Opinion
6648-19SL
04-26-2022
WILLIAM L. BROWN & JENNIFER DANIELS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Elizabeth Crewson Paris, Judge
This IRC section 6330(d) case is before the Court on respondent's motion for summary judgment filed November 25, 2019. By Order dated December 5, 2019, the Court previously directed petitioners to file a response to respondent's motion on or before January 10, 2020.
Upon further review of Respondent's motion, it was determined that the motion for summary judgment failed to include a full copy of the Notice of Determination as to both petitioners that should be included in the record, it cited an incorrect tax year reflected in the motion that should be corrected, the exhibits should be redacted, and a copy of the Audit Reconsideration denial letter should be included in an Amended motion for summary judgment. By Order dated January 23, 2020, the Court directed respondent to file with the Court an amended motion for summary judgment on or before February 21, 2020. Upon request of respondent, said time was extended by Order, until March 23, 2020. Respondent's first amended motion for summary judgment was filed March 23, 2020. Petitioners' time to respond to the amended motion for summary judgment was extended for cause until October 30, 2020. On October 30, 2020, petitioners filed a response with exhibits to respondent's first amended motion for summary judgment. On January 4, 2021, by Order respondent filed a reply to petitioners' response.
Respondent's amended motion for summary judgement with attached exhibits and Declaration, includes the Notice of Deficiency to both petitioners dated July 31, 2017, said notice of deficiency includes a negligence penalty under IRC section 6662(a), with no internal explanation of the penalty and no evidence of penalty approval. Petitioners did not file a petition with the Court to challenge the deficiency and penalty, but they did challenge both in the audit reconsideration. The penalty was assessed on December 17, 2017. After reviewing the declaration included in respondent's amended motion for summary judgment with attached exhibits and the Declaration of the Appeals Officer, both respondent's Appeals office, and the Auditor's case notes for audit reconsideration failed to include any verification of compliance with section 6751(b)(1) as required by section 6330(c)(1). Respondent also failed to include the audit reconsideration denial letter, stating it was not available.
Respondent cannot assess an accuracy-related penalty under section 6662(a) unless he has complied with the requirement of section 6751(b)(1), which provides: No penalty under this title shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level as the Secretary may designate. To show compliance with this provision, respondent must show (1) the identity of the individual who made the "initial determination", (2) an approval of the penalty "in writing", (3) the identity of the person giving approval and his or her status as the "immediate supervisor" and (4) evidence that the supervisory approval was obtained no later than the issuance to petitioner(s) of the initial formal communication of proposed adjustments that includes penalties and provides the taxpayer the right to protest those proposed adjustments, such as a 30-day letter or Letter 525. See sec. 6751(b)(1); Clay v. Commissioner, 152 T.C. 223, 249 (2019).
After due consideration and for cause, it is
ORDERED that respondent's March 23, 2020, First Amended Motion for Summary Judgment is denied without prejudice. It is further
ORDERED that this case is remanded to respondent's Appeal's Office for a supplemental hearing to include relevant documents to demonstrate compliance with the verification requirements of section 6330(c)(1) to include review of verification of compliance with section 6751(b)(1) as required by section 6330(c)(1). It is further
ORDERED that respondent shall offer petitioners a supplemental hearing at a reasonable and mutually agreed upon date and time, but no later than July 15, 2022. It is further
ORDERED that each party shall, on or before July 29, 2022, file with the Court a status report, which shall include any supplemental notice of determination issued to petitioner.