Tax Court Sustains IRS Notice of Federal Tax Lien

Timothy S. Murphy, Robert D. Heitmeyer, and A. Gary Begun, for respondent.

[*2] Petitioner resided in Michigan at the time he filed the petition.

On October 19, 2006, petitioner filed Form 1040, U.S. Individual Income Tax Return (Form 1040), for his taxable year 2005 (2005 Form 1040). In that form, petitioner showed "adjusted gross income" of $69,685, "Taxable income" of $37,985, "total tax" of $18,259, and "2005 estimated tax payments and amount applied from 2004 return" of $25,908. Petitioner showed in his 2005 Form 1040 an overpayment of Federal income tax (tax) of $7,649.

Respondent credited against the "total tax" of $18,259 that petitioner showed in his 2005 Form 1040 estimated tax payments of $14,620. As a result, petitioner had tax due of $3,639 for his taxable year 2005. Petitioner has not paid any of that tax due for that taxable year.

On August 22, 2008, petitioner filed Form 1040 for his taxable year 2004 (2004 Form 1040). In that form, petitioner showed "adjusted gross income" of $179,754, "Taxable income" of $146,061, "total tax" of $62,261, "Federal income tax withheld from Forms W-2 and 1099" of $11,703, "2004 estimated tax payments and amount applied from 2003 return" of $25,710, and "Amount paid with request for extension to file" of $36,136. Petitioner showed in his 2004 Form 1040 an overpayment of tax of $11,288.

[*3] Respondent credited against the "total tax" of $62,261 that petitioner showed in his 2004 Form 1040 (1) tax withholding of $11,703, (2) estimated tax payments of $23,710, and (3) an overpayment of tax for his taxable year 2003 of $2,224.23. As a result, petitioner had tax due of $24,623.77 for his taxable year 2004. Petitioner has not paid any of that tax due for that taxable year.

On April 9, 2007, respondent assessed the "total tax" of $18,259 that petitioner showed in his 2005 Form 1040, an addition to tax under section 6651(a)(2)¹ of $218.34, and interest as provided by law for petitioner's taxable year 2005. On certain other dates after April 9, 2007, respondent assessed certain additional amounts of the addition to tax under section 6651(a)(2) for petitioner's taxable year 2005. (We shall refer to any unpaid assessed amounts with respect to petitioner's taxable year 2005, as well as any unassessed interest as provided by law, as petitioner's unpaid 2005 liability.)

On December 15, 2008, respondent assessed the "total tax" of $62,261 that petitioner showed in his 2004 Form 1040, additions to tax under section 6651(a)(1) and (2) of $5,540.35 and $5,417.23, respectively, and interest as provided by law for petitioner's taxable year 2004. On certain other dates after [*4] December 15, 2008, respondent abated in full the respective additions to tax under section 6651(a)(1) and (2) and also abated certain interest as provided by law, which respondent had assessed for petitioner's taxable year 2004. (We shall refer to any unpaid and unabated assessed amounts with respect to petitioner's taxable year 2004, as well as any unassessed interest as provided by law, as petitioner's unpaid 2004 liability.)

On June 30, 2009, respondent issued to petitioner a notice of Federal tax lien filing and your right to a hearing under IRC 6320 (notice of tax lien) with respect to petitioner's unpaid 2004 liability and petitioner's unpaid 2005 liability.

On July 15, 2009, respondent issued to petitioner a notice of intent to levy and notice of your right to a hearing (notice of intent to levy) with respect to petitioner's unpaid 2004 liability.

Petitioner timely submitted to respondent Form 12153, Request for a Collection Due Process or Equivalent Hearing (petitioner's Form 12153). In that form, petitioner, inter alia, requested a collection due process hearing with respondent's Appeals Office (Appeals Office) with respect to the notice of tax lien and the notice of intent to levy. In petitioner's Form 12153, petitioner (1) indicated that he intended to propose a collection alternative of (a) "Credit of up to $300,000 from Slodov trust fund not applied" and (b) "Amount claimed due [*5] can not be verified"; (2) requested withdrawal of filed tax liens because, according to petitioner, "Lien and levy actions constitute a fraud on the part of IRS agents"; and (3) claimed that a certain internal revenue agent "has information to correct record reversing a jury verdict and court order incarcerating me for evasion of an income tax refund."²

On June 22, 2011, a settlement officer with the Appeals Office (settlement officer) held a telephonic hearing with petitioner. After that hearing, the settlement officer made the following pertinent entries in his "Case Activity Records":

On October 11, 2012, petitioner filed a response to respondent's motion (petitioner's response).

[*16] It is petitioner's position that there are genuine disputes of material fact that preclude us from granting respondent's motion. In support of that position, petitioner argues in petitioner's response (petitioner's overpayment argument) (1) that he overpaid his tax for each of his taxable years 1998 through 2001 by an aggregate amount of approximately $100,000 and (2) that he overpaid his tax for his taxable year 2003 by an amount that exceeds the $2,224.23 that respondent credited against the "total tax" that petitioner showed in his 2004 Form 1040. According to petitioner, those alleged overpayments of tax eliminate, or at least reduce, petitioner's unpaid 2004 liability and petitioner's unpaid 2005 liability.

