Opinion
12334-23L
10-22-2024
JENNIFER CHRISTINA SEEKAMP, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro Judge
Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is hereby ORDERED that the Clerk of the Court shall transmit to petitioner and respondent a copy of the pages of the transcript of the trial in this case held before Judge Emin Toro at Portland, Oregon, containing the Court's Oral Findings of Fact and Opinion rendered at the trial session at which this case was heard.
In accordance with the Oral Findings of Fact and Opinion, a decision will be entered sustaining the determination reflected in the Notice of Determination dated July 6, 2023.
Bench Opinion by Judge Emin Toro
October 3, 2024
Jennifer Christina Seekamp v. Commissioner of Internal
Revenue
docket No. 12334-23L
THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion. The oral findings of fact and opinion shall not be relied upon as precedent in any other case. The oral findings of fact and opinion are made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152. Rule references in this opinion are to the Tax Court Rules of Practice and Procedure, and section references are to the Internal Revenue Code, in effect at all relevant times. All monetary amounts are rounded to the nearest dollar.This is a collection due process (CDP) case in which petitioner, Jennifer Christina Seekamp, challenges a Notice of Determination issued by the IRS Independent Office of Appeals (IRS Appeals) on July 6, 2023. As we will explain, Mrs. Seekamp has not filed a federal income tax return for many years. During 2017, she earned more than $147,000 as an employee. Because she did not file a return for that year, the IRS prepared one for her, under the authority of section 6020(b). In time, the tax reflected in that return, as well as additions to tax and interest, were assessed. And when Mrs. Seekamp ignored the IRS's demands to pay the assessed amount, the IRS told her it intended to levy upon her assets. Mrs. Seekamp invoked her CDP rights. After a hearing, IRS Appeals sustained the proposed levy in the Notice of Determination now before us. The question we face is whether the IRS is permitted to use a levy to force a recalcitrant taxpayer like Mrs. Seekamp to pay what she owes. We conclude that the IRS may do so and that the determinations made in the Notice of Determination must be sustained.
We held trial of this case in person on October 2, 2024, during the Court's Portland, Oregon, trial session. Mrs. Seekamp appeared at the calendar call on September 30, the first day of the session. But, although she asked us to defer the proceedings until October 2 so she could prepare further, she did not appear for trial. Tamila F. Bishop Frankel and Janice B. Geier represented the Commissioner.
On the evidence before us, and using the burden-of-proof principles explained below, the Court finds the following facts:
FINDINGS OF FACT
Mrs. Seekamp and Her Earnings
During 2017, Mrs. Seekamp worked for Regence BlueCross BlueShield of Oregon (Regence). For that year, Regence reported on Form W-2, Wage and Tax Statement, that it had paid Mrs. Seekamp $147,426 as "Wages, Tips, and Other Compensation."
Mrs. Seekamp's 2017 Tax Return
Mrs. Seekamp did not file a federal income tax return for 2017. According to the Commissioner's records, Mrs. Seekamp last filed a federal income tax return for tax year 2006 (although the record does not reflect whether she filed a return for 2023).
Acting under the authority of section 6020(b), the IRS prepared an Automated Substitute for Return (ASFR) for Mrs. Seekamp's 2017 tax year.
Notice of Deficiency for 2017
On November 16, 2020, the IRS issued to Mrs. Seekamp a notice of deficiency. For convenience, we will refer to this notice as the November 16 Notice. In the November 16 Notice, the IRS determined an income tax deficiency of $31,349 and additions to tax of $7,054 under section 6651(a)(1), $5,486 under section 6651(a)(2), and $750 under section 6654(a). The IRS sent the November 16 Notice to 2202 SW Iowa Street, Portland, OR 97239-1909-029. We will refer to this address as the "Iowa Street" address. A U.S. Postal Service Form 3877, Firm Mailing Book for Accountable Mail, indicates that the November 16 Notice was sent by certified mail to Mrs. Seekamp's Iowa Street address. The IRS computer systems reflected the Iowa Street address as Mrs. Seekamp's address of record on November 16, 2020. The Form W-2 Regence issued with respect to Mrs. Seekamp for 2017 showed the same address for her.
On December 10, 2020, approximately three and a half weeks after the IRS mailed the November 16 Notice, Mrs. Seekamp's address in the IRS computer systems was changed to 4901 SW 1st Ave., Portland, OR.
Mrs. Seekamp did not seek our Court's review of the November 16 Notice within 90 days of its mailing as provided in section 6213(a). On April 12, 2021, after the period for seeking such review expired, the Commissioner assessed the amounts reflected in the November 16 Notice, plus applicable interest.
The Commissioner's Collection Actions The Commissioner mailed to Mrs. Seekamp multiple notices of payment due with respect to the 2017 income tax liability. Mrs. Seekamp did not respond.
Attempting to collect the unpaid liability, on October 13, 2021, the Commissioner mailed a Letter LT11, Notice of Intent to Levy and Your Collection Due Process Right to a Hearing. In response, Mrs. Seekamp timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing). Mrs. Seekamp's spouse, Scott W. Seekamp, also signed Form 12153. Mrs. Seekamp did not check the box requesting a collection alternative. She did check the box requesting a lien withdrawal and stated under "Other" that "I/we are not liable for (I/we don't owe) all of the taxes stated in the 2017tax period."
On September 30, 2022, IRS Appeals mailed to Mrs. Seekamp a Letter 4473C notifying her that the CDP hearing request had been received and that IRS Appeals would contact her regarding a hearing. Additionally, the letter asked Mrs. Seekamp to submit to the IRS by October 30, 2022, completed and signed tax returns for 2016 and 2018through 2021.
