Opinion
9331-22L
07-30-2024
JACK S. KANNRY & JOYCE F. KANNRY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ALINA I. MARSHALL JUDGE.
This collection due process (CDP) case was scheduled for a hearing on respondent's Motion for Summary Judgment (motion), at the remote Trial Session of the Court commencing March 18, 2024. Pursuant to section 6320(d) , petitioners seek review of a Notice of Determination Concerning Collection Actions under IRS Sections 6320 or 6330 of the Internal Revenue Code (Notice of Determination), dated March 23, 2022, sustaining a notice of federal tax lien (NFTL) filing. The NFTL related to petitioners' unpaid tax liabilities for the 2015 tax year. Presently before the Court are respondent's motion, filed January 17, 2024, petitioners' Motion for Extension of Time to Complete or Supplement Administrative Record, filed December 26, 2023, and petitioners' Motion to Complete and Supplement Administrative Record, filed February 29, 2024.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure. Except where otherwise indicated, all monetary amounts are rounded to the nearest dollar.
Background
On October 24, 2016 petitioners filed their Form 1040, U.S. Individual Income Tax Return, for the 2015 tax year but failed to fully pay the tax due. Respondent assessed tax and additions to tax, and later abated some of these amounts. As of January 15, 2024, a balance due plus accruals of $54,083 remained for the 2015 tax year.
On February 1, 2018, respondent sent petitioners a Letter 3172, Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320 (lien notice), for their 2015 tax liability. Petitioners submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), disputing the amount of the underlying liability, seeking withdrawal of the federal tax lien, and requesting an installment agreement collection alternative.
IRS Appeals assigned the CDP hearing request to settlement officer (SO) D. Conlon (SO Conlon). On July 5, 2018, Mr. Kannry had a teleconference with SO Conlon where they addressed three issues: (i) Mr. Kannry's concern that respondent failed to issue a notice of deficiency before assessing additional income tax based on math errors respondent calculated on the 2015 return, (ii) the IRS Collection Division's stay of a levy action against petitioners, and (iii) that petitioners' CDP lien filing case for the 2011 through 2014 tax years was pending in Tax Court. While the case activity record does not indicate that SO Conlon told petitioners that their case would be stayed pending the outcome of their Tax Court CDP case addressing 2011-2014 at Docket No. 19091-16L, it appears that SO Conlon stayed this case.
On February 11, 2020, SO Conlon determined that petitioners' Tax Court case at Docket No. 19091-16L had been closed and that the Court sustained IRS Appeals' determinations. SO Conlon called Mr. Kannry and asked if he wanted to proceed. On February 18, 2020, Mr. Kannry stated that petitioners appealed the Tax Court's decision and were waiting for the U.S. Court of Appeals for the Second Circuit to hear their case. As a result, SO Conlon further suspended petitioners' CDP hearing.
On September 16, 2021, SO Conlon determined that petitioners' case in the Second Circuit was closed. On September 23, and then again on September 28, 2021, SO Conlon called petitioners and left a message asking them to call her to discuss the status of their case. Petitioners allege that they did not receive these voicemail messages, and as a result, petitioners did not return SO Conlon's calls. SO Conlon did not attempt to contact petitioners again, by phone or in writing, until IRS Appeals issued the Notice of Determination nearly six months later on March 23, 2022.
In the Notice of Determination SO Conlon determined that the IRS was not required to issue a notice of deficiency for math changes that were made to petitioners' return. Her explanation was unclear at best: "a Statutory Notice of Determination is issued when a tax assessment is made, in this case a change was made to your tax return and a letter goes out to inform you and to correct what was changed." Additionally, she determined that petitioners did not qualify for withdrawal of the NFTL because "[t]here is nothing in the Collection administrative file that indicates withdrawal of the filed lien should be considered and you have provided no additional information". SO Conlon noted that "[l]ien release or discharge is governed by IRC § 6325", but did not state or explain a determination with respect to either. The Notice of Determination also states that petitioners "offered an installment agreement as an alternative to collection", but does not state whether SO Conlon considered the installment agreement or determined that petitioners did not qualify for the requested installment agreement.
Discussion
I. Motion for Summary Judgment
The purpose of summary judgment is to expedite litigation to avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Under Rule 121(a), we may grant summary judgment when there is no genuine dispute as to any material facts and a decision may be rendered as a matter of law. Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). The burden is on the moving party to demonstrate that no genuine dispute as to any material fact remains and that it is entitled to judgment as a matter of law. FPL Grp., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the nonmoving party. Sundstrand, 98 T.C. at 520.
Upon careful review of the Notice of Determination and the parties' filings to date, we conclude that genuine disputes of material fact remain. Accordingly, we will deny respondent's motion.
II. Remand
The Court can remand a CDP case to IRS Appeals when the Court determines that a further hearing would be "helpful", "necessary" or "productive". Kelby v. Commissioner, 130 T.C. 79, 86 n.4 (2008); Lunsford v. Commissioner, 117 T.C. 183, 189 (2001); see Martin v. Commissioner, T.C. Memo. 2003-288, 86 T.C.M. (CCH) 446, 450, aff'd, 436 F.3d 1216 (10th Cir. 2006). Furthermore, if the Commissioner "has not considered all relevant factors" in a CDP hearing, "the proper course, except in rare circumstances, is to remand . . . for additional investigation or explanation." Loveland v. Commissioner, 151 T.C. 78, 84 (2018) (quoting Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985)).
The administrative record lacks clarity, including with respect to petitioners' proposed installment agreement and their requests regarding the NFTL. We will remand this case to IRS Appeals. At the supplemental hearing, IRS Appeals shall consider petitioners' challenges to the amount of their underlying liability (if any such challenges remain), petitioners' proposed installment agreement, petitioners' requests regarding the NFTL, and any additional information or evidence that petitioners may wish to submit. We will retain jurisdiction to preserve petitioners' right to judicial review of the administrative determination. See Wadleigh v. Commissioner, 134 T.C. 280, 299 (2010).
Accordingly, it is
ORDERED that respondent's Motion for Summary Judgment filed January 17, 2024, is denied. It is further
ORDERED that petitioners' Motion for Extension of Time to Complete or Supplement Administrative Record, filed December 26, 2023 is denied as moot. It is further
ORDERED that petitioners' Motion to Complete and Supplement the Administrative record, filed February 29, 2024, is denied as moot. It is further
ORDERED that the case is remanded to IRS's Office of Appeals for the purpose of further administrative consideration . It is further
ORDERED that respondent shall offer petitioners a hearing at IRS's Office of Appeals located closest to petitioners' residence (or at such other place as may be mutually agreed upon by the parties) at a reasonable and mutually agreed upon date and time, but no later than, October 30, 2024, for the parties to endeavor to complete those further proceedings consistent with the foregoing instructions. It is further
ORDERED that the parties shall, on or before December 2, 2024, file with the Court joint or separate reports regarding the then-present status of this case and attaching thereto a copy of any supplemental notice of determination issued to petitioners. It is further
ORDERED that jurisdiction is retained by the undersigned.