Opinion
12375-20SL
04-01-2022
JOSEPH SEMINARA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Eunkyong Choi Special Trial Judge
Pending before the Court is respondent's Motion for Summary Judgment, filed May 10, 2021. Respondent moves for adjudication in his favor regarding the Notice of Determination issued by the Independent Office of Appeals ("Appeals") on September 15, 2020. In the notice, Appeals sustained the Notice of Federal Tax Lien ("NFTL") dated March 28, 2019, which notified petitioner of the federal tax liens filed concerning petitioner's outstanding liabilities for taxable years 2014, 2015, 2016, and 2017. In moving for summary judgment, in addition to his motion, respondent relies on the Declaration of Derek W. Kelley in Support of Motion for Summary Judgment, filed May 10, 2021. Petitioner did not file a response to Respondent's Motion for Summary Judgment. The Court heard respondent's motion on March 23, 2022. There was no appearance by, nor anyone on behalf of, petitioner.
For the reasons set forth below, respondent's motion is denied.
Background
The following facts are drawn from the parties' pleadings and motion papers, including the attached declaration and exhibits. See Rule 121. Petitioner resided in New Hampshire when he filed the Petition in this case.
All statutory references are to the Internal Revenue Code in effect at all relevant times, and all rule references are to the Tax Court Rules of Practice and Procedure.
As previously noted, on March 28, 2019, respondent issued an NFTL notifying petitioner of the federal tax liens filed concerning petitioner's outstanding liabilities for taxable years 2014, 2015, 2016, and 2017. Petitioner had filed income tax returns reporting liabilities for each of the taxable years at issue without submitting payment along with the returns. As a result, petitioner's tax account for each year entered respondent's Automated Collections System, ultimately leading to the NFTL subject to respondent's determination. Respondent did not audit petitioner's 2014, 2015, 2016, or 2017 income tax returns. The administrative record before the Court is bereft of Notices of Deficiency for these taxable years.
In response to the NFTL, on April 30, 2019, petitioner's representative timely submitted a Form 12153 Request for a Collection Due Process or Equivalent Hearing, along with a cover letter, on behalf of petitioner. In Form 12153, petitioner checked the box for each collection alternative available, including "Installment Agreement," "Offer in Compromise" ("OIC"), "I Cannot Pay Balance," and "Lien Subordination, Discharge, and Withdrawal." On July 22, 2019, Settlement Officer Roseann Novetti ("Ms. Novetti") sent petitioner a letter scheduling a telephone conference for August 20, 2019.
Petitioner's representative appeared for the August 20, 2019 telephone conference and represented that she would submit an OIC on Petitioner's behalf. The OIC unit received petitioner's OIC on September 9, 2019. By June 19, 2020, the OIC unit had not made a determination regarding petitioner's OIC. On July 24, 2020, Ms. Novetti received notice from the OIC unit that petitioner had withdrawn his OIC. On July 28, 2020, Ms. Novetti contacted petitioner's representative and learned that the representative no longer represented petitioner. Therefore, Ms. Novetti sent a letter to petitioner on July 29, 2020, requesting that Petitioner contact her.
On August 7, 2020, Ms. Novetti noted in the "Case Activity Record" that she had received a voicemail message from petitioner requesting a callback. She further noted that "[s]ince [taxpayer] withdrew the OIC, the only other option that can be considered for the [taxpayer] in order to have the lien withdrawn is a 60 month [installment agreement] otherwise the Lien [sic] will need to be sustained." The "Case Activity Record" shows that Ms. Novetti also called petitioner on August 7, 2020. Regarding the telephone call, Ms. Novetti noted that she advised petitioner of the option to enter an installment agreement. Still, petitioner stated that he wanted to file another OIC, or file amended returns for 2014, 2015, and 2016. She further noted that she advised petitioner that amended returns would not be necessary if petitioner wanted to file another OIC. Ms. Novetti did not consider taxpayer's amended returns.
