Joseph P. Freije v. Commissioner ( 2008 )

131 T.C. No. 1UNITED STATES TAX COURT
JOSEPH P. FREIJE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17294-07L. Filed July 7, 2008.
The issue is whether R’s determination upholding
the notice of Federal tax lien (NFTL) issued to P,
which was based upon P’s income tax liability for 1999,
was an abuse of discretion. P argues we do not have
jurisdiction because the 1999 tax year was before the
Court in an earlier case. See Freije v. Commissioner,
125 T.C. 14 (2005) (Freije I). P also takes the
position that no tax is due for 1999. R counters that
Freije I did not reach the assessment in this case,
that the assessment in this case was not decided in
Freije I, and that the underlying tax liability cannot
be before this Court because P failed to petition the
Court after receiving the notice of deficiency for
1999.
Held: Freije I addressed an assessment for 1999
made without the issuance of a notice of deficiency,
and the assessment based upon the notice of deficiency
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for 1999 was not addressed in Freije I. The second
assessment created a distinct right of hearing subject
to a separate review by this Court.
Held, further, the second notice of determination
issued regarding 1999 is a valid basis for our
jurisdiction and Freije I does not foreclose the
collection action for 1999 addressed in the present
case.
Held, further, R’s determination to proceed with
the NFTL to collect P’s tax liability for 1999 was not
an abuse of discretion.
Joseph P. Freije, pro se.
Diane L. Worland, for respondent.
GOEKE, Judge: This matter is before the Court on (1)
petitioner’s motion for summary judgment, (2) respondent’s cross-
motion for summary judgment, pursuant to Rule 121,1 and (3)
petitioner’s motion to dismiss for lack of jurisdiction, as
supplemented. The issue involves respondent’s determination
upholding the notice of Federal tax lien (NFTL) arising from
petitioner’s income tax liability for 1999. For the reasons
explained herein, we shall grant respondent’s motion for summary
1
Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code, as amended.
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judgment, deny petitioner’s motion for summary judgment, and deny
petitioner’s motion to dismiss for lack of jurisdiction, as
supplemented.
FINDINGS OF FACT
At the time the petition was filed, petitioner resided in
Indiana.
Petitioner was involved in a prior case before this Court,
Freije v. Commissioner, 125 T.C. 14 (2005) (Freije I). The
resolution of that case has some bearing on the pending motions
in this case. In Freije I the Court found that respondent could
not proceed with a proposed levy with respect to petitioner’s
1997, 1998, and 1999 tax years as set forth in the notice of
determination issued November 26, 2001. In addition in Freije I,
the Court directed respondent to proceed with a series of account
transfers and payment postings.
Subsequently, in an order dated May 9, 2007, the Court
determined that it did not have jurisdiction in Freije I to
address respondent’s collection activity related to the NFTL
which is the subject of the case at hand.
The relationship between Freije I and this case has
confused petitioner primarily because he failed to accept the May
9, 2007, order. The resolution in Freije I did not address the
Federal income tax liability which is the subject of the present
case. The liability in Freije I arose from the disallowance of
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claimed estimated tax payments and the disallowance of certain
itemized deductions. Certain of the disallowed deductions should
not have been the basis for assessment before the issuance of a
notice of deficiency. The liability in this case arose after the
issuance of a notice of deficiency dated March 11, 2002 (the
notice of deficiency). In the notice of deficiency respondent
disallowed certain costs reflected on Schedule C, Profit or Loss
From Business, filed as part of petitioner’s 1999 tax return,
adjustments respondent had not previously made. No petition was
filed in response to the notice of deficiency, and on February 3,
2003, respondent assessed the deficiency of $27,457 for 1999.
The disputed notice of determination in Freije I was issued on
November 26, 2001, and did not include the assessment on February
3, 2003.
The present case involves respondent’s efforts to collect
the balance of the assessment of February 3, 2003. On January
25, 2007, respondent filed an NFTL at the County Recorder’s
Office, Johnson County, Franklin, Indiana, with the taxpayers
listed as petitioner and his spouse and reflecting the liability
as an unpaid balance of $27,331.16 for 1999.
