MacElvain v. Commissioner

MEMORANDUM OPINION

ARMEN, SPECIAL TRIAL JUDGE: This matter is before the Court on respondent's Motion for Partial Summary Judgment, filed pursuant to Rule 121. ¹ As explained below, we shall grant respondent's motion.

BACKGROUND

From 1984 through 1990, petitioner commenced four cases in this Court for the redetermination of deficiencies in Federal income taxes and additions to tax for each of the four taxable years 1980 through 1983. See sec. 6213(a). A description of each of those four cases follows herein:

On June 15, 1984, respondent issued a notice of deficiency to petitioner determining a deficiency of*376 $ 576,896 in his Federal income tax for 1980. Respondent also determined that petitioner was liable for an addition to tax under section 6653(a) for negligence or intentional disregard of rules and regulations.

On October 29, 1984, petitioner filed a petition with the Court (assigned docket No. 37347-84) contesting the notice of deficiency for 1980. ² In February 1986, shortly before petitioner's case was scheduled for trial, petitioner entered into a stipulated decision with respondent agreeing to a deficiency in income tax and an addition to tax under section 6653(a) for 1980 in the amounts of $ 190,291 and $ 9,515, respectively. Petitioner subsequently filed a motion to vacate the stipulated decision. In MacElvain v. Commissioner, T.C. Memo 1987-366, the Court denied petitioner's motion to vacate.

*377 Petitioner did not file any notice of appeal in docket No. 37347-84. Accordingly, the Court's decision in that docket has long been final. See secs. 7481(a)(1), 7483.

On August 19, 1988, respondent issued a notice of deficiency to petitioner determining a deficiency of $ 205,662 in his Federal income tax for 1981. Respondent also determined that petitioner was liable for additions to tax for such year under section 6653(a)(1) and (2) for negligence or intentional disregard of rules and regulations.

On November 16, 1988, petitioner filed a timely petition with the Court (assigned docket No. 29751-88) contesting the notice of deficiency for 1981. On July 20, 1989, the Court entered an Order of Dismissal and Decision, sustaining respondent's determinations for 1981 on the ground that petitioner had failed to properly prosecute his case and had failed to comply with a prior order of the Court. The Court subsequently denied petitioner's Motion to Vacate its order of dismissal.

Petitioner did not file any notice of appeal in docket No. 29751-88. Accordingly, the Court's decision in that docket has long been final. See secs. 7481(a)(1), 7483.

C. TAXABLE YEAR 1982

*378 On June 12, 1989, respondent issued a notice of deficiency to petitioner determining a deficiency in and additions to his Federal income tax for 1982. On September 5, 1989, petitioner filed a timely petition with the Court (assigned docket No. 21830-89) contesting the notice of deficiency for 1982. On May 17, 1991, the Court entered a stipulated decision that petitioner was liable for a deficiency in income tax in the amount of $ 36,016, an addition to tax under section 6653(a)(1) in the amount of $ 1,800.80, an addition to tax under section 6653(a)(2) in an amount equal to 50 percent of the interest due on the deficiency, and an addition to tax under section 6661 for substantial understatement of liability in the amount of $ 9,004.00.

Petitioner did not file any notice of appeal in docket No. 21830-89. Accordingly, the Court's decision in that docket has long been final. See secs. 7481(a)(1), 7483.

On June 15, 1990, respondent issued a notice of deficiency to petitioner determining a deficiency of $ 167,381 in his Federal income tax for 1983. Respondent also determined that petitioner was liable for additions to tax under section 6653(b)(1) and (2) for fraud*379 and under section 6661 for substantial understatement of liability.

