Opinion
32381-21L
01-18-2024
CSI 3000, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Lewis R. Carluzzo Chief Special Trial Judge
This I.R.C. section 6330(d) case is before the Court on respondent's motion for summary judgment, filed July 25, 2023. Petitioner's objections to respondent's motion are embodied in its response, filed September 11, 2023. The motion was heard in Chicago, Illinois, on September 25, 2023. Counsel for respondent appeared and argued in support of the motion; counsel for petitioner appeared and argued against it.
As of the date of the hearing, the dispute between the parties focused entirely on petitioner's liability for an addition to tax assessed with respect to petitioner's 2017 federal income tax liability. According to petitioner, the assessment of the addition to tax should be abated because petitioner had reasonable cause for failing to timely pay its corporate income tax liability for that year.
For purposes of cases such as this one, petitioner's position is considered a challenge to the existence or the amount of the underlying liability. According to respondent, petitioner is not entitled to challenge the existence or the amount of the underlying liability in this proceeding because petitioner had a prior opportunity to do so. See I.R.C. section 6330(c)(2)(B); Montgomery v. Commissioner, 122 T.C. 1, 9 (2004). The administrative record shows that petitioner's claim to abatement of the addition to tax on the basis of reasonable cause was considered and rejected in an administrative hearing by the "Examination Office of Appeals" (penalty proceeding), prior to the administrative hearing contemplated in I.R.C. section 6330, but much of the report generated from the penalty proceeding has been redacted, apparently by agreement between the parties. Other than the outcome of the penalty proceeding, the full extent of what occurred during that proceeding is not entirely clear.
The events at the penalty proceeding might have unfolded as respondent claims in its motion, which would support it, or the situation might have been as suggested in petitioner's argument at the hearing, which would require its denial. At this stage of the proceedings, the uncertainty on the point prompts us to resolve factual inferences against respondent. See Sundstrand Corp. v. Commissioner, 98 T.C. 518 (1992), aff'd 17 F.3d 965 (7th Cir. 1994). That being so, it follows that respondent's motion must be denied.
Recognizing that possible outcome, at the hearing respondent's counsel suggested that if the motion was denied, the matter should be remanded to Appeals for consideration of petitioner's claim to reasonable cause. We see little point in doing so. It is clear that respondent's settlement officer considered petitioner's claim, even if relying only upon the reasoning and outcome of the earlier penalty proceeding. At this point in the proceedings, if the parties are unable to reach an agreement on their dispute, the next step is to proceed to trial for a de novo review of petitioner's challenge to the underlying liability.
To give effect to the foregoing, it is
ORDERED that respondent's motion is denied. It is further
ORDERED that this case is set for trial during the Chicago, Illinois, trial session scheduled to begin in that city on February 26, 2024, in courtroom 3908, Kluczynski Federal Building, 230 S. Dearborn Street, Chicago, Illinois, a time and date certain of 1:30 p.m. on Monday, February 26, 2024. It is further
ORDERED that the terms and conditions set forth in the Standing Pretrial Order previously served upon the parties remain in full force and effect, except previously filed pretrial memoranda need only be updated as appropriate.