Opinion
8084-23SL
02-16-2024
TODD A. CRAWFORD & LORI A. CRAWFORD, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND ORDER OF DISMISSAL
Adam B. Landy, Special Trial Judge.
Pending before the Court is the Commissioner's Motion for Summary Judgment [Doc. 14] and the Commissioner's Motion to Dismiss on Ground of Mootness [Doc. 15]. For the reasons stated below, we will deny the Motion for Summary Judgment and grant the Motion to Dismiss on Ground of Mootness.
Background
On September 12, 2019, the Crawfords late filed their 2017 Form 1040 income tax liability showing total tax of $28,331 and withholdings of $18,298, resulting in an amount due of $10,033. [Doc. 15 at 7.] On October 7, 2019, the IRS assessed additions to tax pursuant to sections 6651(a)(1) and (a)(2) and accrued interest of $4,109. [Id.] To collect the unpaid liability for 2017, the IRS filed and had recorded a federal tax lien (FTL), on March 23, 2020, pursuant to section 6323. [Id.; see also Doc. 13 at 94.]
On March 26, 2020, the IRS mailed to the Crawfords a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320. [Doc. 13 at 95-100; Doc. 15 at 7.] The Crawfords timely requested a collection due process (CDP) hearing with the IRS Independent Office of Appeals. [Doc. 13 at 90-91; Doc. 15 at 8.] The Crawfords maintained that they were entitled to a collection alternative of currently not collectible status and a withdrawal of the filed tax lien on the basis of their medical condition and increased financial hardship. [Doc. 13 at 90-91.] The Crawfords did not challenge the underlying liability for 2017. [Id.] Although the administrative record does not contain a copy of an offer in compromise and related collection information statement, the Crawfords submitted an offer on June 23, 2021. [Doc. 15 at 8.]
After review, the IRS rejected the offer arguing that it believed that the Crawfords could pay the tax liability in full through an installment agreement. [Doc. 13 at 14-28.] Before issuing the Notice of Determination on April 15, 2023, the IRS applied a credit from taxable year 2022 to taxable year 2017, which removed any remaining liability due for 2017. [Doc. 15 at 8.] Unbeknownst to the settlement officer that full payment had been received, the IRS issued the Notice of Determination on April 24, 2023, sustaining the filing of the FTL. [Doc. 13 at 14-28.] The FTL was released on November 29, 2023. [Doc. 15 at 11.] The Crawfords timely petitioned this Court for redetermination. [Doc. 1.]
In the Motion to Dismiss on Ground of Mootness, the Commissioner contends that there is no case or controversy because the tax liability at issue in the case has been paid in full and the proposed collection action is no longer necessary. The Commissioner stated that it is unknown whether the Crawfords object to the Court granting the Motion. On February 8, 2024, the Crawfords filed an Opposition to the Commissioner's Motion to Dismiss on Ground of Mootness arguing that the IRS improperly applied an overpayment from taxable year 2022 to taxable year 2017. The Crawfords request this Court order the Commissioner to redirect the credits from 2017 back to 2022.
Discussion
The Tax Court is a court of limited jurisdiction, and we may exercise jurisdiction only to the extent expressly provided by statute. § 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985); Breman v. Commissioner, 66 T.C. 61, 66 (1976). As the party invoking the Court's jurisdiction, the Crawfords bear the burden of proving that jurisdiction exists. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001).
Once the Commissioner concedes that there is no unpaid liability for the CDP year upon which collection action could be based, a collection review proceeding filed in this Court is moot. Greene-Thapedi v. Commissioner, 126 T.C. 1, 13 (2006); cf. Vigon v. Commissioner, 149 T.C. 97, 105 (2017) (holding that valid liability challenges "may remain even after the collection issues have been resolved or become moot").
The IRS credited an overpayment from the Crawfords' taxable year 2022 against their 2017 liability as authorized by section 6402(a). This overpayment fully satisfied the Crawfords' 2017 liability eliminating the IRS's need for further collection action for 2017. Since the Crawfords had an outstanding federal tax liability for 2017 and did not challenge the underlying tax liability for 2017, the IRS was permitted to apply the overpayment from 2022 to the 2017 tax liability before refunding any remaining amounts to the Crawfords, even if the Crawfords elected that any overpayment from 2022 be applied to the succeeding taxable year as an estimated tax payment. See Treas. Reg. §§ 301.6402-1; 301.6402-3(a)(6). Consequently, the IRS properly applied the 2022 overpayment to 2017 thereby eliminating the balance due. On November 29, 2023, the FTL was released by the Register of Deeds for Oakland County, Michigan. Because there is no longer any case or controversy to sustain the Court's jurisdiction over taxable year 2017, this case is nonjusticiable and must be dismissed on the ground of mootness.
Upon due consideration of the Commissioner's Motions, and for cause, it is
ORDERED that the Commissioner's Motion for Summary Judgment, filed February 2, 2024, is denied as moot. It is further
ORDERED that the Commissioner's Motion to Dismiss on Ground of Mootness, filed February 2, 2024, is granted, and this case is dismissed on ground of mootness.