IRS Appeals initially assigned Mrs. Seekamp's CDP case to Settlement Officer (SO) Sylvia S. Perez and later transferred the case to Appeals Settlement Officer (ASO) Kristine Martinez-Padua.
On December 19, 2022, SO Perez mailed to Mrs. Seekamp a Letter 4837, Appeals Received Your Request for a Collection Due Process Hearing, informing her that the request for a CDP hearing was timely and that her CDP hearing was scheduled to be held by telephone on January 26, 2023, at 10:00 a.m. (PST).
Additionally, SO Perez asked Mrs. Seekamp to provide by January 9, 2023 (1) signed income tax returns for tax periods 2016, 2018, 2019, 2020, and 2021; and (2) a completed Form 433-A, Collection Information Statement for Individuals, along with three months of receipts for income, banks, investments, assets-statements from lenders on loans, monthly payments, payoffs, and expenses. Mrs. Seekamp did not provide the requested information.
Although Mrs. Seekamp had requested a lien withdrawal in her Form 12153, SO Perez determined there was no record of a filed federal tax lien.
On January 26, 2023, the telephonic CDP hearing was held as scheduled. SO Perez, Mrs. Seekamp, and Mr. Seekamp participated. SO Perez advised Mrs. Seekamp that the 2017 liabilities were in her name only and no Form 2848, Power of Attorney and Declaration of Representative, was on file for Mr. Seekamp. Mrs. Seekamp orally authorized Mr. Seekamp to speak on her behalf during the CDP hearing and agreed to fax to SO Perez a signed Form 2848 authorizing Mr. Seekamp to act as her power of attorney. She eventually did so.
The Seekamps raised several issues at the CDP hearing. According to the Case Activity Record prepared by SO Perez, they disputed the single filing status used by the IRS in preparing the substitute for return. Mr. Seekamp told SO Perez that they "have been married for 30 years and always filed jointly other than the three years that they didn't."
The Case Activity Record summarizes the Seekamps' contentions in relevant part as follows:
All their action done without malice not avoiding this and they didn't file because they didn't have to. Per code and section 620B [which the Court notes does not exist] they didn't have to. . . . Went on to say he knows the code book and has publication and so on. Says haven't consent to this tax debt and per [jurisdiction] the secretary if didn't consent to the filing then wouldn't file.
We have reproduced the summary from the Case Activity Record as it appears in the record, without correcting it for typographical errors and the like, except as noted.
SO Perez "asked tp [i.e., Mrs. Seekamp] about receiving a snod [i.e., a statutory notice of deficiency] letter dtd 11/16/2020[.]" Mrs. Seekamp "didn't recall." SO Perez also "asked tp if she lived at snod address 2202 SW Iowa St, Portland OR." Mrs. Seekamp "indicated she doesn't recall living at this address in 11/2020." "They had moved several times. Had different addresses." SO Perez "asked if [Mrs. Seekamp] received a certified letter." Mrs. Seekamp said "no she never did."
The Case Activity Record continues:
SO asked tp when did she became aware of this tax debt. Says when she received the levy
notice. No letters received prior to the dated levy notice. SO asked tp if she had filed a return for 2017. TP says no because didn't have to and not required to. TO date hasn't filed one. SO advised tp IRS gave her many opportunities to get this corrected but hadn't. Now, tax debt account in collections. SO also advised tp that the letter I sent her gave her another change to file her own corrected return. Says wants to remedy this. SO will send tp copy of SNOD and that will give her information how tax debt was figured.
We have reproduced the summary from the Case Activity Record as it appears in the record, again without correcting it for typographical errors and the like.
Mrs. Seekamp and SO Perez agreed to have a follow-up telephone conversation, and SO Perez mailed a copy of the statutory notice of deficiency and the wage and income information to Mrs. Seekamp.
On January 30, 2023, Mrs. Seekamp submitted a letter to SO Perez as a follow-up to the CDP hearing. In the letter, Mrs. Seekamp stated as an explanation for not filing a 2017 tax return that she did not "earn enough taxable income." Mrs. Seekamp also stated:
In accordance with the Freedom of Information Act and in order that I can perform a revised voluntary assessment, and pay income taxes if then due to the extent that I am able, please review the following assertions and provide the following:
1. I am requesting a copy of the administrative file being used in this case.
2. Any authenticated 1040's or other submissions made re: this obligation.
3. I have found that the tax rates and tables do not apply to all income, just "taxable income." Please provide clarification on what instructions say about line 22 ("taxable income") of the 1040 form.
The reason for this request is that I cannot locate clear instructions or definitions for line 22 of the 1040 form. Without clear definitions or instructions for line 22 ("taxable income") I can not revise a self-assessment.
**I am not asking you to interpret anything, give legal advice, nor am I "protesting" anything or making frivolous statements, I am merely just asking you to tell me what it actually says.
Mrs. Seekamp signed the letter and added "All Rights Reserved" under her signature.
On March 28, 2023, after SO Perez was assigned other responsibilities by the IRS, Mrs. Seekamp's CDP case was reassigned in Appeals to ASO Martinez-Padua.
Following up on Mrs. Seekamp's January 30, 2023, request, ASO Martinez-Padua prepared the CDP administrative file on April 6, 2023, and on June 16, 2023, the administrative file was mailed to Mrs. Seekamp by the Appeals Taxpayer First Act function, which mails requested administrative files to taxpayers.
On June 23, 2023, ASO Martinez-Padua received a voice message from Mr. Seekamp, acting as Mrs. Seekamp's power of attorney, informing her that Mrs. Seekamp received the administrative file and asking what the next steps would be. ASO Martinez-Padua returned the call and left a voice message requesting a return call. ASO Martinez-Padua did not receive a return telephone call or further communication from the Seekamps.
