Opinion
12592-20L
11-12-2021
Jay B. Dorsey Petitioner v. Commissioner of Internal Revenue Respondent
ORDER
David Gustafson Judge
In this collection due process ("CDP") case, the Commissioner filed a motion (Doc. 7) to remand the case to the Office of Appeals of the Internal Revenue Service ("IRS"), and we ordered the parties to make filings explaining their positions as to the years properly at issue in this case. This order assumes familiarity with our prior order (Doc. 8.) We will dismiss four years from this case; and as to the remaining two years, we will grant the motion to remand.
I. Years to be dismissed: 2014-2017
The petition (Doc. 1) in this case asks us to review a "Notice of Determination" issued by the IRS to petitioner Jay B. Dorsey, which is attached to the petition. That notice addresses four years--2009, 2010, 2014, and 2015. The petition itself (at para. 3) lists five overlapping years--2009, 2010, 2015, 2016, 2017. Thus, a total of six years are referred to in the petition and its attachment--2009, 2010, 2014, 2015, 2016, 2017. We will dismiss the last four of those (2014-2017), with Mr. Dorsey's consent as to three of the years (2014-2016) but not as to the fourth (2017), for the following reasons:
The years 2014 and 2015 are addressed in IRS Appeals' notice of determination, and we therefore have jurisdiction over them. However, Mr. Dorsey asserts that he "does not take any issue" as to these years and that they should "be dismissed" (Doc. 9 at 2). In such a circumstance, we can dismiss a CDP case as moot, see Wagner v. Commissioner, 118 T.C. 330 (2002), so we will dismiss 2014 and 2015 from this case.
Neither 2016 nor 2017 is a subject of IRS Appeals' notice of determination. "[F]or the Tax Court to have jurisdiction under section 6330(d), the Office of Appeals must first issue a determination under section 6330(c)(3)". Anson v. Commissioner, T.C. Memo, 2010-119, *3. As to 2016 Mr. Dorsey asserts that he "does not take any issue" and that 2016 should "be dismissed"; but he "does take issue with tax year 2017". However, Mr. Dorsey admits that 2017" was not included in the notice of determination" (Doc. 9 at 2). Consequently, we do not have jurisdiction over either 2016 or 2017, so we must dismiss them both from this case.
After those dismissals, only 2009 and 2010 will remain at issue.
II. Years to be remanded: 2009-2010
The Commissioner moved us to remand this case to IRS Appeals so that it could verify the IRS's compliance with section 6751(b)(1) as to the penalties assessed for 2009 and 2010. Mr. Dorsey does not object to the remand but argues it should have a broader scope, i.e., that on remand Appeals should consider his challenge to the tax liabilities. Section 6330(c)(2)(B) allows a liablity challenge in a CDP hearing only if the taxpayer did not already have "an opportunity to dispute such tax liability" before Appeals. Treasury Regulation section 301.6330-1(e)(3) explains: "An opportunity to dispute the underlying liability includes a prior opportunity for a conference with Appeals that was offered either before or after the assessment of the liability." Mr. Dorsey had such an opportunity when he requested audit reconsideration for 2009 and 2010. During that process his letter of September 24, 2014 (Doc. 9 at 12 of 27), requested a hearing before Appeals. Thereafter, an "Appeals Transmittal and Case Memo" dated 8/28/2017 (Doc. 10, Ex. C) stated:
Resolution Reason: TP [taxpayer] provided new facts and arguments and without involving exam, Appeals made a determination
Penalty Resolution Reason: Sustained in full by Appeals. * * *
The memo bears the printed "signature" of an "AO/SO" (Appeals Officer / Settlement Officer) and is "Approved By Robert L. Bryant, Appeals Team Manager". (Consistent with that memo, a later Form 4564 (dated 03/26/2020) states, "Appeals agreed with the audit reconsideration report".) The attachment to Appeals' notice of determination noted the prior Appeals hearing (Doc. 7 at 11 of 21 ("You previously exercised your right to an Appeals hearing on these tax years"; "you previously exercised your right to appeal the assessment"; "you pursued an appeal outside the Collection Due Process"); id. at 12 of 21("you had previously exercised your right to a rview by Appeals")) and its effect on the scope of the CDP hearing. This conclusion is consistent with the "Case Activity Record Print", which states in an entry for 07/29/2019, "TP arguing liability for 2009 and 2010. These were both appealed already and cannot be heard in appeals again." (Doc. 7 at 15 of 21.)
