Opinion
26442-21L
07-20-2023
FRED A. VARGASON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Adam B. Landy, Special Trial Judge
On October 13, 2021, Mr. Vargason filed a petition to review the Internal Revenue Service's (IRS) Notice of Determination Concerning Collection Actions Under IRC Sections 6320 or 6330, which sustained the proposed levy action.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
Pending before the Court is the Commissioner's Motion for Summary Judgment, filed April 4, 2022, supported by a declaration and fourteen exhibits. The Commissioner seeks to sustain a determination made by the IRS Independent Office of Appeals (Appeals) to proceed with the proposed levy action to collect Mr. Vargason's unpaid civil (trust fund) penalties for the tax periods ended June 30, 2017; September 30, 2017; December 31, 2017; March 31, 2018; June 30, 2018; September 30, 2018; and December 31, 2018 (the "Tax Periods at Issue").
By Order dated August 2, 2022, the Court assigned the Commissioner's motion to the undersigned for disposition and directed Mr. Vargason to file a response to the Commissioner's motion. On September 2, 2022, Mr. Vargason filed a response opposing the motion. Upon review of the record, the Court concludes that the Commissioner is not entitled to judgment as a matter of law.
The Court may grant summary judgment only when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(a)(2); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
There is a genuine dispute as to whether the Settlement Officer properly verified that the Trust Fund Recovery Penalty (TFRP) for the Tax Periods at Issue were properly assessed against Mr. Vargason. Section 6672(a) imposes a penalty for "willfully failing to collect, account for, and pay over income and employment taxes of employees." Middleton v. Commissioner, T.C. Memo. 2022-28, *6. "These penalties are assessed and collected in the same manner as taxes against a person who is an 'officer or employee of a corporation … who as such officer, [or] employee … is under a duty to perform,' in this case, the duties to which section 6672 refers." Id.; see also § 6671(a) and (b). "Such persons are referred to as 'responsible persons,' a term which may be broadly applied." Id. (citing Mason v. Commissioner, 132 T.C. 301, 321 (2009)).
Section 6672(b)(1) requires the Commissioner to provide the taxpayer with notice of the TFRPs before assessment. Mason, 132 T.C. at 322. A notice under section 6672(b)(1) provides a taxpayer with the means for challenging a proposed TFRP assessment administratively with Appeals. Id. at 317. To satisfy the preliminary notice requirement, a Letter 1153 must either be (1) personally served on the responsible person, or (2) sent by certified mail to that responsible person's last known address. Id. at 317-318, 322; see also § 6672(b)(1).
Section 6330(c)(1) states that at a CDP hearing the Appeals Officer shall obtain verification that the requirements of any applicable law or administrative procedure were met. This Court has authority to review satisfaction of the verification requirement regardless of whether the taxpayer raised that issue at the CDP hearing. See Hoyle v. Commissioner, 131 T.C. 197, 202-03 (2008), supplemented by 136 T.C. 463 (2011). Although Mr. Vargason's objection did not dispute compliance with the verification requirement, the record clearly reflects that the Settlement Officer failed to properly verify that all legal and procedural requirements were met.
The administrative record attached to the declaration does not contain a copy of Letter 1153 or proof the letter was either personally served on Mr. Vargason or sent by certified mail to Mr. Vargason's last known address prior to assessment of the TFRPs. The Commissioner has not shown that the Settlement Officer verified that all applicable laws or administrative procedures were met. Consequently, summary judgment is not appropriate in this case.
Upon due consideration of the Commissioner's motion, Mr. Vargason's objection, and for cause, it is
ORDERED that the Commissioner's Motion for Summary Judgment, filed April 4, 2022, is denied without prejudice. It is further
ORDERED that, on the Court's own motion, this case is remanded to Appeals for the purpose of affording Mr. Vargason a supplemental administrative hearing pursuant to I.R.C. § 6330. It is further
ORDERED that the IRS shall offer Mr. Vargason a supplemental administrative hearing at the Appeals Office located closest to Mr. Vargason's residence (or at such other place as may be mutually agreed upon) at a reasonable and mutually agreed upon date and time, but no later than December 29, 2023. It is further
ORDERED that the undersigned retains jurisdiction of this case. It is further
ORDERED that, on or before January 31, 2024, a joint status report to inform the Court of the then-present status of this case and if available, the Commissioner shall attach to this joint status report a copy of the supplemental notice of determination.
If the parties believe a telephone conference would be helpful, please contact the undersigned's Chambers Administrator at 202-521-0835 for scheduling purposes.