Mrs. Seekamp did not submit an income tax return for 2017 or documentation of any allowable exemptions, deductions, or tax credits despite SO Perez giving Mrs. Seekamp additional time to do so.
ASO Martinez-Padua used the IRS's computer transcripts and the documents in the CDP administrative file to verify that the requirements of applicable law and administrative procedures had been met.
On July 6, 2023, IRS Appeals issued the Notice of Determination now on review before us.
Proceedings in this Court
The Petition
On August 5, 2023, Mrs. Seekamp and Mr. Seekamp filed a joint Petition in this case, disputing the deficiency and additions to tax determined in the November 16 Notice and challenging the July 6, 2023, Notice of Determination sustaining the proposed levy. At the time the Petition was filed, Mrs. Seekamp lived in Oregon.
The Petition contended that Mrs. Seekamp and Mr. Seekamp "disagree[d] with the Internal Revenue Service's Notice of Deficiency and the Independent Office of Appeals Determination of Deficiency based upon our self-assessment and research of applicable codes and statutes." Where asked to state the facts upon which they relied, the Seekamps listed:
1) 26 USC 6001, 6011 and 6012A
2) 26 USC 1
3) CFR 26 1.861-1
4) IRC Sect. 83
5) IRS Instructions Form 1040 Line 22
6) Title 31 Sect. 321(d)(2)
7) 26 USC Sect. 6331 and 6334
8) CFR 26 1-1.1
9) IRC Sec 3401(o)
10) 26 USC 7214 and 18 USC 241 and 242
11) IRM 9.1.2.1
After the Petition, Mrs. Seekamp made no substantive filings with the Court for more than a year.
The Order to Show Cause
By Order served September 25, 2023, among other things, the Court directed the Commissioner and Mrs. Seekamp to file responses by October 16, 2023, showing "why the Court, on its own motion, should not dismiss this case for lack of jurisdiction as to the Notice of Deficiency issued for the taxable year 2017 on the ground that the Petition was not timely filed."
The Commissioner responded on October 13, 2023. The Commissioner's response included a complete redacted copy of the November 16 Notice, as well U.S. Postal Service Form 3877 showing proof of mailing by certified mail. The response also included an exhibit reflecting information from the IRS's Integrated Document Retrieval System (IDRS) showing the addresses for Ms. Seekamp reflected in that system. The IDRS printout showed the Iowa Street address as Mrs. Seekamp's address on November 16, 2020.
On November 27, 2023, after having received no response from Mrs. Seekamp, the Court made the Order to show Cause absolute. The Court dismissed so much of the case as related to the November 16 Notice for lack of jurisdiction. In her Order, Chief Judge Kerrigan wrote:
The record shows that the Notice of Deficiency issued to petitioner Jennifer Christina Seekamp for the taxable year 2017 was sent to her last known address by certified mail on November 16, 2020. . . . Consequently, the Petition was not filed within the period prescribed by the Internal Revenue Code as to the Notice of Deficiency, and this case must be dismissed for lack of jurisdiction as that Notice.
Order to Change Caption
On September 27, 2023, the Commissioner filed a Motion to Change Caption and a Motion to Dismiss for Lack of Jurisdiction as to Petitioner Scott Wesley Seekamp and to Change Caption. Two days later, the Court directed mrs. Seekamp to respond to those motions by October 30, 2023. Further, it warned Mrs. Seekamp that failure to comply with its Order could result in the granting of those motions. She did not respond.
On November 27, 2023-the same day that it dismissed the deficiency portion of the case-the Court granted the Commissioner's motions, dismissing Mr. Seekamp as a petitioner for lack of jurisdiction and classifying Mrs. Seekamp's case as a Collections Due Process action. Trial-related Proceedings
On May 2, 2024, the Court set this case for trial at the trial session beginning at 10:00 am on Monday, September 30, 2024, in Portland, Oregon. The court also issued a Standing Pretrial Order that provided instructions about the timely filing of pretrial motions, memoranda, stipulations, and status reports. The Standing Pretrial Order included the following instruction:
No later than 21 days before the first day of the trial session: The parties must file one of the following: a Proposed Stipulated Decision, a Pretrial Memorandum, a Motion to Dismiss for Lack of Prosecution, or a Status Report.
Mrs. Seekamp did not file any pretrial document as required by the Standing Pretrial Order.
On August 1, 2024, the Commissioner filed a Motion for Summary Judgment. Four days later, the Court directed Mrs. Seekamp to file a response to the Commissioner's motion by September 4, 2024. The Court warned Mrs. Seekamp that, should she not respond, it could grant the Commissioner's motion. She did not respond.
Instead, on September 16, 2024, Mrs. Seekamp filed a Status Report, her first substantive filing since her Petition. The opening line of the Status Report read "The Petition filed here is a disaster. But the case that underlies it is a winner."
The Status Report went on to state:
Mrs. Seekamp now files this Status Report, which will inform the Court-
(A) how she must move for the Court's leave to amend because the Petition is, in reality, the dismissed Mr. Seekamp's pleading;
(B) which party has failed to cooperate in moving this case toward a settlement or other appropriate resolution; and
(C) why, on this record, the Commissioner cannot prevail.
The Status Report expressed a need for Mrs. Seekamp to plead additional error grounds and asserted that the reason Mrs. Seekamp had not filed a motion for leave to amend her pleading was because she did not know whether the Commissioner would object to the filing and the Commissioner's counsel had not responded to Mrs. Seekamp's inquiry under Rule 50(a). According to the Status Report, "having counsel's position would enable Mrs. Seekamp to know how much argument, if not a specific argument, she must include in her Motion For Leave."
Status Rep. 6.
As to the merits, the Status Report stated that Mrs. Seekamp would contend that "[t]he IRS never sent Mrs. Seekamp a tax period 2017 statutory Notice of Deficiency" and, even if it did, any notice was not sent to her "last known address."
