Opinion
14563-20L
05-17-2023
DAVID E. CLIFTON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Richard T. Morrison Judge
We grant the Motion for Summary Judgment (Doc. 12) filed by respondent (the "IRS") on January 6, 2023. We sustain the November 16, 2020 determination of the IRS Office of Independent Appeals ("Appeals") with respect to a proposed levy. The determination was made after a collection due process ("CDP") hearing.
Background
For tax years 2010 and 2011, petitioner David E. Clifton did not timely file tax returns. However, Clifton made payments of his tax liabilities for these years. These payments were made entirely during 2011 and 2012.
Clifton also did not timely file his return for 2012. On September 3, 2018, Clifton filed his return, reporting a tax liability of $135,816. Clifton never made any payments toward this liability or the associated penalties and interest, except that in this proceeding he requests that the Court apply overpayments for 2010 and 2011 against his 2012 liabilities.
On September 18, 2019, the IRS issued Clifton a notice of intent to levy to collect his 2012 and 2014 liabilities.
On or around October 16, 2019, Clifton submitted to the IRS a request for a CDP hearing with respect to the notice of intent to levy. Among other things, his request expressed a desire to "verify that the amounts owed are correct."
On August 18, 2020, the Appeals Officer ("AO") handling Clifton's CDP hearing reviewed the case file and determined, among other things, that Clifton had already fully paid his balance owed for 2014.
On October 8, 2020, the AO held a teleconference with Clifton's representative as part of the CDP hearing. Clifton's representative stated that he would like to verify the amount of the liability. He stated that Clifton may have net operating losses ("NOLs") from years prior to 2012 that might carry forward to reduce or offset his 2012 liability. He stated that no returns for such years had yet been filed and that work on them would not start for 45-60 days. The AO gave an extension to October 20, 2020, an additional 15 days, to provide the prior-year returns.
On November 2, 2020, the AO reviewed the case file and determined that no prior-year returns had been received. She attempted to call Clifton's representative, but the voicemail system did not accept any messages due to being "full."
On November 16, 2020, Appeals issued a notice of determination sustaining the proposed levy. On December 21, 2020, Clifton filed a timely Tax Court petition for review of the determination. On November 3, 2021, Clifton filed his 2010 return. The return reported taxable income of $0.
On November 5, 2021, Clifton filed his 2011 return. The return reported taxable income of $0 and an NOL carryover of $596,984.
On January 6, 2022, the parties filed a joint Motion for Continuance (Doc. 7). The motion stated that Clifton had informed counsel for the IRS that he had filed returns for 2009, 2010, and 2011, and that these returns claimed NOLs that would carry forward to the 2012 year. The motion stated that the parties believed when the returns were processed, the NOL carryforwards would nullify the balance due for 2012 and the case would become moot.
On June 13, 2022, the IRS processed the 2010 return. IRS records show that Clifton overpaid his 2010 tax by $53,764. In its summary-judgment papers, the IRS does not dispute that Clifton overpaid his 2010 tax liabilities by this amount.
On June 20, 2022, the IRS processed the 2011 return. IRS records show that Clifton overpaid his 2011 tax by $81,000. In its summary-judgment papers, the IRS does not dispute that Clifton overpaid his 2011 tax liabilities by this amount.
The record on summary-judgment does not reveal (1) if Clifton filed claims for refund regarding his tax payments for the 2010 or 2011 tax years, or (2) if he did file such claims, the dates on which the claims were filed.
On January 4, 2023, the IRS moved for summary judgment. The motion asks the Court to sustain the November 16, 2020 determination of Appeals without trial.
On February 8, 2023, Clifton filed his Response to Motion for Summary Judgment (Doc. 16). On February 27, 2023, the IRS filed a Reply to Response to Motion for Summary Judgment (Doc. 19).
Discussion
Section 6330(d)(1) authorizes the Tax Court to review a determination of Appeals after a CDP hearing. A taxpayer may only raise issues before the Court that were "properly raised in the taxpayer's CDP hearing." Treas. Reg. § 301.6320-1(f)(2)Q&A-F3. "An issue is not properly raised if the taxpayer . . . fails to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity to present such evidence." Id.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
In Clifton's response to the IRS motion for summary judgment, he discusses two issues, both of which relate to the 2010 and 2011 returns he filed during this litigation. First, he asks the Court to credit his 2010 and 2011 overpayments against his 2012 liability. Second, he refers to the $596,984 NOL reported on his 2011 return.
I. Applying the overpayments from 2010 (and from 2011) to 2012
We first address Clifton's request to apply the prior-year overpayments to 2012. Clifton did not raise the issue regarding the prior-year overpayments during the CDP hearing. He is therefore barred from raising the issue before the Court. Furthermore, he is statutorily disabled from receiving a credit for 2012 for the prior-year overpayments for 2010 and 2011. To receive such a credit, he would have had to have filed a claim for refund with a filing date that simultaneously met the filing-date requirements of (1) § 6511(a) and (2) § 6511(b)(2)(A). In this case, there is no date on which a claim for refund could have met both timing requirements.
II. Applying an NOL carryover for 2011 to 2012
We now address Clifton's reference to the NOL that he reported on his 2011 return. At the CDP hearing, Clifton advised Appeals it was possible he might be able to carry over NOLs from prior-year returns to 2012. However, he did not submit the prior-year returns to Appeals during the hearing. Nor did he submit factual information to Appeals supporting the NOL carryover. Thus, it is difficult to say that he properly raised the issue at Appeals. However, even assuming he properly raised the issue at Appeals, and even assuming he is entitled to raise the issue before the Court, he has failed to raise any material issue of fact regarding his entitlement to the NOL carryover.
The party moving for summary judgment (here, the IRS) bears the burden of showing that no genuine dispute of material fact exists, and for purposes of the motion, the Court will draw inferences in the light most favorable to the nonmoving party (here, Clifton). See Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). However, the nonmoving party must set forth specific facts showing that there is a genuine dispute for trial. Rule 121(d). Although Clifton has filed a 2011 tax return reporting a NOL, that, if correct, might affect his 2012 tax liability, a tax return is "nothing more than the position of [the taxpayers] that they had the respective losses claimed on those returns." Owens v. Commissioner, T.C. Memo. 2001-143, at *8. Unlike with the overpayments for 2010 and 2011, the IRS does not concede that there is an NOL for 2011. Had the IRS conceded there was an NOL for 2011, there would have been no need for Clifton to set forth facts about the NOL. But the IRS has made no such concession.
Had the IRS conceded that there was an NOL for 2011, and had the IRS recorded the elimination of the 2012 tax liability through carrying over the NOL to 2012, the dispute over a proposed levy to collect the 2012 liabilities would be moot. We continued the case on the possibility that these events might happen. But they did not. The dispute is not moot.
Furthermore, even supposing that there was an NOL arising in 2011, this would not necessarily affect Clifton's tax liability for 2012. He must first carry back any NOL from tax year 2011 to tax year 2009, and then to tax year 2010, before carrying the loss forward to tax year 2012. I.R.C. § 172 (2009) (amended 2014); Treas. Reg. § 1.172-4(b) (requiring carryback or carryover to the earlier possible year). The 2011 return, even if were assumed to be correct as to the amount of the NOL arising in 2011, does not solve this timing problem.
Conclusion
Given the foregoing, it is
ORDERED that respondent's Motion for Summary Judgment is granted; and it is
ORDERED and DECIDED that the collection action as determined in the Notice of Determination Concerning Collection Action Under Sections 6320 or 6330 of the Internal Revenue Code, dated November 16, 2020, upon which this case is based, is sustained.