Opinion
6446-19L
12-13-2021
Wendell C. Robinson & May T. Jung-Robinson Petitioners v. Commissioner of Internal Revenue Respondent
ORDER
David Gustafson Judge
Pursuant to notice previously given (see Docs. 49-51, 80), trial in this case will be held December 15, 2021. This is a "collection due process" case involving two years--2009 and 2012--in which petitioners' contentions include challenges to the underlying liabilities that are the subject of the IRS's collection efforts. The purpose of this order is to invite, in advance of trial, the parties' review of the Court's current understanding of certain aspects of the case as it pertains to the year 2009.
Apparent facts for 2009
Subject to correction of the parties, which the Court solicits, it appears that the following assertions are correct.
1. In April 2010 petitioners filed a timely income tax return for 2009, which currently appears as Petitioners' Proposed Exhibit 1 (Doc. 69). On that tax return, petitioners reported
"total tax" of $217,246.08 (line 60);
"Federal income tax withheld" of $166,608.92 (line 61);
"2009 estimated tax payments" of zero (line 62); and
"Amount you owe" of $50,637.16 (line 75).
2. Petitioners' income tax withheld was not $166,608.92 but was instead $46,467.92; and petitioners' 2009 estimated tax payments were not zero but instead totaled $120,006. With their 2009 return petitioners made a payment of $15,000. (See Petitioners' Proposed Exhibit 2, para. 2 (Doc. 70), letter of February 25, 2019, and accompanying exhibits); see also Respondent's Proposed Exhibit 30-R.)
3. The actual withholding and estimated tax payments combined total $166,473.92. Those amounts plus the $15,000 payment with the return total $181,473.92, which was the amount that petitioners had paid as of the time their return was filed in April 2010.
4. On June 21, 2010 (but effective April 15, 2010), the IRS assessed not $217,246.08 (the "total tax" reported on petitioners' return) but $220,564.43.
5. The difference between the IRS's assessment of tax ($220,564.43) and petitioners' "total tax" reported ($217,246.08) is $3,318.35. That difference is attributable to the IRS's conclusion that petitioners' return reflected mathematical or clerical errors under section 6213(b)(2) and (g)(2), the correction of which yielded a tax increase in that amount. Petitioners dispute that increase--either because the alleged errors were not in fact erroneous, or because the IRS did not follow proper procedure, or because the IRS did not timely assess the resulting tax--and for purposes of this order we assume petitioners' dispute has merit.
6. Petitioners' total payments of $181,473.92 did not satisfy their 2019 tax liability--neither as they reported it nor as the IRS corrected it. Those payments left unpaid $35,772.16 of petitioners' reported liability of $217,246.08. (Petitioners later computed that amount left unpaid as $35,637.16. We cannot account for that $135 discrepancy.)
7. Likewise, petitioners' total payments of $181,473.92 left unpaid $39,090.51 of petitioners' liability of $220,564.43 as corrected by the IRS.
8. On February 27, 2012, the IRS issued to petitioners a statutory notice of deficiency ("SNOD") for 2009. (Part of that SNOD (see Doc. 70 at pdf 21) appears as "Exhibit #1" to petitioners' petition (Doc. 70 at pdf 18) in Docket No. 13367-12 (where the petition is Doc. 1). The full SNOD appears as an attachment to the answer in that case (i.e., an attachment to Doc. 3 in Docket No. 13367-12.)
9. On "page 10" of the SNOD, the "Total Tax, line 60", as "Shown on Return", is stated to be $220,564--i.e., the total as previously assessed by the IRS. The "Total Tax, line 60", "as Corrected", is stated to be $222,495. The difference of these two amounts is $1,931, which was determined as a deficiency on the SNOD.