The following day, the Court set the Commissioner's Motion for Summary Judgment for hearing during the Portland, Oregon trial session. The Order expressly noted that case "is currently calendared for trial during the Court's September 30, 2024, Portland, Oregon, trial session."
Four days before the trial session began, Mrs. Seekamp filed a Rule 50(c) Statement that raised additional arguments, summarized as follows:
[T]he administrative record and the controlling laws say that the IRS's intended levy action is either unlawful or inappropriate. They also say that Mrs. Seekamp is not liable for the taxes on one of two grounds: (1) the IRS's tax assessments are legally invalid or (2) on her proper underlying liability challenge, she does not owe any tax.
Among other things, the Statement pointed out that the Commissioner's papers had provided four distinct issuance dates for notices of deficiency: March 16, 2020; May 19, 2020; November 3, 2020; and November 16, 2020.
On September 30, 2024, when this case was called from the calendar at the Portland, Oregon trial session, the Commissioner moved for leave to correct out of time his Notice of Filing of the Administrative Record from June 17, 2024, and also to file out of time a corrected Certificate as to the Genuineness of the Administrative Record. The Commissioner's counsel explained that, because of a typographical error on her part, the description of the exhibits included as an index of the administrative record mistakenly referred to the November 16 Notice as issued on "March 16, 2020." The exhibit itself reflected the correct date of November 16, 2020. And, because counsel used the same index to prepare the Certificate as to the Genuineness of the Administrative Record for ASO Martinez-Padua's signature, that document reflected the same mistake.
Mrs. Seekamp, appearing for herself, initially objected to the Commissioner's motions. After speaking to a representative from a taxpayer clinic, however, she withdrew her objection.
When the Court asked Mrs. Seekamp to describe her view of the case, she reiterated her intention to file a motion to amend her Petition to include the arguments made in her Rule 50(c) Statement. When asked about the merits of her case-i.e., her potential liability for the tax, additions to tax, and interest underlying the Notice of Determination and determined by the November 16 Notice- Mrs. Seekamp confirmed that she had worked for Regence during 2017. She further stated that her position was in human resources and that she worked for the full year. But when asked about the amount she was paid, Mrs. Seekamp said that she could not recall the precise amount or whether the amount Regence reported on the Form W-2 was in the right ballpark.
Mrs. Seekamp asked the Court for more time-"one or two days"-to prepare her case and potentially refresh her recollection. Granting Mrs. Seekamp's request, the Court informed the parties that we would recall the case on October 2, 2024, at 1:00 PM.
The next day, Mrs. Seekamp filed with the Court three additional documents: (1) an objection to the Commissioner's Motion for Leave to File Corrected Notice of Filing of the Administrative Record, (2) an objection to the Commissioner's Motion for Leave to File Corrected Certificate as to the Genuineness of the Administrative Record, and (3) a First Supplement to Statement under Rule 50(c). The first two documents asserted that Mrs. Seekamp had been deprived of her collection due process rights during the September 30, 2024, hearing and that the Court should not allow the Commissioner to fix the error described in his Motions for Leave because the Court would not allow a pro se petitioner to fix a similar error. The third document reiterated the positions taken in the Statement under Rule 50(c). Specifically, it argued that the administrative record does not support that a Notice of Deficiency dated November 16, 2020, was sent to Mrs. Seekamp's last-known address, and that because of this fact and other alleged irregularities with respect to the Notice, Mrs. Seekamp must prevail.
The Court recalled the case at its Portland, Oregon trial session on October 2, 2024, at 1:00 PM, as previously scheduled. Mrs. Seekamp neither appeared nor informed the Court of any reason why she was unable to appear. After the Commissioner's counsel and Court personnel attempted to reach Mrs. Seekamp without success, the Court recalled the case again. Mrs. Seekamp did not appear. Counsel for the Commissioner appeared and were heard. The Court granted the Commissioner's Motions concerning the typographical corrections with respect to the administrative record. But the Court denied the Commissioner's Motion for Summary Judgment in view of the factual disputes raised in Mrs. Seekamp's various papers and drawing inferences from those disputes against the movant (that is, the Commissioner).
The Court scheduled the case for trial at 2:00 PM and subsequently tried the case. We heard testimony from Revenue Agent Jason Doyle.
OPINION
I. Summary of CDP Issues
Section 6331 authorizes the IRS to levy upon (that is, to seize) property or property rights of any person who is liable for any tax and has failed to pay that tax after proper notice and demand. See I.R.C. §§ 6331, 7701(a)(11)(B), (12)(A)(i); see also Ramey v. Commissioner, 156 T.C. 1, 2-3 (2021). Because the power to levy is a strong remedy for collecting unpaid tax, section 6330 gives a taxpayer the right to a hearing with IRS Appeals and generally bars the IRS from making a levy unless the IRS notifies the taxpayer in writing of the right to a hearing before the levy is made. I.R.C. § 6330(a) and (b); Ramey, 156 T.C. at 2.
At the CDP hearing, IRS Appeals must verify that the requirements of any applicable law or administrative procedure have been met. See I.R.C. § 6330(c)(1). Additionally, IRS Appeals generally must consider any issues raised by the taxpayer. See I.R.C. § 6330(c)(3)(B). In certain circumstances, this includes challenges to the taxpayer's underlying liability for the year at issue. See I.R.C. § 6330(c)(2)(A)(iii) and (B). Finally, IRS Appeals must consider "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person [involved] that any collection action be no more intrusive than necessary." See I.R.C. § 6330(c)(3)(C).
