Opinion
2455-22
01-13-2023
VICTOR TAVAREZ, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Kathleen Kerrigan, Chief Judge
This case is set for trial at the Court's January 23, 2023, New York City, New York trial session. On October 25, 2022, respondent filed a Motion for Summary Judgment. Petitioner filed a response to respondent's motion on November 16, 2022.
Unless otherwise indicated, all section references are to the Internal Revenue Code, Title 26 U.S.C., and all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The following background is drawn from the parties' undisputed pleadings, Motion papers, including the administrative record as supplement by the parties, and the supporting Exhibits attached thereto. Petitioner resided in New York when he timely filed his Petition.
On October 4, 2021, respondent issued to petitioner Letter CP508C, Notice of Certification of Your Seriously Delinquent Federal Tax Debt to the U.S. Department of State (Passport Notice), with respect to petitioner's civil penalty liabilities for the 2013 and 2016 tax years. The Passport Notice identifies civil penalty liabilities of $18,235 and $50,426 for 2013 and 2016, respectively. The Passport Notice also identifies additional interest of $2,437 and $4,892, for 2013 and 2016, respectively, resulting in total civil penalty liabilities of $75,991. Petitioner timely filed his Petition disputing the Passport Notice on January 6, 2022. The sole issue in this case concerns petitioner's certification as an individual owing a seriously delinquent tax debt pursuant to section 7345.
On or about October 26, 2015, respondent assessed a civil penalty against petitioner for the 2013 taxable year. The penalty was assessed pursuant to section 6695(g) - failure to be diligent in determining eligibility for certain tax benefits - in connection with income tax returns that petitioner prepared.
On September 15, 2016, respondent issued a notice of intent to levy informing petitioner of his collection due process rights. On or about September 30, 2016, respondent filed a notice of federal tax lien (NFTL). On October 4, 2016, respondent issued a notice of lien filing and right to collection due process hearing. Petitioner did not request a hearing in response to either of the collection due process notices. Respondent made the initial levy for this period on April 17, 2017.
On or about February 12, 2018, respondent assessed a civil penalty against petitioner for the 2016 taxable year. The penalty was assessed pursuant to section 6695(g) in connection with income tax returns that petitioner prepared. On May 28, 2018, respondent issued a notice of intent to levy informing petitioner of his collection due process rights. Respondent made the initial levy for this period on August 6, 2018. On or about November 30 2018, respondent filed a Notice of Federal Tax Lien. On December 4, 2018, respondent issued a Notice of Lien Filing and Right to Collection Due Process Hearing. Petitioner did not request a hearing in response to either of the collection due process notices.
Petitioner was initially certified to the State Department as a taxpayer with seriously delinquent federal tax debt with respect to the 2013 and 2016 civil penalties on February 25, 2019. Petitioner subsequently submitted an Offer in Compromise to respondent, which caused a reversal of the initial passport certification on February 22, 2021. The Offer in Compromise was denied on August 11, 2021. As of October 4, 2021, petitioner's tax liabilities exceeded $54,000. On October 4, 2021, respondent issued the Passport Notice informing petitioner that respondent had notified the State Department of petitioner's certification.
In his Petition and Response to Respondent's Motion, petitioner disputes the amount of the underlying liability.
Discussion
The purpose of summary judgment is to expedite litigation and to avoid unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). In cases that are subject to a de novo scope of review, we may grant summary judgment when there is no genuine dispute as to any material fact and 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 965 (7th Cir. 1994). In cases that are decided on the administrative record, we ordinarily decide the issues raised by the parties by reviewing the administrative record using the procedure discussed in Van Bemmelen v. Commissioner, 155 T.C. 64, 78-79 (2020).
As in Rowen v. Commissioner, 156 T.C. 101, 106 (2021), we need not decide in this case either the applicable scope or standard of review. As to the scope of review, there is no material dispute between the parties regarding the evidence we should consider. As to the standard of review, our decision would be the same whether we reviewed the IRS's certification de novo or for abuse of discretion.
Section 7345(a) provides that, if the IRS certifies that a taxpayer has "a seriously delinquent tax debt," that certification shall be transmitted "to the Secretary of State for action with respect to denial, revocation, or limitation of [the taxpayer's] passport." The IRS is responsible for notifying the taxpayer contemporaneously with the making of such certification. § 7345(d). A "seriously delinquent tax debt" is a Federal tax liability that has been assessed, exceeds $50,000 (adjusted for inflation), is unpaid and legally enforceable, and with respect to which a lien notice has been filed or a levy made. § 7345(b)(1), (f). The adjusted threshold amount for 2021, the year of petitioner's certification, was $54,000. See Rev. Proc. 2020-45, § 3.59, 2020-46 I.R.B. 1016, 1027.
Section 7345(e)(1) permits a taxpayer whom the IRS has certified as having a seriously delinquent tax debt to petition this Court to determine "whether the certification was erroneous or whether the [IRS] has failed to reverse the certification." Section 7345(e)(2) restricts the relief that we may grant. If we determine that a certification is erroneous, we can grant only one remedy: an order that the IRS "notify the Secretary of State that such certification is erroneous." § 7345(e)(2). Section 7345 does not authorize us to grant any other form of relief. Ruesch v. Commissioner, 25 F.4th 67, 70 (2d Cir. 2022), aff'g in part, vacating in part and remanding 154 T.C. 289 (2020).
The Commissioner has met the criteria to certify that petitioner has a "seriously delinquent tax debt." The Commissioner has supplied copies of petitioner's IRS account transcripts for 2013 and 2016. The transcripts show that as of October 6, 2022, petitioner had assessed, unpaid, and legally enforceable Federal income tax liabilities for 2013 and 2016, the sum of which exceeds the $54,000 threshold required for certification. With regard to the 2013 and 2016 Federal income tax liabilities, the transcripts also show notices of lien and levy issued pursuant to sections 6320 and 6330. See § 7345(b)(1)(C).
To the extent petitioner is seeking to challenge the amount of his underlying tax liability for 2013 and 2016, that challenge would be impermissible. The only determination we are authorized to make is whether the Commissioner's certification of a taxpayer as a person having a seriously delinquent tax debt (or his failure to reverse a certification) "was erroneous." § 7345 (e)(1). And the only relief we are authorized to grant is to order the Commissioner "to notify the Secretary of State that such certification was erroneous." § 7345(e)(2); see Garcia v. Commissioner, 157 T.C. 1, 9-10 (2021). Section 7345 does not permit taxpayers to challenge, in a passport case such as this, the assessed tax liabilities that have triggered their certification. Ruesch v. Commissioner, 154 T.C. 289, 296-97 (2020), aff'd in part, vacated and remanded in part on other grounds, 25 F. 4th 67 (2d Cir. 2022). On the basis of the undisputed facts, the Commissioner has shown that petitioner's 2013 and 2016 liabilities meet the requirements for certification to the Secretary of State as a "seriously delinquent tax debt." See § 7345(e)(1).
Upon due consideration it is, ORDERED that respondent's Motion for Summary Judgment dated October 25, 2022, is granted. It is further
ORDERED that this case is stricken from the Court's New York City, New York session commencing January 23, 2023. It is further
ORDERED and DECIDED that respondent's certification that petitioner has a seriously delinquent tax debt, reflected in the Passport Notice, dated October 4, 2021, upon which this case is based, is sustained.