Petitioner timely requested a hearing upon receiving notice
of the NFTL filing. The declaration of the settlement officer
assigned to petitioner’s case indicates that petitioner did not
submit a proposed installment agreement, an offer-in-compromise,
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any claim for spousal defenses, nor any collection alternatives
to the NFTL. The declaration further indicates that the
settlement officer verified that the procedural requirements of
assessment were met and that the required notification to
petitioner was timely. Petitioner has not offered any argument
or assertion that is inconsistent with these declarations.
Petitioner’s request for an administrative hearing demonstrates
that petitioner simply maintained that on the basis of Freije I
no collections could be made for 1999.
On July 12, 2007, respondent sent petitioner a notice of
determination sustaining the NFTL filed on January 25, 2007. On
July 30, 2007, petitioner timely petitioned this Court.
On September 26, 2007, petitioner filed a motion for summary
judgment. Respondent filed a response to petitioner’s motion for
summary judgment on October 19, 2007, and simultaneously filed a
motion for summary judgment. On November 16, 2007, petitioner
filed his response to respondent’s motion for summary judgment.
On January 22, 2008, petitioner filed a motion to dismiss for
lack of jurisdiction, as supplemented on February 20, 2008.
On February 11, 2008, this case was called for hearing on
the parties’ pending motions. Petitioner appeared and was heard.
At the conclusion, the Court took all pending motions under
advisement for disposition.
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OPINION
Jurisdiction and Res Judicata
Section 6320(c) incorporates the procedures of section
6330(d) in proceedings where the Commissioner has filed an NFTL.
Section 6330(d) provides that this Court has jurisdiction to
review a timely filed petition after the issuance of a notice of
determination. Respondent issued a notice of determination on
July 12, 2007, regarding the NFTL filed. This determination did
not concern the same assessment involved in Freije I. Petitioner
timely filed a petition with this Court.
Despite these facts supporting our jurisdiction, petitioner
maintains that we do not have jurisdiction because Freije I
should have addressed all collection issues regarding 1999.
Petitioner fails to recognize that Freije I involved respondent’s
efforts to collect via a levy, and the present case involves a
lien action. Separate hearings are permitted for lien and levy
collection actions. Secs. 6320(b)(2), 6330(b)(2). Petitioner’s
argument also raises a question which goes beyond jurisdiction--
whether the outcome in Freije I bars any further collection
action for 1999 as a matter of res judicata.
Freije I did not address the second assessment for 1999, as
the Court explained in its order of May 9, 2007. We recognized
that it was not necessary or appropriate, for the Court lacked
jurisdiction to address the subsequent assessment for 1999; that
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petitioner would be provided an opportunity for a new collection
review hearing for the second assessment; and that Freije I
related only to the first assessment.
In deficiency cases it has long been recognized that “the
Tax Court’s jurisdiction, once it attaches, extends to the entire
subject of the correct tax for the particular year.” Erickson v.
United States, 159 Ct. Cl. 202, 309 F.2d 760, 767 (1962). “As a
general rule, * * * where the Tax Court has entered a decision
for a taxable year, both the taxpayer and the Commissioner (with
certain exceptions) are barred from reopening that year.”
Hemmings v. Commissioner, 104 T.C. 221, 233 (1995). Petitioner
in effect argues for the imposition of this rule in the context
of our jurisdiction under sections 6320 and 6330. For the
reasons set forth below, petitioner’s position is incorrect.
Section 6320(b)(2) provides that “A person shall be entitled
to only one hearing under this section with respect to the
taxable period to which the unpaid tax specified in subsection
(a)(3)(A) relates.” The Secretary promulgated section 301.6320-
1(d)(2), Q&A-D1, Proced. & Admin. Regs., which provides:
(2) Questions and answers.--The questions and
answers illustrate the provisions of this paragraph (d)
as follows:
Q-D1. Under what circumstances can a taxpayer
receive more than one CDP hearing under section 6320
with respect to a tax period?