II. Standard and Scope of Review
We have jurisdiction to review the determinations reflected in IRS Appeals' Notice of Determination pursuant to section 6330(d)(1). Section 6330(d)(1) does not prescribe the standard of review that this Court should apply in reviewing an IRS Appeals administrative determination in a CDP case. The framework for that review is set out in our cases.
When the validity of the underlying tax liability is properly at issue in a CDP proceeding, the Court will review the matter de novo. See Giamelli v. Commissioner, 129 T.C. 107, 111 (2007); Davis v. Commissioner, 115 T.C. 35, 39 (2000). The scope of review as to the existence or amount of an underlying liability is also de novo. See Jordan v. Commissioner, 134 T.C. 1, 8-9 (2010), supplemented by T.C. Memo. 2011-243; see also Zaimes v. Commissioner, T.C. Memo. 2023-121, at *7 (citing Kim v. United States, 121 F.3d 1269, 1272 (9th Cir. 1997)).
Issues other than a taxpayer's underlying liability are reviewed for abuse of discretion. See Loveland v. Commissioner, 151 T.C. 78, 84 (2018); Giamelli, 129 T.C. at 111. That is, we do not substitute our own judgment for that of IRS Appeals and do not decide de novo whether we would have reached the same determination as IRS Appeals. Rather, we decide whether IRS Appeals' determination was arbitrary, capricious, or without sound basis in fact or law. See Giamelli, 129 T.C. at 111.
An appeal in this case would ordinarily lie in the U.S. Court of Appeals for the Ninth Circuit. See I.R.C. § 7482(b)(1)(A). That court has held that, in a CDP case, our review of issues that are subject to an abuse of discretion standard is confined to the administrative record. See Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009).
III. Underlying Liability
A taxpayer may challenge her underlying liability at a CDP hearing only if she did not receive a statutory notice of deficiency or did not have a prior opportunity to dispute the liability. See I.R.C. § 6330(c)(2)(B); Montgomery v. Commissioner, 122 T.C. 1, 9 (2004).
For a number of reasons, we are not altogether sure that Mrs. Seekamp is entitled to challenge her underlying liability. But, even assuming for the sake of analysis that she can, she cannot prevail.
The first problem for Mrs. Seekamp's ability to challenge her underlying liability is credibility. Mrs. Seekamp told SO Perez that she did not receive a statutory notice of deficiency for 2017. Ordinarily, a taxpayer who did not receive a notice of deficiency even though the IRS properly sent it would be entitled to challenge the underlying liability. See, e.g., Rivas v. Commissioner, T.C. Memo 2012-20, 2012 WL 141745, at *4 ("[S]ection 6330(c)(2)(B) contemplates actual receipt of a notice of deficiency by the taxpayer[.]"); Tatum v. Commissioner, T.C. Memo. 2003-115, 2003 WL 1918914, at *3 ("It is therefore clear that section 6330(c)(2)(B) contemplates actual receipt of the notice of deficiency by the taxpayer.").
But we are not certain that we should credit Mrs. Seekamp's assertion to SO Perez. Mrs. Seekamp did not appear at trial, so there was no opportunity for her to be questioned under oath on this point. And the Court's experience with Mrs. Seekamp during the proceedings casts significant doubt on her credibility.
In her two appearances before us in person on Monday, September 30, Mrs. Seekamp was respectful and cooperative. She seemed uncertain about the relevant rules, was willing to consult with volunteer lawyers, and appeared ready to modify her views based on their advice, as demonstrated by her withdrawing her objection to the Commissioner's request to correct a typographical error. (Recall that the Commissioner had mistakenly described the November 16 Notice as issued in March 2020 in the Notice of Filing of the Administrative Record and the Certificate as to the Genuineness of the Administrative Record.)
In written materials submitted to the Court the following day, however, Mrs. Seekamp's tone was markedly different. The events described in her written materials bore little resemblance to what actually occurred in open Court and what the transcripts of the proceedings will reflect.
Given the disparity between Mrs. Seekamp's live and written presentations, as well as our inability to gauge her credibility at trial without an appearance, we are not sure we can credit Mrs. Seekamp's claim to SO Perez that she did not receive the November 16 Notice. And, if that claim falls, so does the opportunity for a challenge to the underlying liability in this Court. See I.R.C. § 6330(c)(2)(B); Montgomery, 122 T.C. at 9.
The second problem for Mrs. Seekamp is that we presume a properly mailed letter will be received by the person to whom it was addressed. As the Court has explained before, "[t]he mailing of a properly addressed letter creates a 'presumption that it reached its destination and was actually received . . . .'" BM Constr. v. Commissioner, T.C. Memo. 2021-13, at *12 (quoting Rivas v. Commissioner, T.C. Memo. 2017-56, at *20); see also Conn v. Commissioner, T.C. Memo. 2008-186, 2008 WL 2986391, at *2 ("If the presumption is raised and the taxpayer does not rebut the presumption, the Court may find that the taxpayer received the notice of deficiency . . . ."). Here the Commissioner has supplied a dated notice of deficiency, a U.S. Postal Service Form 3877, and other records from the IRS's computer systems indicating that the November 16 Notice was mailed to Mrs. Seekamp's last known address. Nothing in the record shows that the notice was returned as undeliverable. See Rivas v. Commissioner, T.C. Memo. 2012-20, 2012 WL 141745, at *4-5 (describing the process the U.S. Postal Service uses in delivering certified mail). And, Mrs. Seekamp has offered nothing to rebut the presumption other than an unsworn statement she made to SO Perez.