Although petitioner contends that he did not receive the notice of deficiency for 1983, the record shows that he did. ³ On September 12, 1990, petitioner filed an imperfect petition with the Court (assigned docket No. 20618-90). On January 10, 1991, the Court entered an Order of Dismissal for Lack of Jurisdiction in that docket on the ground that petitioner had failed to file a proper amended petition or pay the requisite filing fee within the time prescribed by the Court. Although the Court, pursuant to its normal procedure, has destroyed all of its records in docket No. 20618-90 with the exception of the above-referenced order of dismissal, both the Court's docket record and respondent's records show that the Court served respondent with a copy of the petition on September 17, 1990. Respondent's records also show that attached as an exhibit to the copy of the petition served on respondent were the first two pages of the notice of deficiency dated June 15, 1990. In serving petitions on respondent, see Rule 21(b)(1), it has long been the Court's practice to photocopy and serve at least the letter portion of any*380 notice of deficiency that accompanies the petition.

Petitioner did not file any notice of appeal from the Court's order of dismissal. Accordingly, such order has long been final. See secs. 7481(a)(1), 7483.

In or about March 1996, the United States commenced a civil action against petitioner in the U.S. District Court for the Middle District of Alabama. The action, which sought to reduce the Government's tax claims for 1980 through 1982 to judgment, prayed that the Court find the "defendant, Robert C. MacElvain, indebted to the United States in the amount of $ 2,091,477.76, as of March 18, 1996, for unpaid federal income tax liabilities for calendar years 1980, 1981, and 1982, plus further accruals of interest and statutory*381 additions thereon according to law, and that judgment be entered in favor of plaintiff United States of America for that amount."

Petitioner participated actively in the foregoing action, asserting a variety of defenses, specifically including the statute of limitations.

In April 1997, the District Court entered judgment in favor of the United States and against petitioner "for unpaid taxes, interest, penalties and lien fees for the years 1980, 1981 and 1982 * * * in the amount of $ 2,091,477.76 plus interest and statutory additions as allowed by law". ⁴

On January 29, 1999, respondent mailed a final notice of intent to levy to petitioner. See sec. 6331. The notice states that petitioner owes taxes, interest, and penalties for the years*382 and in the amounts as follows:

         Year     Amount

         ____     ______

         1980    $   793,308.52

         1981    1,632,232.54

         1982     278,290.41

         1983    1,278,878.58

         1984     175,098.63

         1985     404,236.97

         1986     196,256.57

The notice also states that respondent is preparing to collect these amounts and that petitioner would be given 30 days to request an Appeals Office hearing.

Petitioner timely requested a hearing with respondent's Appeals Office. In particular, petitioner argued that "the time for making an assessment for all the periods listed on your 'NOTICE OF INTENT TO LEVY' was negated on May 8, 1987".

On September 29, 1999, the Appeals Office issued a Notice of Determination Concerning Collection Actions to petitioner stating that respondent would proceed with collection. The determination letter makes reference to petitioner's challenge to the validity of the assessments and states that, because*383 petitioner had an earlier opportunity to dispute the underlying tax liabilities, that issue would not be addressed by the Appeals Office.

On October 27, 1999, petitioner filed with the Court a petition for review of respondent's determination to proceed with collection. ⁵ The petition includes an allegation that petitioner is not liable for the underlying taxes because of the expiration of the period of limitations on assessment for the years in issue and government fraud.

After filing an answer to the petition, respondent filed a Motion for Partial Summary Judgment. Respondent contends that, because petitioner received notices of deficiency for the taxable years 1980, 1981, 1982, and 1983 (and therefore was presented with an earlier opportunity to contest his tax*384 liabilities for those years), petitioner is precluded by statute from contesting the underlying taxes for those years in this proceeding. Petitioner filed an opposition to respondent's motion.

This matter was called for hearing at the Court's motions session in Washington, D.C., on September 6, 2000. Counsel for respondent appeared at the hearing and offered argument in support of respondent's motion. Petitioner appeared at the hearing and offered argument in opposition to respondent's motion. Petitioner also offered the testimony of a witness, Victoria Osborn. The Court rejected Ms. Osborn's proposed testimony after a brief voir dire revealed that she did not have any firsthand knowledge regarding petitioner's above-described Tax Court cases assigned docket Nos. 37347-84, 29751-88, 21830-89, and 20618-90.