A-D1. The taxpayer may receive more than one CDP
hearing under section 6320 with respect to a tax period
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* * * where the same type of tax for the same period is
involved, but where the amount of the unpaid tax has
changed as a result of an additional assessment of tax
(not including interest or penalties) for that period
* * *
If a taxpayer was not permitted a second administrative hearing
as a result of an additional assessment, petitioner’s argument
that Freije I resolves this case would be more significant. If
that were the case, it might be expected that the Court would
have jurisdiction over all assessments for the year at issue in
order to ensure that the taxpayer was afforded judicial review of
all of the assessments. However, the regulation offers taxpayers
a separate review where, as in this case, there is a distinct
assessment.
Sections 6320 and 6330 address situations where the
Commissioner is attempting to collect tax that has been assessed.
Since in certain circumstances the Commissioner may assess tax
more than once for the same tax period, it is quite reasonable
that a taxpayer can have a separate opportunity for a hearing
regarding each of the distinct assessments. Respondent is
properly proceeding here under a new assessment which makes
different adjustments than were made under the prior assessment.
We held the first assessment to be procedurally flawed because it
included more than adjustments based on mathematical errors and
was made without issuance of a notice of deficiency. Before
making the second assessment, which was based on different
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adjustments from the first, respondent sent the notice of
deficiency. Therefore, Freije I does not control the outcome in
this case.
Summary Judgment
Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Fla. Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). The Court may grant
summary judgment where there is no genuine issue of 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), affd. 17 F.3d 965 (7th Cir. 1994). The moving party
bears the burden of proving that there is no genuine issue of
material fact, and the Court will view any factual material and
inferences in the light most favorable to the nonmoving party.
Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). Rule 121(d)
provides that where the moving party properly makes and supports
a motion for summary judgment, “an adverse party may not rest
upon the mere allegations or denials of such party’s pleading,”
but must set forth specific facts, by affidavits or otherwise,
“showing that there is a genuine issue for trial.”
Section 6320(b) provides that a taxpayer having received
notice from the Secretary of the filing of an NFTL under section
6323 shall have a right to a fair administrative hearing before
the Internal Revenue Service Office of Appeals. Section 6320(c)
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provides that an Appeals Office hearing generally shall be
conducted consistently with the procedures set forth in section
6330(c), (d), and (e).
This Court cannot consider the merits of the underlying tax
liability associated with the second assessment for 1999 because
this assessment was based upon the notice of deficiency, and
there is no assertion that petitioner did not receive the notice
of deficiency. To the contrary, respondent has produced a copy
of the notice of deficiency and a copy of U.S. Postal Service
Form 3877, Firm Mailing Book for Accountable Mail, which
demonstrates that the notice of deficiency was mailed to
petitioner at the mailing address shown on the petition and on
the notice of determination. That address is petitioner’s
address of record in this case. Accordingly, under section
6330(c)(2)(B) petitioner was not authorized to raise the
underlying liability at his Appeals Office hearing, and we may
not consider it. See Goza v. Commissioner, 114 T.C. 176 (2000).
Where the validity of the underlying tax liability is not
properly at issue, we will review the Commissioner’s
administrative determination for an abuse of discretion. Sego v.
Commissioner, 114 T.C. 604, 610 (2000). There is no basis for an
abuse of discretion argument because petitioner did not raise any
issues before the settlement officer other than the underlying
liability, which was barred by section 6330(c)(2)(B), as
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explained above, and the settlement officer properly weighed the
intrusiveness of the proposed collection action against the need
for the efficient collection of taxes.
Petitioner makes numerous other arguments about respondent’s
conduct and the actions of this Court. Petitioner also seeks
sanctions against respondent. None of these arguments has merit
because they are not relevant to the Court’s analysis of the
present controversy.
Accordingly, we are satisfied that no genuine issue of
material fact exists requiring trial and thus summary judgment is
appropriate, and that respondent’s determination to sustain the
lien filing was not an abuse of discretion. Thus, we will grant
respondent’s motion for summary judgment and deny petitioner’s
motion for summary judgment. Further, we find that this Court has
jurisdiction as to the 1999 tax year. Accordingly, we will deny
petitioner’s motion to dismiss for lack of jurisdiction, as
supplemented.
To reflect the foregoing,
An appropriate order and
decision will be entered.