Opinion
21210-19L
09-19-2024
ALL IS WELL HOMECARE SERVICES, LLC, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge
In compliance with our Order to Show Cause ("OSC"; Doc. 55), the parties have filed responses (Docs. 56, 57). We will discharge the OSC and order further proceedings. This order presumes knowledge of the OSC and our previous orders (Docs. 29, 30, 44, 48, 50).
Background
The LLC's liabilities
Petitioner All Is Well Homecare Services, LLC (which we refer to as "the LLC") reported but failed to pay employment tax liabilities on Forms 940 and 941 for periods in 2013-2016. The Internal Revenue Service ("IRS") assessed those taxes and, in order to collect them, eventually issued--on two different dates in March 2019--a notice of lien (dated March 7, 2019; Doc. 11, Ex. D) and a notice of proposed levy (dated March 18, 2019; Doc. 11, Ex. E). Both of those collection notices addressed only the Forms 940 and 941 liabilities of the LLC.
The owner's liabilities
The LLC's sole member and owner is Dinah Opoku-Manu. As of March 2019, Ms. Opoku-Manu had unpaid income tax liabilities for the years 2010-2018 (reported on Form 1040) as well as so-called "100% penalties" under section 6672 for failure to pay over the employee portion of the LLC's employment taxes. Ms. Opoku-Manu's liabilities are not included on the lien and levy notices described above, nor on the LLC's hearing request (Doc. 22, Ex. F), Appeals' notices of determination (Doc. 22, Exs. A, B), nor the petition in this case (Doc. 1, para. 3), all of which mention only the LLC's employment tax liabilities.
Agency-level CDP hearing
On April 17, 2019, the LLC submitted a Form 12153, "Request for a Collection Due Process or Equivalent Hearing" (Doc. 22, Ex. F), citing the lien and levy notices issued to the LLC and the LLC's employment tax liabilities. The principal issue in the CDP hearing was an Offer in Compromise ("OIC") submitted by the LLC as to its employment tax liabilities, first in tandem with an OIC submitted by Ms. Opoku-Manu as to her income tax and 100% penalty liabilities (Doc. 21 at 8-15) and then corrected to state the LLC's offer distinctly (Doc. 21 at 41-47). A $14,000 deposit accompanied the original OIC, and the corrected OIC specified that $9,048.35 of that amount pertained to the LLC (Doc. 21 at 48), leaving $4,951.65 as pertaining to Ms. Opoku-Manu (see Doc. 56, para. 14).
The CDP hearing before Appeals concluded with its issuing to the LLC, on November 1, 2019, two determinations as to its employment tax liabilities, both of which denied the LLC's OIC as unprocessable and sustained the proposed collection. Appeals' document issued as to the proposed levy was a "Notice of Determination" (Doc. 22, Ex. B), which notified the LLC of its option to file a Tax Court petition challenging the determination. Because Appeals determined that the LLC's hearing request was not timely as to the lien notice and therefore would not support Tax Court jurisdiction to review the matter, Appeals' document issued as to the lien was a "Decision Letter on Equivalent Hearing" (Doc. 22, Ex. A).
Tax Court petition and remand
The LLC filed a petition as to both the lien and the proposed levy. As in the agency-level hearing, the principal issue before the Court has been the LLC's Offer in Compromise ("OIC"). The Commissioner filed a motion (Doc. 10) for summary judgment, which we denied (see Docs. 30, 48). On May 4, 2023, the Commissioner filed a motion (Doc. 43) to remand the case to Appeals, which we granted as to the levy issue on May 5, 2023 (see Doc. 44). We later denied the Commissioner's motion for summary judgment as to the lien notice (Doc. 48), and by order of November 13, 2023 (Doc. 50), we remanded the lien issue to Appeals as well.
Order to Show Cause and responses
Nine months later, there was little visible progress. No supplemental hearing had been held, no supplemental determination had been issued, and no refund of any portion of the deposit submitted with the OIC had been made. We held a telephone status conference with the parties on August 15, 2024; and the next day we issued our OSC (Doc. 55), requiring each of the parties to show cause, by September 13, 2024, why the Court should not--
(1) hold that the Commissioner has waived the contention that the CDP request as to the lien is untimely, and/or hold that the deadline was equitably tolled;
(2) hold that Appeals' refusal or failure to prosecute the remand in this case constitutes an abuse of discretion that warrants in this case the Court's ruling that the collection notices underlying this case should not be sustained and, as a consequence, the Court's entering a decision in petitioner's favor; and
(3) order that a refund of petitioner's OIC deposit be made within 60 days.
The parties filed their responses (Docs. 56-57), and those responses show as follows: Appeals issued a letter to petitioner on August 29, 2024, accepting petitioner's OIC. Appeals issued to the LLC on September 11, 2024, a "Supplemental Decision Letter Concerning Equitable Tolling" (Doc. 56, Ex. A), which holds that equitable tolling does not apply and therefore the LLC's CDP request was timely as to the lien notice. As for a refund of the OIC payment, the Commissioner reports that "The parties continue conferring on whether any action on Ms. Opoku-Manu's accounts or OIC deposit is appropriate and desired by Ms. Opoku-Manu."
