withheld; Doc. 90 at 5-6). The IRS initially accepted their erroneous reporting of withholding, added those amounts to the actual estimated tax payments, and (because of the Robinsons' not-yet-corrected error) told the Robinsons that they were entitled to a refund). (Doc. 90 at 8-9.) The relevance of these facts is that the Robinsons' supposed excuse for their late payment (i.e., their supposed belief that they had overpaid) was the result of their own error and was not a real excuse for their persistent refusal to pay the liability after the IRS's notice and demand. (Doc. 90 at 27-28.)
B. The Commissioner's proposed computations
The Commissioner's Rule 155 submission, like most such submissions, is a document with very little narrative. It consists of a cover page, a case caption and short preamble, a signature page, a "computation statement" summarizing the IRS's adjustments that we allowed, a Form 5278, "Statement - Income Tax Changes" calculating the Robinsons' 2009 tax liability, a "Failure to Pay Tax on Return (a)(2)" statement calculating the addition to tax, and a draft decision document.
1. 2009
In compliance with our bench opinion (Doc. 90 at 35-36), the Commissioner proposes a correction to the Robinsons' 2009 income tax liability (i.e., neither the $217,246 reported on the return, nor the $220,564.43 determined in the statutory notice of deficiency, but rather $218,860.63). The Robinsons make no argument or assertion that this fails to effectuate our instruction (i.e., that "[t]he Robinsons are liable for the portion of the $3,318 addition to their 2009 tax liability assessed by the IRS that was attributable to the mathematical and clerical error (i.e., excess itemized deductions) for which they properly received notice pursuant to section 6213(b)(2)(A)"; Doc. 90 at 35-36).
The Commissioner's computation and his draft decision document are both silent as to the addition to tax under section 6651(a)(3) (cf. Doc. 90 at 36), and we infer that he computes this liability as zero.
The Commissioner's statement entitled "Failure to Pay Tax on Return (a)(2)" (Doc. 92 at 6) purports to compute the section 6651(a)(2) addition to tax on the unpaid portion of the tax liability shown on the Robinsons' 2009 return. He computes this addition to tax by multiplying the statutory percentage (0.5%) by $40,794.31 for the applicable time period. Our opinion (Doc. 90 at 35, as cited above) held that the Robinsons are liable for the section 6651(a)(2) addition to tax on $35,637 (the amount of unpaid tax liability reported by the Robinsons for 2009), and we are unable to determine why the Commissioner calculated the section 6651(a)(2) addition to tax using $40,794.31 instead of $35,637. We will order him to show cause why this should not be corrected.
2. 2012
The Commissioner's calculation of the Robinsons' 2012 liability in his "computation statement" (Doc. 92 at 4) appears to comport with the holding in our bench opinion.
III. Conclusion
Because the Robinsons' submission under Rule 155 does not propose computations, but instead makes argument on issues decided in our bench opinion, we disregard it in recalculating their liabilities for 2009 and 2012. Rule 155(c). The Commissioner's submission under Rule 155 proposes a computation of the Robinsons' liability for 2009 that, in one respect, is apparently not consistent with the holding in our bench opinion issued in this case.
It is therefore
ORDERED that the Clerk of the Court (1) shall remove from Doc. 94 the exhibits attached thereto and shall file them in a separate document (Doc. 96) as "Petitioners' Exhibits", (2) shall recharacterize Doc. 95 as "Petitioners' Exhibits", and (3) shall strike Docs. 95 and 96 from the record of this case, shall remove these documents from the Court's public record, and shall place them under seal where they shall remain until further direction of the Court, and they shall be retained by the Court in a sealed file which shall not be inspected by any person or entity except by an order of the Court. It is further
ORDERED that the Robinsons' objections to the Commissioner's computation (Doc. 94) are not sustained. However, it is further
ORDERED that, no later than May 9, 2022, the Commissioner shall file a response to this order in which he shall show cause why we should not order him to file a corrected computation which recomputes the section 6651(a)(2) addition to tax on the Robinsons' reported unpaid liability for 2009. It is further
ORDERED that, no later than June 3, 2022, the Robinsons shall file a reply to the Commissioner's response to this order.