Denise Mannella v. Commissioner ( 2009 )

132 T.C. No. 10UNITED STATES TAX COURT
DENISE MANNELLA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 17531-07. Filed April 13, 2009.
R mailed P a notice of intent to levy and notice
of the right to a hearing pursuant to sec. 6330, I.R.C.
(notice of intent to levy), on June 4, 2004. On Nov.
1, 2006, P requested relief from joint and several
liability under sec. 6015, I.R.C. R denied P’s request
as untimely. P then petitioned this Court for relief
under sec. 6015, I.R.C., and R moved for summary
judgment.
R argues that P is ineligible for relief under
sec. 6015(b), (c), and (f), I.R.C., because she did not
request relief within 2 years of R’s mailing the notice
of intent to levy. P argues that the 2-year
limitations period should not apply because she did not
receive the notice of intent to levy and she was not
informed of the right to request sec. 6015, I.R.C.,
relief.
Held: Actual receipt of the notice of intent to
levy or of the notice of the right to request relief
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from joint and several liability is not required for
the 2-year period in which to request relief under sec.
6015(b) and (c), I.R.C., to begin. Therefore, P’s
requests for relief under sec. 6015(b) and (c), I.R.C.,
were not timely under sec. 6015(b)(1)(E) and (c)(3)(B),
I.R.C.
Held, further: Sec. 1.6015-5(b)(1), Income Tax
Regs., which R relied upon in denying P relief under
sec. 6015(f), I.R.C., is an invalid interpretation of
sec. 6015, I.R.C. Lantz v. Commissioner, 132 T.C. ___
(2009). Therefore, P is not barred from receiving
relief under sec. 6015(f), I.R.C., on the ground that
her request for relief was untimely.
Held, further: R’s motion for summary judgment
will be granted in part and denied in part.
Denise Mannella, pro se.
Russell F. Kurdys, for respondent.
OPINION
HAINES, Judge: This case is before the Court on
respondent’s motion for summary judgment. Petitioner brought
this action under section 6015 seeking relief from joint and
several liability for unpaid taxes.1
Background
Petitioner resided in Pennsylvania at the time her petition
was filed.
1
Section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure.
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Petitioner and her husband, Anthony J. Mannella, filed joint
Federal income tax returns for the years 1996 through 2000 (years
at issue). Because petitioner and Mr. Mannella failed to pay the
taxes due for the years at issue,2 respondent issued each of them
a separate Final Notice, Notice of Intent to Levy and Notice of
Your Right to a Hearing (notice of intent to levy), on June 4,
2004. The notices were sent to petitioner and her husband at
their correct address by certified mail.
Petitioner contends that she did not receive her notice of
intent to levy because on June 17, 2004, Mr. Mannella received
the notices, signed the certified mail receipts, and failed to
deliver petitioner’s notice to her or otherwise inform her of the
notice. Petitioner represents that if the case goes to trial,
Mr. Mannella will testify that he signed petitioner’s name on the
certified mail receipt and did not inform petitioner of the
notice until more than 2 years after he received the notice. She
contends that she then sought legal advice and decided to seek
relief from the joint tax liabilities.
On November 1, 2006, petitioner filed two Forms 8857,
Request for Innocent Spouse Relief, for the years at issue. On
May 3, 2007, respondent issued petitioner a Notice of
2
The outstanding liability for 1996 relates to an agreed
deficiency. For 1997 through 2000 petitioner and her husband
failed to make full payment of the taxes shown as due on their
returns.
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Determination Concerning Relief from Joint and Several Liability
for the years at issue, which stated:
We’ve determined, for the above tax year(s), that you
do not qualify for Innocent Spouse relief. We received
your request more than two years after the date we
began collection activity. Internal Revenue Code
Section 6015 requires an innocent spouse claim to be
filed no later than 2 years after the start of
collection activity. Collection activity began on
6/4/2004, you filed Form 8857 on 11/1/2006.