Discussion
Discharge of the OSC
In the time since we issued our OSC, sufficient progress has been made to warrant discharge of the OSC:
1. Equitable tolling. Our Order to Show Cause ("OSC"; Doc. 55) was issued August 16, 2024; and less than four weeks later (and before responses to the OIC were due on September 13, 2024) IRS Appeals issued a Supplemental Decision Letter addressing equitable tolling (and holding that it dos not apply). The OSC evidently had its intended effect of spurring action, and we are satisfied that the OSC should be discharged in this regard.
We do not yet have before us the issue of whether Appeals was correct in so holding as to equitable tolling. That is an issue we will address in due course, but the record now before us is not sufficient to enable us to address the issue. However, we can say that Appeals' recent action supports the conclusion that the Commissioner has not waived his contention that the CDP request was untimely.
2. Conduct of the remand. This principal issue in the CDP hearing (and in the case) is apparently Appeals' prior non-acceptance of petitioner's OIC. After we issued the OSC, Appeals determined that the OIC should be accepted (because it had been deemed accepted by virtue of the passage of time), and Appeals issued its letter so stating. This was substantial progress in the case (i.e., progress favorable to petitioner), and it counters the hypothesis in the OSC that Appeals abused its discretion by not acting.
Petitioner complains that, although Appeals has accepted the OIC, its determination nonetheless reflects abuses of discretion. Petitioner may elaborate on this complaint in the status report that we shall order, but for present purposes it is sufficient that to hold that the action taken since we issued the OSC warrants its discharge.
3. Refund. Petitioner acknowledges that "an order refunding the deposit will no longer be necessary", because the question of a refund is mooted by the acceptance of the OIC. This is correct to the extent--evidently $9,048.35--that the $14,000 deposit pertained to the OIC and liability of the LLC. If any portion (evidently $4,951.65) relates to the distinct OIC offered by Ms. Opoku-Manu, which was denied, then questions might remain as to the appropriate amount of any refund due to her, but given the acceptance of the LLC's OIC, the refund of the entire deposit would be inappropriate, and any refund to the LLC would be inappropriate, so our OSC should be discharged as to the deposit refund issue.
Unfinished business as to the LLC
The acceptance of the LLC's OIC requires a (second) Supplemental Determination Letter, which must address follow-up action that the Commissioner describes as follows: "First, the SO [Settlement Officer] is preparing reversals of transfers of credits which originated in later years and were applied after June 20, 2021, to the years at issue in the Offer in Compromise. Second, petitioner's counsel provided additional information about Employee Retention Credits on September 11, 2024, that SO Edwards is researching." (Doc. 56, para. 10.) Petitioner similarly states that we must consider "all non-CDP years that have credits, (including the Employee Retention Credits 'ERC' as applicable in this case), overpayments and adjustments that may have been used to reduce taxes owed for the CDP periods" (see Doc. 57 at 9) and asserts that "any limitations period suspended during the lien application period must be reinstated" (id. at 7). This administrative action is distinct from the matter of refund of deposit discussed above; and we do not infer that either party asks us to adjudicate any unallowed credits (cf. Weber v. Commissioner, 138 T.C. 348, 366, 371-72 (2012)), or to order any refund of overpayments that result from the acceptance of the OIC (cf. Greene-Thapedi v. Commissioner, 126 T.C. 1, 13 (2006) ("we lack jurisdiction under section 6330 to determine any overpayment or to order a refund or credit"), abrogated on other grounds by Zuch v. Commissioner, 97 F.4th 81 (3d Cir. 2024).
Unfinished business as to Ms. Opoku-Manu
Issues specific to Ms. Opoku-Manu--her income tax and 100% penalty liabilities, Appeals' denial of her OIC, and the refund of her deposit of $4,951.65--are not addressed here. The Commissioner reports that "[t]he parties continue conferring on whether any action on Ms. Opaku-Manu's accounts or OIC deposit is appropriate and desired by Ms. Opaku-Manu" (Doc. 56, para. 17). We encourage the parties to continue so conferring, but it appears that Ms. Opoku-Manu and her income tax and 100% penalty liabilities are outside our jurisdiction in this case, which instead involves a different taxpayer (the LLC) and its different liabilities (employment taxes).
It is therefore
ORDERED that our Order to Show Cause (Doc. 55) is hereby discharged. It is further
ORDERED that the parties shall file a joint status report or separate reports no later than November 8, 2024, as the Commissioner suggested. (See Doc. 56 at 5.) We expect that filing to report Appeals' issuance of its second "Supplemental Determination Letter" (see Doc. 56, para. 10). It is further
ORDERED that the status report(s) to be filed by November 8, 2024, shall include the parties' recommendations (preferably joint recommendations) as to further proceedings and shall include the parties descriptions (preferably joint descriptions) of the issues that remain for decision. Presumably the remaining issues include equitable tolling as to the lien. However, in light of the acceptance of the LLC's OIC, it is currently unclear what practical effect equitable tolling might have in this case. If equitable tolling applies and the Court therefore has authority to decide the lien aspect of this case, the parties should explain what issues (if any) would be before the Court that are not before the Court in the levy aspect of this case. (See, e.g., Doc. 57 at 7.)