Third, the liability challenge Mrs. Seekamp appears to want to offer may be foreclosed as frivolous by section 6330(c)(4)(B). Section 6330(c)(4)(B) provides that an "issue may not be raised at the hearing if . . . the issue meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A)." Those clauses bar a taxpayer from raising an issue that is based on a position that the Secretary has identified as frivolous. See I.R.C. § 6702(b)(2)(A); see also Burnett v. Commissioner, T.C. Memo. 2018-204, at *9 ("[S]ection 6330(c) permits only 'relevant' issues to be raised. The term 'relevant' does not include frivolous or groundless issues."). We cannot be sure on this point because Mrs. Seekamp's papers offer only conclusory assertions about the substance of her arguments and she declined to appear at trial to give us a fuller discussion of her views. Still, a review of the list of authorities cited in her Petition, the comments from the Seekamps recorded in the Case Activity Record, and her January 30, 2023, letter to SO Perez (including the protestation that she was not protesting anything or making frivolous statements) suggests frivolous positions. Even if we put each of these reservations to the side, when we consider Mrs. Seekamp's underlying liability on the merits, Mrs. Seekamp comes up short. As best we can tell from what she said at the CDP hearing and in her Statement under Rule 50(c), Mrs. Seekamp contends she did not have enough income to be required to file.
The evidence at trial showed otherwise on de novo review. The Commissioner's determinations in a notice of deficiency are generally presumed correct, and the taxpayer bears the burden of proving those determinations erroneous. See Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933); Merkel v. Commissioner, 192 F.3d 844, 852 (9th Cir. 1999), aff'g 109 T.C. 463 (1997). In cases involving unreported income in the Ninth Circuit, to which an appeal in this case would ordinarily lie, see I.R.C. § 7482(b)(1)(A), this general rule is subject to the following conditions:
For the presumption to apply . . . the Commissioner must base the deficiency on some substantive evidence that the taxpayer received unreported income. If the Commissioner introduces some evidence that the taxpayer received unreported income, the burden shifts to the taxpayer to show by a preponderance of the evidence that the deficiency was arbitrary or erroneous. If the [taxpayer] succeeds in showing that the deficiency was arbitrary or erroneous, the burden shifts back to the Commissioner to show that the [determination] was correct.Hardy v. Commissioner, 181 F.3d 1002, 1004-05 (9th Cir. 1999) (citations omitted), aff'g T.C. Memo. 1997-97; see also Walquist v. Commissioner, 152 T.C. 61, 67 (2019); Caldwell v. Commissioner, T.C. Memo. 2022-51, at *5 ("In cases of unreported income, the Commissioner must establish an evidentiary foundation connecting the taxpayer to the income-producing activity, Weimerskirch v. Commissioner, 596 F.2d 358, 361 (9th Cir. 1979), rev'g 67 T.C. 672 (1977), or demonstrate that the taxpayer actually received income, Edwards v. Commissioner, 680 F.2d 1268, 1270-71 (9th Cir. 1982).").
Gross income generally includes all income from whatever source derived. See I.R.C. § 61(a). It specifically includes compensation for services. See I.R.C. § 61(a)(1).
Mrs. Seekamp did not file a return for 2017. In view of the record before us, including the evidence adduced at trial-for example, the relevant transcripts and Mr. Doyle's testimony-the Commissioner satisfied his burden to "introduce[] some evidence that the taxpayer received unreported income." Hardy v. Commissioner, 181 F.3d at 1004-05; Caldwell, T.C. Memo. 2022-51, at *5. At the calendar call, Mrs. Seekamp did not dispute that she worked for Regence for all of 2017. All she was able to muster was that she could not recall how much Regence paid her. But we find it incredible that a person would not recall whether she was paid more than $147,000, as Regence reported, or less than $10,400 (the filing threshold for a single individual in 2017), even if the events occurred about seven years ago. See Diaz v. Commissioner, 58 T.C. 560, 564 (1972) ("[T]he distillation of truth from falsehood . . . is the daily grist of judicial life."); Mazotti v. Commissioner, T.C. Memo. 2024-75, at *8-9 ("As a trier of fact, it is our duty to listen to the testimony, observe the demeanor of the witnesses, weigh the evidence, and determine what we believe." (quoting Kropp v. Commissioner, T.C. Memo. 2000-148, 2000 WL 472840, at *3)). Furthermore, Mrs. Seekamp has presented nothing to counter the Commissioner's evidence or to explain why compensation in excess of $147,000 did not give rise to a filing obligation for 2017. See I.R.C. §§ 6011, 6012.
A similar analysis applies with respect the additions to tax reflected in the November 16 Notice. The Commissioner determined that Mrs. Seekamp is liable for additions to tax under sections 6651(a)(1), 6651(a)(2), and 6654(a). Section 7491(c) imposes upon the Commissioner the burden of production with respect to these additions to tax. See Higbee v. Commissioner, 116 T.C. 438, 446 (2001) (holding that respondent bears the initial burden of production for additions to tax under section 6651); Wheeler v. Commissioner, 127 T.C. 200, 207 (2006), aff'd, 521 F.3d 1289 (10th Cir. 2008) (same holding as to the section 6654 addition to tax). Once the Commissioner meets this burden, the burden of proof falls on Mrs. Seekamp to show that the Commissioner's determination is incorrect or that the taxpayer has an affirmative defense. See Higbee, 116 T.C. at 446-47.
The record here, including the evidence introduced at trial, shows that the Commissioner has met his initial burden with respect to each of the additions to tax. Mrs. Seekamp presented no contrary evidence.
We therefore conclude, on de novo review, that a challenge to her underlying liability, even if it could be made, cannot prevail.
IV. Abuse of Discretion
In determining whether IRS Appeals abused its discretion in sustaining the collection action, we consider whether ASO Martinez-Padua (1) properly verified that the requirements of applicable law or administrative procedure have been met, (2) considered any relevant issues Mrs. Seekamp raised, and (3) weighed "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of [Mrs. Seekamp] that any collection action be no more intrusive than necessary." I.R.C. § 6330(c)(3).
