Opinion
33840-21SL
01-05-2024
ELECTRICAL ENGINEERED PRODUCTS, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ADAM B. LANDY SPECIAL TRIAL JUDGE.
This collection review case is before the Court on the Commissioner's Motion for Summary Judgment (Motion), filed August 21, 2023. The Internal Revenue Service (IRS) Independent Office of Appeals issued to petitioner, Electrical Engineered Products, Inc. (Company), a notice of determination dated September 21, 2021, sustaining the issuance of a notice of intent to levy with respect to the unpaid Federal civil penalty for taxable year 2017 (year at issue). The Company invoked this Court's jurisdiction by filing a Petition for review of the proposed levy, pursuant to section 6330(d), on October 26, 2021.
The term "Internal Revenue Service" or "IRS" refers to the administrative actions conducted before the filing of the Petition in this case. The term "Commissioner" refers to the Commissioner of Internal Revenue, the head of the IRS and respondent in this case, and to actions taken since the Petition was filed in this case.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times.
The Motion is supported by a Declaration of Lee Gyomlai, an attorney for the Commissioner. Attached to the Motion is an account transcript for the year at issue showing that the underlying liability arose from a civil penalty assessed on November 16, 2020, pursuant to section 6721(e), for intentional disregard of the requirement to timely file Forms W-2 and W-3. In filing his Motion, the Commissioner contends that the settlement officer carefully reviewed the Company's challenge to the underlying tax liability, and he properly determined that the Company was liable for the civil penalty for the year at issue. The Commissioner further contends that the settlement officer did not abuse his discretion when the Company did not propose a collection alternative for review. Thus, the Commissioner maintains that summary adjudication in his favor is appropriate. For the reasons stated below, we will deny the Commissioner's Motion.
The Court may grant summary judgment only when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(a)(2); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Section 6330(c)(1) states that at a collection due process (CDP) hearing the settlement officer shall obtain verification that the requirements of any applicable law or administrative procedure were met. This Court has authority to review satisfaction of the verification requirement regardless of whether the Company raised that issue at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by, 136 T.C. 463 (2011).
The Commissioner's Motion does not address whether the settlement officer determined that the assessment of the section 6721(e) penalty was subject to the section 6751(b)(1) managerial approval requirement or if the exception in section 6751(b)(2) applies and no managerial approval was required. The exhibits attached to the Declaration also do not show whether the settlement officer verified the IRS's compliance with section 6751 prior to the assessment of the section 6721(e) penalty. Consequently, the settlement officer failed to properly verify that all legal and procedural requirements were met, and summary judgment is not appropriate.
Upon due consideration of the foregoing, and for cause, it is
ORDERED that the Commissioner's Motion for Summary Judgment, filed August 21, 2023, is denied without prejudice.