On September 15, 2020, Appeals issued the Notice of Determination that is the subject of this case. In the summary attached to the notice, Appeals Teams Manager Cindy Kasminoff ("Ms. Kasminoff") stated that Appeals had determined to sustain the Notice of Federal Tax Lien. Referencing the August 7, 2020 telephone call between Ms. Novetti and petitioner, Ms. Kasminoff stated that regarding petitioner's wish to file another OIC or file amended returns, Ms. Novetti advised petitioner that he could no longer file them through Appeals. Ms. Kasminoff further stated that petitioner did not challenge the liability underlying the NFTL and did not propose any collections alternative other than the OIC, which was withdrawn, and therefore, the NFTL was sustained.
Petitioner timely petitioned this Court for review. In his petition, petitioner stated that his amended returns for taxable years 2014, 2015, and 2016 respectively show no tax due, a refund of $1,657, and a refund of $5,455. He further stated that he had filed an Offer in Compromise for taxable year 2017.
Discussion
Summary Judgment may be granted where the pleadings and other materials show that there is no genuine dispute as to any material fact and that a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d (7th Cir. 1994). The burden is on the moving party to demonstrate that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. FPL GRP., Inc. & Subs. v. Commissioner, 116 T.C. 73, 74-75 (2001). In reviewing the facts in this case in a light most favorable to petitioner, the nonmoving party, we find that respondent is not entitled to a decision sustaining the NFTL.
Where the validity of the underlying tax liability is properly in issue, the Court reviews respondent's determination de novo. Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the validity of the underlying tax liability is not properly in issue, the Court will review the settlement officer's administrative determination for abuse of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000). When a settlement officer errs in refusing to consider a taxpayer's dispute of the underlying liability, that matter was properly in issue in the CDP hearing. See Perkins v. Commissioner, 129 T.C. 58, 67 (2007). We find that petitioner's request to file amended returns through Appeals was a dispute of the underlying tax liability. As discussed below, we also find that Ms. Novetti erred in refusing to consider petitioner's amended returns and thereby consider his dispute of the underlying tax liability. Based on the foregoing, we further find that the validity of the underlying tax liability is properly in issue in this case, and our review of respondent's determination is de novo.
Section 6330(c)(2)(B) permits a taxpayer to challenge the existence or amount of the underlying tax liability only if the taxpayer did not receive a Notice of Deficiency or otherwise have a prior opportunity to dispute the underlying tax liability. Where respondent assessed the tax reported in a taxpayer's return; the taxpayer's return was not examined under audit, and respondent did not issue the taxpayer a notice of deficiency, the taxpayer has not had a prior opportunity to dispute the underlying tax liability and may do so during the CDP hearing. See Shaddix v. Commissioner, T.C. Memo. 2022-11, *8. The administrative record, in this case, reveals that respondent assessed the tax petitioner reported in his returns; petitioner's accounts entered respondent's Automated Collections System, absent an examination, when petitioner failed to pay the tax he reported on his returns; and petitioner did not receive deficiency notices for any of the taxable years at issue. Accordingly, reviewing Appeals' determination de novo, we find that petitioner was entitled to have his dispute of the underlying tax liabilities considered at his CDP hearing. We further find that Ms. Novetti's refusal to consider petitioner's amended returns was erroneous, and respondent is not entitled to judgment as a matter of law.
During the March 23, 2022 hearing on the instant motion, respondent asserted that petitioner did not dispute his liability at his CDP hearing because petitioner did not offer amended returns at the August 20, 2019 telephone conference with Ms. Novetti, but instead offered them approximately one year later during the August 7, 2020 telephone conference with Ms. Novetti. Respondent asserted that the August 20, 2019 telephone conference alone was petitioner's CDP hearing; that petitioner cannot indefinitely raise new issues for Appeals to consider. We disagree. "A CDP hearing may consist of one or more written or oral communications between an Appeals officer and the taxpayer" and "[a]ll communications between the taxpayer and the Appeals officer between the time of the hearing request and the issuance of the determination notice constitute part of the CDP hearing." Turner v. Commissioner, T.C. Memo, 2010-44, *2 (internal citations omitted).
Upon due consideration of the foregoing, it is ORDERED that respondent's above-referenced Motion for Summary Judgment is denied.