10. The SNOD did not determine as to the $1,931 deficiency a liability for the failure-to-pay addition to tax. However, pertinent to the $220,564 of tax assessed before the SNOD was issued, the SNOD explained as follows:
FAILURE-TO-PAY PENALTY - IRC SECTION 6651(a)
If tax as shown on your return as filed is more than your original or adjusted payments, we may charge a Failure-to-Pay Penalty. We will figure the penalty from the due date of the return to the date the tax is paid. We will bill you for this amount at a later date. . . .
11. Petitioners challenged the 2009 SNOD by filing in the Tax Court in May 2012 a petition that commenced case No. 13367-12. The petition (filed as Doc. 1 in that case) stated in paragraph 5 that "Petitioner disputes the entire amount of: $1,931.00" and stated in paragraph 6: "The determination of the Petitioner's [sic] tax liabilities, as set forth in the attached Notice of Deficiency, is based upon the following errors: . . . the determination of Petitioners' tax liability . . . was the product of Internal Revenue Service error(s)".
12. On October 8, 2012, the IRS assessed summarily (i.e., without deficiency procedures; see sec. 6665(b)) the failure-to-pay addition to tax of section 6651(a)(2), in an amount of $5,814.56. (Respondent's Proposed Exhibit 30-R.)
13. In March 2014 the Commissioner filed in petitioners' 2009 deficiency case a "Motion to Dismiss for Lack of Prosecution" (Doc. 11 in No. 13367-12). On March 11, 2014, the Tax Court granted the motion to dismiss in its "Order of Dismissal and Decision" (Doc. 13 in No. 13367-12), which
ORDERED AND DECIDED that for the taxable year 2009 there are no deficiencies due from petitioners in their Federal income tax (tax) . . . .
14. Petitioners did not appeal the decision entered in No. 13367-12 in March 2014.
15. Petitioners made an additional payment toward their 2009 income tax liability on February 25, 2019, when they submitted a check in the amount of $39,438.45. (Petitioners' Proposed Exhibit 2, page 3 (Doc. 70).) When this amount is added to the actual withholdings, estimated tax payments, and $15,000 payment with the return, the combined total of all petitioners' payments toward their 2009 income tax liability is $220,912.37.
16. Petitioners' letter of February 25, 2019 (Petitioners' Proposed Exhibit 2, page 5 (Doc. 70)) stated that this payment of $39,438.45 fully satisfied their 2009 liability. They stated that it paid the remaining balance of their 2009 tax liability (which they stated as $35,637.16) plus the interest thereon, which they computed as $3,801.29.
Tentative analysis
Assuming the foregoing to be correct (but willing to be corrected), we observe that petitioners' argument in their February 2019 letter that they have fully paid their 2009 liability overlooks several matters:
First, their liability for tax per se is about $3,300 greater than they assume in their February 2019 letter. I.e., the IRS determined, in its correction of mathematical and clerical errors pursuant to section 6213(b)(2) and (g)(2), that their 2009 income tax liability was $220,564.43, rather than the $217,246.08 that they reported--i.e., a difference of $3,318.35. Thus, petitioners' February 2019 check evidently failed to pay this portion of their tax liability.
Second, their February 2019 letter made no accounting for the failure-to-pay addition to tax of section 6651(a)(2), which the IRS had assessed in October 2012 in an amount of $5,814.56. (It must be noted that this failure-to-pay addition had accrued on the entire unpaid liability--not just the $3,318.35 that the IRS had added by way of correction, but also the more than $35,000 of petitioners' reported liability of $217,246.08 that went unpaid even by petitioners' reckoning.) Thus, their February 2019 check evidently failed to pay their liability for the failure-to-pay addition to tax.
Third, their February 2019 letter computed interest only on $35,637.16 of self-reported tax, and did not figure interest on the $3,300 of tax arising from the IRS's corrections nor interest on the addition to tax of $5,814.56. Thus, their February 2019 check evidently failed to pay a portion of their liability for interest.
It is
ORDERED that at the trial of this case on December 15, 2021, each party shall be prepared to state his position on the foregoing and to explain any errors in it.