Opinion
12150-21L
02-06-2023
SMART MAILERS L.L.C., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL
Cary Douglas Pugh, Judge.
On March 26, 2020, the Internal Revenue Service (IRS) sent petitioner a Letter 3172, Notice of Federal Tax Filing and Your Right to a Hearing Under IRC 6320 (lien notice) regarding petitioner's outstanding liability for taxable quarters 06/2013, 12/2015, and 03/2016. In response to the lien notice, petitioner timely submitted Form 12153, Request for a Collection Due Process or Equivalent Hearing (administrative hearing request) with the IRS Independent Office of Appeals (Appeals). The parties conducted the administrative hearing on November 30, 2020, and on March 11, 2021, Appeals issued a Notice of Determination Concerning Collection Actions under IRC Sections 6320 or 6330, sustaining the filing of the lien for petitioner's unpaid liability for taxable quarters 06/2013, 12/2015, and 03/2016.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Petitioner timely filed a petition with the Court contesting respondent's notice of determination. Petitioner indicated that it seeks to contest a notice of determination for taxable quarters of 03/2013, 06/2013, 12/2013, 03/2014 through 12/2014, 03/2015, 06/2015, 09/2015, 12/2015, and 03/2016.
Respondent filed a Motion to Dismiss for Lack of Jurisdiction as to Taxable Quarters 02/2013, 12/2013, 03/2014 through 12/2014, and 03/2015 through 09/2015 and To Strike. Respondent argues that the Court lacks jurisdiction because at the time the petition in this case was filed, respondent has not issued a notice of deficiency, a notice of determination in a collection case, or made any other determination which would be sufficient to confer jurisdiction on the Court with respect to taxable quarters 02/2013, 12/2013, 03/2014 through 12/2014, and 03/2015 through 09/2015.
Respondent filed a separate Motion to Dismiss on the Ground of Mootness as to Taxable Quarters 06/2013 and 12/2015, and supplemented its motion to include taxable quarter 03/2016. These three quarters are the only ones subject to the lien notice on which petitioner's collection case is premised. Respondent stated that the outstanding income taxes, penalties, and interest for all three taxable quarters at issue have been paid in full by way of offsets and a transfer from another account. Respondent thus contends, citing Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), that because the liabilities at issue in the notice of determination were paid in full, no case or controversy remains to give the Court jurisdiction and the case should be dismissed as moot.
Petitioner agrees that the outstanding taxes, penalties, and interest for taxable quarters 06/2013, 12/2015, and 03/2016 were paid in full by way of offsets and a transfer from another account. However, petitioner argues that the penalties and interest for those quarters should have been abated in full and thus the offset of petitioner's liabilities was incorrect.
We set respondent's motions for hearing at the November 28, 2022, trial calendar in New Orleans, Louisiana. Both parties appeared and were heard. For the reasons stated below, we will grant respondent's motions, as supplemented, and dismiss this case.
This Court is a court of limited jurisdiction. § 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985). We may exercise jurisdiction only to the extent provided by statute. Breman v. Commissioner, 66 T.C. 61, 66 (1976).
Sections 6320(c) and 6330(d) confer jurisdiction on this Court to review lien (and levy) determinations when the conditions set forth in those sections, as applicable, have been met. See Rule 330(b). To that end, our jurisdiction under sections 6320 and 6330 rests upon the issuance of a valid notice of determination and the filing of a timely petition for review. See Orum v. Commissioner, 123 T.C. 1, 8 (2004), aff'd, 412 F.3d 819 (7th Cir. 2005); Sarrell v. Commissioner, 117 T.C. 122, 125 (2001).
Additionally, the statutory framework governing our review of Appeals' lien (and levy) determinations limits the relief that we can provide a taxpayer. See §§ 6320(c), 6330(c)(3); see also Lunsford v. Commissioner, 117 T.C. 183, 184 (2001). We have three options: sustain Appeals' determination, reject Appeals' determination, or remand for further consideration by Appeals. See Freije v. Commissioner, 125 T.C. 14, 33, 37 (2005).
As a consequence of these limits on the relief we may order under sections 6320 and 6330, if the tax liability giving rise to the collection action at issue is satisfied or if the IRS decides not to pursue collection and releases any lien that has been filed, the case must be dismissed as moot because we can grant no further relief. See Greene-Thapedi, 126 T.C. at 8 ("[W]hatever right petitioner may have to challenge the existence and amount of her underlying tax liability in this proceeding arises only in connection with her challenge to the proposed collection action."); see also Willson v. Commissioner, 805 F.3d 316, 320 (D.C. Cir. 2015) ("[I]f a case raises a question within the jurisdictional purview of the court, and that question is subsequently resolved, the case is moot notwithstanding the existence of other live controversies between the taxpayer and the IRS that do not fall within the tax court's jurisdiction.").
We recognize the inefficiencies that may arise when the IRS applies an offset to satisfy an outstanding tax liability rendering a challenge to the proposed collection action moot. A taxpayer who believes that the underlying tax liability is not properly owed and the offset was wrongly applied now must challenge the action in a different proceeding. Nonetheless, our jurisdiction does not allow us to review an offset in a case where the proposed collection action is moot. See Greene-Thapedi, 126 T.C. at 8 (stating that if the proposed collection action is moot, taxpayer "has no independent basis to challenge the existence or the amount of [the] underlying tax liability").
Here, the lien was filed with respect to 06/2013, 12/2015, and 03/2016. Because the tax liabilities for these periods were paid in full, effectively ending the collection procedures, and we can grant petitioner no further relief, this action is no longer justiciable and is moot. As to 03/2013, 12/2013, 03/2014 through 12/2014, and 03/2015 through 09/2016, petitioners failed to demonstrate any basis for our jurisdiction. Therefore, upon due consideration and for cause, it is hereby
ORDERED that respondent's Motion to Dismiss on the Ground of Mootness as to Taxable Quarters 06/2013, 12/2015, and 03/2016, filed on January 13, 2022, as supplemented, is granted and this case is dismissed as moot as to 06/2013, 12/2015, and 03/2016. It is further
ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction as to Taxable Quarters 02/2013, 12/2013, 03/2014 through 12/2014, and 03/2015 through 09/2015 and To Strike, filed on January 13, 2022, is granted and this case is dismissed for lack of jurisdiction as to 02/2013, 12/2013, 03/2014 through 12/2014, and 03/2015 through 09/2015.