Our review of the record establishes that ASO Martinez-Padua satisfied each of the three requirements.
A. Verification
We have authority to review a settlement officer's satisfaction of the verification requirement regardless of whether the taxpayer raised the issue at the CDP hearing. See Kidz Univ., Inc. v. Commissioner, T.C. Memo. 2021-101, at *10 (citing Hoyle v. Commissioner, 131 T.C. 197, 200-03 (2008), supplemented by 136 T.C. 463 (2011)). Mrs. Seekamp's Statement under Rule 50(c) and her First Supplement to Statement under Rule 50(c) lean heavily on the verification issue. Specifically, she argues that "IRS Appeals failed to obtain verification from the IRS that it had sent a November 16, 2020, dated Notice of Deficiency to Mrs. Seekamp's statutory 'last known address.'" Rule 50(c) Statement 5. In her supplement, she makes the same point slightly differently, stating that "[t]he administrative record fails to support the Commissioner's primary contention: that the IRS sent Mrs. Seekamp [the November 16 Notice] to her statutory 'last known address.'" Supp. to Rule 50(c) Statement 2. According to Mrs. Seekamp, this flaw is fatal to the assessments made by the Commissioner here. Mrs. Seekamp's claim lacks merit for at least three reasons.
First, Mrs. Seekamp did not assert in the Petition that the settlement officer failed to satisfy this requirement and set forth no specific facts in support of such a claim. See Rule 331(b)(4) ("Any issue not raised in the assignments of error shall be deemed to be conceded."); Rockafellor v. Commissioner, T.C. Memo. 2019-160, at *12.
In both the September 16, 2024, Status Report and the Statement under Rule 50(c), Mrs. Seekamp suggests that she might want to amend her Petition to raise this and other issues. But she filed no motion requesting such relief. And we decline to take up Mrs. Seekamp's invitation that we do so on our own. See Rule 50(c) Statement 3.
Moreover, Mrs. Seekamp has offered no explanation for why she waited until now to assert these arguments. Nor is it clear to us that granting such relief at this late date would not be unfairly surprising and prejudicial to the other side and, therefore, contrary to the interest of justice. See Estate of Quick v. Commissioner, 110 T.C. 172, 178 (1998) ("In determining the justice of a proposed amendment . . . [w]e consider, among other factors, whether an excuse for the delay exists and whether the opposing party would suffer unfair surprise, disadvantage, or prejudice if the motion to amend were granted."), supplemented by 110 T.C. 440 (1998); Nolte v. Commissioner, T.C. Memo. 1995-57, 1995 WL 37631, at *3 ("[A]n untimely amendment may properly be denied where there is no excuse for delay and there is prejudice or substantial inconvenience to the adverse party."), aff'd without published opinion, 99 F.3d 1146 (9th Cir. 1996); Rule 41(a).
Second, even if we were to permit Mrs. Seekamp to amend her pleadings to raise this verification issue, her position would run headlong into the law-of-the-case doctrine. "The law-of-the-case doctrine generally provides that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Zeyen v. Bonneville Joint Dist., #93, 114 F.4th 1129, 1136-37 (9th Cir. 2024) (quoting Musacchio v. United States, 577 U.S. 237, 244-45 (2016)).
In an order served on November 27, 2023, the Chief Judge of this Court specifically concluded that "The record shows that the Notice of Deficiency issued to petitioner Jennifer Christina Seekamp for the taxable year 2017 was sent to her last known address by certified mail on November 16, 2020." That finding was necessary to the Court's conclusion that "so much of this case relating to a notice of deficiency for the taxable year 2017 [must be] dismissed for lack of jurisdiction."
Mrs. Seekamp contends that an exception to the law-of-the-case doctrine applies. As the Ninth Circuit recently made clear, "[a] second district judge should not reconsider the ruling of a predecessor unless: '(1) the decision is clearly erroneous and its enforcement would work a manifest injustice, (2) intervening controlling authority makes reconsideration appropriate, or (3) substantially different evidence was adduced at a subsequent trial.'" Zeyen, 114 F.4th at 1138 (quoting Delta Sav. Bank v. United States, 265 F.3d 1017, 1027 (9th Cir. 2001)).
None of these exceptions applies here. As to the first, Mrs. Seekamp herself does not contend that the Chief Judge's decision was incorrect. See Statement under Rule 50(c) ("Mrs. Seekamp does not argue that the Court's November 27, 2023, entered order is entirely incorrect."). As to the second, she points to no intervening controlling authority. As to the third, she has produced no substantially different evidence from what was previously considered.
In an apparent run at the third exception, Mrs. Seekamp says "the Court and Mrs. Seekamp sat in the same procedural boat. Neither had what the Commissioner possessed: the administrative record." Rule 50(c) Statement 13. But the administrative record supports the Chief Judge's ruling (as we will discuss in greater detail). Further, Mrs. Seekamp asked for and was sent a copy of the administrative record during the CDP process. So we do not see how the circumstances have changed between the time the Chief Judge made the prior ruling and now. Nor do we see why the administrative record in any way suggests that we should revisit the prior ruling.
Moreover, Mrs. Seekamp states that "[b]ecause the Court has not changed judges here, it may revisit that entire [November 27, 2023] Order." That is simply wrong. As already noted, the November 27, 2023, Order was issued by the Chief Judge of this Court, not the division with current jurisdiction over the proceedings. The change in judges raises precisely the types of concerns the law-of-the-case doctrine is designed to address. See Musacchio, 577 U.S. at 245 (The doctrine "expresses the practice of courts generally to refuse to reopen what has been decided." (quoting Messenger v. Anderson, 225 U.S. 436, 444 (1912)); Zeyen, 114 F.4th at 1137 ("[J]udges who sit in the same court should not attempt to overrule the decisions of each other." (quoting Castner v. First Nat'l Bank of Anchorage, 278 F.2d 376, 379 (9th Cir. 1960)); see also 18B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4478 (Westlaw 2024) ("The courts are understandably reluctant to reopen a ruling once made. This general reluctance is augmented by comity concerns when one judge or court is asked to reconsider the ruling of a different judge or court.") (collecting and discussing authorities).