Petitioner filed a timely petition with this Court seeking
relief from joint and several liability under section 6015.
Respondent then moved for summary judgment. Petitioner filed her
objection with the Court, and a hearing on respondent’s motion
was held in Pittsburgh, Pennsylvania.
Discussion
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 when there is no genuine issue of 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); Zaentz v. Commissioner, 90 T.C. 753,
754 (1988). The moving party bears the burden of proving that
there is no genuine issue of material fact. Dahlstrom v.
Commissioner, 85 T.C. 812, 821 (1985); Naftel v. Commissioner, 85
T.C. 527, 529 (1985). The Court will view any factual material
and inferences in the light most favorable to the nonmoving
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party. Dahlstrom v. Commissioner, supra at 821; Naftel v.
Commissioner, supra at 529.
Section 6013(d)(3) provides that married individuals who
file a joint return are jointly and severally liable for the tax
arising from the return. Notwithstanding section 6013(d)(3), a
spouse may seek relief from joint and several liability under
subsections (b), (c), and (f) of section 6015. An election for
relief under section 6015(b) or (c) must be made within 2 years
of the Commissioner’s first collection activity taken after July
22, 1998, against the taxpayer making the election.3 Internal
Revenue Service Restructuring and Reform Act of 1998 (RRA), Pub.
L. 105-206, sec. 3201(g)(2), 112 Stat. 740; sec. 6015(b)(1)(E),
(c)(3)(B). The issuance of a notice of intent to levy under
section 6330 is a collection activity. Sec. 1.6015-5(b)(2),
Income Tax Regs.
RRA section 3501, 112 Stat. 770, provides that the
Commissioner include information regarding the procedures
3
Sec. 6015(b) provides relief for a requesting spouse who
files a joint return which contains an understatement of tax
attributable to the erroneous items of the nonrequesting spouse
if the requesting spouse did not know or have reason to know that
there was an understatement and, taking into account all the
facts and circumstances, it is inequitable to hold the requesting
spouse liable for the deficiency. Sec. 6015(c) provides that an
individual who is divorced or legally separated from the person
she filed a joint return with or has not resided with that
individual as a member of the same household at any time within
the 12-month period before an election is made, may elect to
limit her liability for any deficiency to the amount properly
allocable to her.
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necessary to claim section 6015 relief whenever he sends a
collection-related notice, such as a notice of intent to levy.4
In McGee v. Commissioner, 123 T.C. 314, 319 (2004), we held that
when the Commissioner fails to include such information with a
collection-related notice that is the Commissioner’s first
collection activity, the 2-year limitations period may not be
applied.5
There is no dispute that respondent sent petitioner a notice
of intent to levy by certified mail on June 4, 2004, and that the
notice was received on June 17, 2004. Furthermore, the notice
included information about the right to request section 6015
4
The Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3501, 112 Stat. 770, provides as
follows:
SEC. 3501. EXPLANATION OF JOINT AND SEVERAL LIABILITY.
(a) In General.–-The Secretary of the Treasury or
the Secretary’s delegate shall, as soon as practicable,
but not later than 180 days after the date of the
enactment of this Act, establish procedures to clearly
alert married taxpayers of their joint and several
liabilities on all appropriate publications and
instructions.
(b) Right To Limit Liability.–-The procedures
under subsection (a) shall include requirements that
notice of an individual’s right to relief under section
6015 of the Internal Revenue Code of 1986 shall be
included in the statement required by section 6227 of
the Omnibus Taxpayer Bill of Rights (Internal Revenue
Service Publication No. 1) and in any collection-related
notices.
5
In McGee v. Commissioner, 123 T.C. 314 (2004), the taxpayer
sought relief only under sec. 6015(f).
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relief.6 However, petitioner contends that her husband signed
for her notice and never gave it to her or informed her about it.