Mr. Dorsey makes the more nuanced contention that he did not have what he calls a "full opportunity" (Doc. 9 at 3), which he defines to include a "face-to-face meeting" (id. at 3-4). However, he cites no authority for the proposition that a taxpayer receiving an Appeals hearing upon audit reconsideration is entitled to a face-to-face hearing in that context. Mr. Dorsey's filing suggests that a face-to-face hearing would have enabled him to demonstrate that "his deductions are valid" and "there would be no tax due for either years 2009 or 2010". But deductions are usually substantiated by documents, and it is not clear why a face-to-face meeting would have been decisive. He presumably could have sent documents to Appeals during audit reconsideration to substantiate his deductions; but he did not show us that he did so (nor did he show us his substantiation for any deductions). His argument is in the nature of a critique of the sufficiency of Appeals' conduct of his audit reconsideration, not a contention that Appeals failed to conduct it. In effect, he asks us to review Appeals' audit reconsideration in order to discern its defects; but in this CDP review context, we lack the power to do so. See Pazden v. Commissioner, T.C. Memo. 2021-108. In this context, our only inquiry is whether Mr. Dorsey had a hearing before Appeals, not whether that hearing had the optimal outcome.
Consequently, we agree with the Commissioner that Mr. Dorsey was not allowed to dispute his 2009 and 2010 liability during his CDP hearing (and that he will not be entitled to dispute it in the supplemental hearing that we will order).
To give effect to the foregoing, it is
ORDERED that the years 2014 and 2015 are dismissed from this case as moot, in view of Mr. Dorsey's assertions that he "does not take any issue" as to these years and that they should "be dismissed" (Doc. 9 at 2). It is further
ORDERED that the year 2016 (as to which Mr. Dorsey similarly asserts that he "does not take any issue" and that it should "be dismissed") is dismissed for lack of jurisdiction, in the absence of a notice of determination addressing that year. It is further
ORDERED that the year 2017 is likewise dismissed for lack of jurisdiction, notwithstanding Mr. Dorsey's assertion that he "does take issue with tax year 2017", because he admits that "[t]his tax year was not included in the notice of determination" (Doc. 9 at 2). It is further
ORDERED as to the remaining years not dismissed--i.e., 2009 and 2010--that the Commissioner's motion to remand is granted, that this case is stricken from the Court's Washington, D.C., session beginning December 13, 2021, that jurisdiction over this case is retained by the undersigned judge, and that this case is remanded to the IRS's Office of Appeals in order to afford petitioner a supplemental administrative hearing, for the purpose of IRS Appeals' verifying whether written supervisory approval of the penalties at issue here was obtained in compliance with section 6751(b)(1), and not for the purpose of entertaining a liability challenge for 2009 and 2010, which challenge is barred by section 6330(c)(2)(B). It is further
ORDERED that the IRS shall on or before February 28, 2022, offer to petitioner a supplemental hearing at a reasonable and mutually agreed upon date and time. The supplemental hearing shall be conducted by video conference or by telephone unless both parties agree to meet in-person. In the case of an agreed meeting in-person, the supplemental hearing shall take place at the IRS's Office of Appeals located closest to petitioner's residence (or at such other place as may be mutually agreed upon and taking into account any scheduling difficulties associated with the coronavirus pandemic). It is further
ORDERED that the parties shall, on or before April 4, 2022, file with the Court a joint report (or, if that is not expedient, then separate reports), describing the status of the case and proposing a schedule for further proceedings, to which they shall attach a copy of any supplemental notice issued to petitioner.