More fundamentally, though, even if the law-of-the-case doctrine were inapplicable, we would reach the same conclusion the Chief Judge reached.
The administrative record supports the conclusion that the November 16 Notice was sent to Mrs. Seekamp's last known address and that SO Perez and ASO Martinez-Padua verified that fact. The November 16 Notice on its face uses the Iowa Street address and contains a certified mail tracking number. U.S. Postal Service Form 3877 shows the same address and tracking number. And both SO Perez and ASO Martinez-Padua had access to relevant IRS databases and confirmed that they used the databases to verify compliance with applicable law or administrative requirements. See United States v. Chem. Found., Inc., 272 U.S. 1, 14-15 (1926) ("The presumption of regularity supports the official acts of public officers, and, in the absence of clear evidence to the contrary, courts presume that they have properly discharged their official duties.").
During the Appeals proceeding, SO Perez further carried out her verification duties by specifically asking Mrs. Seekamp about the address. Significantly, Mrs. Seekamp did not contend that the address was wrong when pressed by SO Perez. She did not say she never lived at the Iowa Street address. Or even that she did not live there on November 16, 2020. She simply could not recall whether she lived there on November 16, 2020. That lack of recollection is irrelevant to the key point at issue: whether Mrs. Seekamp or anyone else told the IRS that she no longer lived at the Iowa Street address before the November 16 Notice was issued. During the discussions with SO Perez, Mrs. Seekamp offered no evidence that this happened or that she told Appeals that this happened. And
ASO Martinez-Padua had before her the records prepared by SO Perez and included in the administrative record recounting these discussions. Thus, we find no fault (let alone abuse of discretion) with ASO Martinez-Padua's actions and see nothing in the administrative record suggesting that the November 16 Notice was sent to the wrong address.
What is more, IRS computer records concerning Mrs. Seekamp's various addresses over time list the Iowa Street address as her last known address as of November 16, 2020. The Form W-2 from Regence lists the Iowa Street address as Mrs. Seekamp's address for 2017. IRS records show that Mrs. Seekamp's address was changed on December 10, 2020, three-and-a-half weeks after the November 16 Notice was issued.
Mrs. Seekamp speculates that the IRS must have known about the change of address before the change was reflected in the IRS systems. But she offers no evidence to back up her speculation. And of course the relevant information-where she lived at a particular time and whether she told the IRS about where she lived-was singularly within her possession. She is, and has been, best situated to provide proof that she alerted the IRS to a change in address before November 16, 2020. Yet she has not.
Finally, Mrs. Seekamp offers no evidence to discredit SO Perez's and ASO Martinez-Padua's statements in the Case Activity Record and the Notice of Determination that they in fact did verify that all procedural requirements were met. Particularly telling are SO Perez's pointed questions about whether Mrs. Seekamp received the November 16 Notice. Whatever confusion Mrs. Seekamp seeks to sow by pointing out that various documents in the record reflect different dates when a notice of deficiency may have been issued, the CDP hearing officers focused on the November 16 Notice. And there is no reason to doubt that that Notice was sent to Mrs. Seekamp's last known address and that the Appeals Officers here so confirmed.
We note for completeness that the Commissioner offers an entirely plausible explanation for why certain transcripts in the record reflect different dates for the issuance of notices of deficiency. One of those dates (May 19, 2020) appears to relate to a notice that was reversed. And the other (November 3, 2020) appears to reflect the date the information underlying the November 16 Notice was entered in the IRS computer system but not the date the November 16 Notice actually left the IRS. That the IRS may have needed some time to process the November 16 Notice at the height of the COVID-19 pandemic when the agency was working with reduced staff is not difficult to understand.
B. Issues Raised and Balancing Analysis
The other elements of the analysis need not detain us long. IRS Appeals considered the issues Mrs. Seekamp raised at the hearing and invited her to provide documentation in support of her position. Mrs. Seekamp did not do so. Nor did she request any collection alternatives. Finally, Mrs. Seekamp does not allege any error in how IRS Appeals balanced the interest at issue.
In short, we find no abuse of discretion.
V. Section 6673 Warning
Section 6673(a)(1) authorizes the Tax Court to impose a penalty not in excess of $25,000 whenever it appears that proceedings have been instituted or maintained by the taxpayer primarily for delay or whenever the taxpayer's position in such proceeding is frivolous or groundless. We cautioned Mrs. Seekamp at the hearing on September 30, 2024, that making frivolous arguments before the Court might result in imposition of the penalty. The next day, Mrs. Seekamp filed three more documents that could support our taking that step. Because she did not appear for trial, and thus did not advance the arguments in open Court, we will not impose a section 6673 penalty at this time. But if she attempts to make similar arguments in the future, either in this proceeding or others, she has been warned the Court may not be so restrained.
VI. Conclusion
For the reasons stated above, we will sustain the determinations reflected in the Notice of Determination dated July 6, 2023.
To reflect the foregoing, an appropriate order will be issued.
This concludes the Court's oral findings of fact and opinion in this case.
(Whereupon, at 4:38 p.m., the above-entitled matter was concluded.)
CERTIFICATE OF TRANSCRIBER AND PROOFREADER
CASE NAME: Jennifer Christina Seekamp v. Commissioner
DOCKET NO.: 12334-23L
We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 42 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Bruce Carlson on October 3, 2024 before the United States Tax Court at its session in Portland, OR, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording.