Friday, August 10, 2007

Back Taxes: Withdrawn IRC 6330 due process request cannot be reinstated

Craig I. Smith v. Commissioner.Dkt. No. 4675-06L , TC Memo. 2007-221, August 9, 2007.

Appealable, barring stipulation to the contrary, to CA-6. -1 entitled petitioners to a section 6330 for both taxable years.2 We hereinafter refer to these March 2004 requests collectively as petitioners' first request for a 3 Thereafter, on April 2, 2004, respondent sent petitioners a letter in response to petitioners' first request for a 4 By signing the form, each petitioner acknowledged:

I've received a resolution with the Internal Revenue Service regarding the tax and tax period that my hearing request concerned and I'm satisfied that I no longer need a hearing with Appeals. Therefore, I withdraw my request for a Collection due Process (CDP) Hearing under * * * IRC Sections 6320 and IRC Section 6320 or 5 In addition, petitioners failed to make estimated tax payments relating to tax years after 2001 and 2002 as required by the terms of the installment agreement. Consequently, respondent terminated the agreement and demanded payment in full of petitioners' uncollected tax liabilities for 2001 and 2002. On December 13, 2004, respondent mailed petitioners a Notice CP 523, Notice of Intent to Levy --You Defaulted On Your Installment Agreement, for 2001. On the same day, respondent mailed a similar notice to petitioners for 2002. We hereinafter refer to these notices collectively as the second notice of levy. Each letter stated:

This is a formal notice of our intent to terminate your installment agreement 30 days from the date of this notice. You defaulted on your agreement because you didn't make your payments as agreed. The agreement states that we may terminate your agreement and collect the entire amount of your tax liability if you don't meet all the conditions. This is your notice, as required by Internal Revenue 6 a hearing for each year under section 6330 hearing. Respondent released the levy on petitioners' bank account on May 12, 2005.

Respondent determined that petitioners' second request for a


Section 6331(d) provides that the levy authorized in Section 6330 elaborates on Sec. 6330(a)(3)(B) and (b)(1). A request for a collection hearing must be made within the 30-day period commencing on the day after the date of the Sec. 6330(a)(3)(B), (2); sec. 301.6330-1(b)(1), Proced. & Admin. Regs. section 6330 notice only once for the taxable period to which the unpaid tax relates. Once the Secretary issues a notice of intent to levy and notice of right to a section 6330 hearing. Sec. 301.6330-1(b)(2), Q&A-B2, Proced. & Admin. Regs.7

If a Sec. 6330(b)(1), (c)(1). The taxpayer is entitled to one hearing with respect to "the taxable period to which the unpaid tax specified in * * * [the levy notice] relates." Sec. 6330(c)(2)(A).
At the conclusion of the hearing, the Appeals officer must determine whether and how to proceed with collection and take into account: (i) The relevant issues raised by the taxpayer, (ii) challenges to the underlying tax liability by the taxpayer, where permitted, and (iii) whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary. section 6330(d)(1), within 30 days of the issuance of a notice of determination, the taxpayer may appeal the determination to this Court if we have jurisdiction over the underlying tax liability.

Section 301.6330-1(i)(1), Proced. & Admin. Regs., provides that where a taxpayer does not timely request a section 6330 hearing. Sec. 301.6330-1(i)(1), Proced. & Admin. Regs. The Appeals officer generally follows the same procedures at an equivalent hearing which he or she would have followed had the equivalent hearing been a section 6330 hearing may constitute a "determination" for purposes of Section 6159 authorizes the Secretary to enter into installment agreements and to terminate an installment agreement where the taxpayer fails to timely pay any installment when it is due or to pay any other tax liability when it is due. Sec. 6159(b)(5). The Secretary is required to establish procedures for an independent administrative review of termination of installment agreements for taxpayers who request such review. Sec. 6331(k)(2)(D); sec. 301.6331-4(a)(1), Proced. & Admin. Regs. However, where a taxpayer receives a Letter 1058, but does not timely request a hearing, a second notice of intent to levy sent after termination of an installment agreement does not entitle the taxpayer to a hearing under section 6330 hearing. There is no doubt that petitioners' second request for a 8

Petitioners' claim that this Court has jurisdiction centers on the continuing validity, in their view, of their first request for a section 6330 hearing only because they had obtained an installment agreement with respondent; once respondent had terminated the installment agreement (unjustifiably so, according to petitioners), petitioners' first request for a section 6330 hearing but were instead given an equivalent hearing, respondent's decision letter (issued as a consequence of the equivalent hearing) was a "determination" for purposes of section 6330 hearing), which respondent duly conducted. Thus, respondent asserts, the equivalent hearing gave rise to a decision letter, which is not a "determination" under section 6330 hearing constitutes an exception to the general rule requiring a hearing in response to a timely request. Such a hearing is, in turn, a prerequisite for the Secretary's issuance of a notice of determination. There is no statutory authority for the proposition that a withdrawn request for a section 6330 hearing) that would lead to that outcome. Indeed, in their withdrawal request, petitioners explicitly agreed to give up their right to seek judicial review of the notice of determination that would have been issued by the Appeals Office.9 Even though no section 6330 hearing is designed to accomplish, a payment alternative in the form of an installment agreement.
Because petitioners withdrew their request for a section 6330 hearing in Orum v. Commissioner, supra at 11.

While admitting that their November 2004 payment was not timely and that they failed to make estimated tax payments as required by the installment agreement, petitioners contend that respondent unjustifiably terminated the installment agreement. Petitioners do not allege that the termination of the installment agreement was the result of clerical error, misdirected mail, or the like. They do not dispute that they received the statutory notices to which they were entitled, were afforded an equivalent hearing in response to their second (untimely) request for a section 6330 hearing, and respondent was not required to issue a notice of determination. Respondent's decision letter was not a determination for purposes of 10

To reflect the foregoing,

An appropriate order of dismissal for lack of jurisdiction will be entered.1 Unless otherwise indicated, all section references are to the Internal Revenue Code as amended.2 The request for a sec. 6330 hearing for 2001 was made on Mar. 24, 2004. In the Mar. 24 request, petitioners requested that the hearings for both taxable years be consolidated.3 The installment agreement preceded petitioners' request for a sec. 6330 hearing for 2001 even though they had already entered into an installment agreement for 2001 "to preserve my hearing rights."4 The Apr. 6, 2004, Form 12256 pertained to 2002. Petitioners stipulated that they also executed a Form 12256 for 2001.5 Respondent received and recorded the November payment on Dec. 6, 2004. The record does not disclose any further payments made by petitioners.6 The Commissioner's Form 12153 instructs taxpayers to "Use this form to request a hearing with the IRS Office of Appeals only when you receive a Notice of Federal Tax Lien Filing & Your Right To A Hearing Under IRC 6320, a Final Notice --Notice Of Intent to Levy & Your Notice Of a Right To A Hearing, or a Notice of Jeopardy Levy and Right of Appeal." The parties treated petitioners' May 11, 2005, request for a hearing as a request for a 7 Sec. 301.6330-1(b)(2), Q&A-B2, Proced. & Admin. Regs., provides:Q-B2. Is the taxpayer entitled to a CDP hearing when the IRS, more than 30 days after issuance of a CDP Notice under section 6330, only the first pre-levy or post-levy CDP Notice with respect to the unpaid tax and tax periods entitles the taxpayer to request a CDP hearing. If the taxpayer does not timely request a CDP hearing with Appeals following that first notification, the taxpayer foregoes the right to a CDP hearing with Appeals and judicial review of Appeals' determination with respect to levies relating to that tax and tax period. The IRS generally provides additional notices or reminders (reminder notifications) to the taxpayer of its intent to levy when no collection action has occurred within 180 days of a proposed levy. Under such circumstances, a taxpayer may request an equivalent hearing as described in paragraph (i) of this section.8 Petitioners, expecting to receive yet another, "final", notice before collection by levy, ignored the second notice of intent to levy. They did so at their peril, because no further notice was in fact required for the Secretary to proceed with collection by levy. The Secretary is required to issue a sec. 6330 hearing. See Orum v. Commissioner, 123 T.C. 1, 11 (2004), affd. 412 F.3d 819 (7th Cir. 2005); sec. 301.6330-1(b)(2), Q&A-B4, Proced. & Admin. Regs.9 See Aguirre v. Commissioner, 117 T.C. 324 (2001), where we granted summary judgment against taxpayers who signed Form 4549, Income Tax Examination Changes, in which they waived the right to contest their tax liability in this Court and consented to the immediate assessment and collection of tax.10 In view of our holding that we lack jurisdiction, we need not address the issue of whether, as petitioners argued at trial and on brief, respondent abused his discretion in proceeding with collection by levy. However, for the sake of completeness, we note that we do not find petitioners' position persuasive.
Alvin S. Brown, Esq.
Tax attorney
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