Petitioner argues that the 2-year limitations period should not
apply because she did not receive the notice of intent to levy
and she was not informed of the right to request section 6015
relief. Because this case is before the Court on respondent’s
motion for summary judgment, we assume that Mr. Mannella signed
for petitioner’s notice of intent to levy and that petitioner did
not receive the notice. See Dahlstrom v. Commissioner, supra at
821; Naftel v. Commissioner, supra at 529.
Sections 6330(a) and 6331(d) provide that before the
Commissioner may levy on any property or property right of a
taxpayer, the taxpayer must be provided a final notice of intent
to levy and notice of the right to request a hearing and such
notice must be provided no less than 30 days before the levy is
made. The notice of intent to levy must be given in person, left
at the person’s dwelling or usual place of business, or sent by
certified or registered mail to the person’s last known address.
Secs. 6330(a)(2), 6331(d)(2); secs. 301.6330-1(a),
6
The notice was accompanied by Publication 594, What You
Should Know About The IRS Collection Process, and Form 12153,
Request for a Collection Due Process Hearing. Both documents
informed petitioner of her right to request relief from joint and
several liability under sec. 6015. Publication 594 directed
petitioner to Publication 971, Innocent Spouse Relief, for
further information about relief from joint and several
liability. Form 12153 informed petitioner she could elect the
benefits of sec. 6015 by filing Form 8857, Request for Innocent
Spouse Relief.
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301.6331-2(a)(1), Proced. & Admin. Regs. If the notice is
properly sent to the taxpayer’s last known address or left at the
taxpayer’s dwelling or usual place of business, it is sufficient
to start the 30-day period within which an Appeals hearing may be
requested. Sec. 301.6330-1(a)(3), A-A9, Proced. & Admin. Regs.
Actual receipt of the notice of intent to levy is not required
for the notice to be valid for purposes of starting the 30-day
period. Id.
We see no reason the notice of intent to levy, including
information about her right to section 6015 relief, mailed to
petitioner at her last known address but not received by her
should start the 30-day period to request an Appeals hearing but
not start the 2-year period to request relief under section
6015(b) or (c). Nothing in section 6015 or the corresponding
regulations requires that petitioner actually receive the notice
of intent to levy for the 2-year period to begin. We conclude
that her actual receipt of the notice of intent to levy is not
required for the 2-year period in which to request relief under
section 6015(b) or (c) to begin.
With respect to the required notice of the right to request
section 6015 relief, neither RRA section 3501 nor McGee v.
Commissioner, supra, requires that the taxpayer actually receive
notice of the right to request relief. RRA section 3501 requires
that the Commissioner implement procedures to notify taxpayers
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subject to joint liability of their rights when he attempts to
collect unpaid taxes. In McGee the Commissioner did not comply
with RRA section 3501, and for that reason the Court found the 2-
year period did not begin with the Commissioner’s first
collection activity.
Respondent included information about the right to request
section 6015 relief with the collection notice and therefore
complied with RRA section 3501. Once the required notice was
mailed to petitioner’s last known address, nothing in the
Internal Revenue Code, regulations, or public law required that
respondent take additional steps to effect delivery. See
Sebastian v. Commissioner, T.C. Memo. 2007-138; Howard v.
Commissioner, T.C. Memo. 1993-315 (citing Pomeroy v. United
States, 864 F.2d 1191, 1195 (5th Cir. 1989)).
Collection against petitioner began with the issuance of a
notice of intent to levy on June 4, 2004. Petitioner submitted
her requests for section 6015 relief on November 1, 2006, more
than 2 years later. Petitioner’s requests for relief under
section 6015(b) and (c) were not timely, and therefore she does
not qualify for relief from joint and several liability under
section 6015(b)(1)(E) and (c)(3)(B).
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In contrast to section 6015(b) and (c), section 6015(f)7
does not provide a 2-year limitations period. Respondent relies
on section 1.6015-5(b)(1), Income Tax Regs., which purports to
limit the period for requesting relief under section 6015(f) to 2
years from the first collection activity against the requesting
spouse in the same manner as the restrictions of section
6015(b)(1)(E) and (c)(3)(B).