DISCUSSION

Section 6331(a) provides that if any person liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment, the Secretary is authorized to collect such tax by levy upon property belonging to the taxpayer. Section 6331(d) provides that the Secretary is obliged to provide the taxpayer with notice before proceeding with collection*385 by levy on the taxpayer's property, including notice of the administrative appeals available to the taxpayer.

In the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress enacted new sections 6320 (pertaining to liens) and 6330 (pertaining to levies) to provide protections for taxpayers in tax collection matters. Section 6330 generally provides that the Commissioner cannot proceed with the collection of taxes by way of a levy on a taxpayer's property until the taxpayer has been given notice of, and the opportunity for, an administrative review of the matter (in the form of an Appeals Office hearing); if dissatisfied with the outcome of such hearing, the taxpayer may seek judicial review of the administrative determination in either the Tax Court or a Federal District Court, during which review the suspension of the levy continues.

Section 6330(c)(2)(B) provides that the existence or the amount of the underlying tax liability can be contested at an Appeals Office hearing if the taxpayer did not receive a notice of deficiency for the taxes in question or did not otherwise have an earlier opportunity to dispute such tax*386 liability. Section 6330(d)(1)(A) provides that a taxpayer may file a petition for review of the Commissioner's administrative determination with the Tax Court if the Court has jurisdiction of the underlying tax liability.

Summary judgment is intended to expedite litigation and avoid unnecessary and expensive trials. See Florida Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be granted with respect to all or any part of the legal issues in controversy "if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials, together with the affidavits, if any, show that there is no genuine issue 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), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

In Goza v. Commissioner, 114 T.C. 176 (2000), we explained that section 6330(c) provides for an Appeals Office hearing to address collection issues such as spousal defenses, *387 the appropriateness of the Commissioner's intended collection activities, and possible alternative means of collection. The taxpayer in Goza had received a notice of deficiency, yet failed to file a petition for redetermination with the Court. When the taxpayer subsequently attempted to use the Court's procedures governing Lien and Levy Actions as a forum to assert frivolous and groundless constitutional arguments against the Federal income tax, we cited the statutory limitation imposed under section 6330(c)(2)(B) and dismissed the petition for failure to state a claim upon which relief could be granted. ⁶

Based on our review of the record in this case, we hold that there is no dispute as to a material fact and that respondent*388 is entitled to partial summary judgment as a matter of law. In particular, the record in the instant case shows that petitioner received notices of deficiency for the taxable years 1980, 1981, 1982, and 1983. Moreover, petitioner filed petitions with the Court contesting those notices. As previously discussed, those petitions were disposed of either by stipulated decision, order of dismissal and decision, or order of dismissal for lack of jurisdiction. Under the circumstances, section 6330(c)(2)(B) clearly bars petitioner from contesting the existence or amount of his tax liabilities for those years before the Appeals Office or the Court. ⁷ Petitioner failed to raise a spousal defense or challenge respondent's proposed levy by offering a less intrusive means for collecting the taxes in either the Appeals Office hearing or in his Lien and Levy Action petition filed with the Court. See sec. 6330(c)(2)(A). These issues are now deemed conceded. See Rule 331(b)(4).

*389 Petitioner has failed to state a justiciable claim for relief in this Lien and Levy proceeding with respect the taxable years 1980, 1981, 1982, and 1983. Petitioner's claim that the period of limitations for assessment expired on May 8, 1987, for these years constitutes a challenge to the existence of the underlying tax liabilities. Section 6330(c)(2)(B) precludes review of those tax liabilities in this proceeding. ⁸

*390 In view of the foregoing, we hold that respondent's determinations to proceed with collection for the taxable years 1980, 1981, 1982, and 1983 are correct. Accordingly, we shall grant respondent's Motion for Partial Summary Judgment.

To reflect the foregoing,

An appropriate order will be issued granting respondent's Motion for Partial Summary Judgment.