Section 6330(d)(1) provides that "the Tax Court shall have jurisdiction with respect to such matter" as is covered in a notice of determination issued to a taxpayer after a hearing with the Appeals Office concerning a proposed collection action. See Davis v. Commissioner, 115 T.C. 35, 37 (2000).

In Weber v. Commissioner, 138 T.C. 348, 366 (2012), we held that we do not have jurisdiction under section 6330 to "determine an overpayment of an unrelated liability." We stated in Weber:

Neither respondent nor any court has determined that petitioner overpaid his tax for any of his taxable years 1998 through 2001⁴ or that petitioner overpaid his tax for his taxable year 2003 by an amount that exceeds the $2,224.23 that respondent credited against the "total tax" that petitioner showed in his 2004 Form 1040. Therefore, petitioner does not have an "available credit" for any of his taxable years 1998 through 2001 and 2003 that can be taken into account in determining whether his tax liability for his taxable years 2004 and 2005 remains unpaid. See id. at 371. Instead, petitioner has a "claim for a credit" for each of those taxable years. See id. at 371-372. Any such claim "need not be resolved [*18] before the IRS can proceed with collection of the liability at issue." See id. at 372. We shall not consider petitioner's overpayment argument in determining whether to grant respondent's motion.

In addition to petitioner's overpayment argument, petitioner advances in petitioner's response certain statements, contentions, arguments, and/or questions that we find to be frivolous and/or groundless.

Based upon our examination of the entire record before us, we conclude that there is no genuine dispute as to any material fact that requires a trial in this case. On that record, we further conclude that the determinations in the notice of determination with respect to petitioner's unpaid 2004 liability and petitioner's unpaid 2005 liability should be sustained.

We consider sua sponte whether to impose on petitioner a penalty under section 6673(a)(1), a provision that we brought to his attention in our Order dated September 21, 2012.⁵ Section 6673(a)(1) authorizes us to require a taxpayer to pay to the United States a penalty in an amount not to exceed $25,000 whenever it [*19] appears to us, inter alia, that the taxpayer instituted or maintained a proceeding before us primarily for delay, sec. 6673(a)(1)(A), or that the taxpayer's position in a proceeding before us is frivolous or groundless, sec. 6673(a)(1)(B).

We believe that petitioner instituted and maintained this case primarily for delay and that certain of the statements, contentions, arguments, and/or questions that petitioner advances in the petition and petitioner's response are frivolous and/or groundless. Nonetheless, we shall not impose a penalty under section 6673(a)(1) on petitioner in this case. We caution him that he may be subject to such a penalty if in the future he institutes or maintains a proceeding before us primarily for delay and/or his position in any such proceeding is frivolous or groundless. See Abrams v. Commissioner, 82 T.C. 403, 409-413 (1984); White v. Commissioner, 72 T.C. 1126, 1135-1136 (1979).

We have considered any statements, contentions, arguments, and/or questions of petitioner that are not frivolous and/or groundless and that are not discussed herein, and we find them to be without merit and/or irrelevant.

On the record before us, we shall grant respondent's motion.

[*20] To reflect the foregoing,

An order granting respondent's motion and decision for respondent will be entered.

² We take judicial notice that the U.S. Court of Appeals for the Sixth Circuit (Court of Appeals) affirmed petitioner's conviction for tax evasion under sec. 7201 for each of his taxable years 1998 through 2001.

³See supra note 2.

⁴ Indeed, as discussed supra note 2, the Court of Appeals affirmed petitioner's conviction for tax evasion under sec. 7201 for each of his taxable years 1998 through 2001. See Burt v. Commissioner, T.C. Memo. 2013-58. In order to have been convicted of tax evasion, the Government had to have proved beyond a reasonable doubt that for each of those taxable years (1) petitioner had additional tax due and owing, (2) petitioner committed an affirmative act of evasion or attempted evasion of that tax, and (3) petitioner willfully violated the tax law. See Sansone v. United States, 380 U.S. 343, 351 (1965); United States v. Daniel, 956 F.2d 540, 542 (6th Cir. 1992). If petitioner had additional tax due and owing for each of his taxable years 1998 through 2001, a fortiori petitioner underpaid, and did not overpay, his tax for each of those taxable years.

⁵ Petitioner is no stranger to us. In Burt v. Commissioner, T.C. Memo. 2013-58, at *8, which was released after petitioner filed petitioner's response in the instant case, we found that "petitioner's position in this case is frivolous and groundless and that he instituted and maintained this case primarily for delay." As a result, in Burt, we imposed a penalty of $20,000 on petitioner under sec. 6673(a)(1).