We have recently held that section 1.6015-5(b)(1), Income
Tax Regs., is an invalid interpretation of section 6015. Lantz
v. Commissioner, 132 T.C. ___, ___ (2009) (slip op. at 33).
Accordingly, we refused to apply the 2-year limitations period to
a taxpayer’s request for relief under section 6015(f). Id.Under Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445
F.2d 985 (10th Cir. 1971), we apply the law of the Court of
Appeals to which an appeal would ordinarily lie. Because the
U.S. Court of Appeals for the Seventh Circuit, to which an appeal
in Lantz would ordinarily lie, analyzes agency regulations under
the standards set forth in Chevron, U.S.A., Inc. v. Natural Res.
Def. Council, Inc., 467 U.S. 837, 842-843 (1984), we reviewed the
validity of section 1.6015-5(b)(1), Income Tax Regs., under
Chevron. Lantz v. Commissioner, supra at ___ (slip op. at 11).
7
Sec. 6015(f) provides that a taxpayer may be relieved of
joint and several liability if, taking into account all the facts
and circumstances, it would be inequitable to hold the taxpayer
liable for the unpaid tax or deficiency (or any portion of
either) and relief is not available under subsec. (b) or (c).
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In Swallows Holding, Ltd. v. Commissioner, 126 T.C. 96(2006), vacated 515 F.3d 162 (3d Cir. 2008), we reviewed the
validity of a regulation under the standards set forth in Natl.
Muffler Dealers Association v. United States, 440 U.S. 472(1979). The U.S. Court of Appeals for the Third Circuit vacated
our judgment and held that the regulation was properly analyzed
under Chevron, not Natl. Muffler. Swallows Holding, Ltd. v.
Commissioner, 515 F.3d at 167-168, 172.
This case is appealable to the United States Court of
Appeals for the Third Circuit. Accordingly, in this case as well
as Lantz the regulation is properly analyzed under Chevron. In
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., supra
at 842-843, the Supreme Court set forth a two-step analysis:
When a court reviews an agency’s construction of
the statute which it administers, it is confronted with
two questions. First, always, is the question whether
Congress has directly spoken to the precise question at
issue. If the intent of Congress is clear, that is the
end of the matter; for the court, as well as the agency
must give effect to the unambiguously expressed intent
of Congress [Chevron step one]. If, however, the court
determines Congress has not directly addressed the
precise question at issue, the court does not simply
impose its own construction of the statute, as would be
necessary in the absence of an administrative
interpretation. Rather, if the statute is silent or
ambiguous with respect to the specific issue, the
question for the court is whether the agency’s answer
is based on a permissible construction of the statute
[Chevron step two].
See also Swallows Holding, Ltd. v. Commissioner, 515 F.3d at 167.
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For the reasons more fully discussed in Lantz, section
1.6015-5(b)(1), Income Tax Regs., is invalid under Chevron step 1
because Congress has spoken to the precise question at issue and
the regulation runs directly contrary to the nature of the relief
provided in section 6015(f). Lantz v. Commissioner, supra at ___
(slip op. at 17). If section 6015(f) is construed as silent or
ambiguous, a 2-year limitations period is not a permissible
construction of section 6015(f), and therefore section 1.6015-
5(b)(1), Income Tax Regs., is invalid under Chevron step 2.
Lantz v. Commissioner, supra at ___ (slip op. at 18-19, 30).
Respondent’s only argument in support of his motion for
summary judgment is that petitioner’s requests for relief were
untimely. Because the regulation upon which respondent relies in
denying relief under section 6015(f) is an invalid interpretation
of section 6015, respondent has failed to meet his burden of
proving that no genuine issue of material fact exists and that he
is entitled to judgment as a matter of law on the issue of
whether petitioner is entitled to relief under section 6015(f).
Accordingly, respondent’s motion for summary judgment will be
granted in part and denied in part.
To reflect the foregoing,
An appropriate order will be
issued.