Kim Reinhart v. Commissioner , 2014 T.C. Memo. 218 ( 2014 )

T.C. Memo. 2014-218UNITED STATES TAX COURT
KIM REINHART, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Docket No. 25917-11L. Filed October 16, 2014.
Mitchell I. Horowitz and Micah G. Forgarty, for petitioner.
Miriam C. Dillard, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
KERRIGAN, Judge: The petition in this case was filed in response to a
Decision Letter Concerning Equivalent Hearing under Section 6320 and/or 6330
of the Internal Revenue Code (decision letter) upholding a collection action
regarding a notice of Federal tax lien (NFTL) filed on March 15, 2011, for the tax
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[*2] period ending June 30, 1992. The parties have stipulated that petitioner
timely requested a collection due process (CDP) hearing as to the March 15, 2011,
NFTL, that the settlement officer should have issued a notice of determination
rather than a decision letter, and that the decision letter should be treated as a
notice of determination under section 6330(d)(1) for jurisdictional purposes. See
Craig v. Commissioner, 119 T.C. 252, 259 (2002).
The issue for consideration is whether respondent is time barred from
collecting a trust fund recovery penalty for the tax period ending June 30, 1992
(1992 trust fund recovery penalty).
Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect at all relevant times, and all Rule references are to the Tax
Court Rules of Practice and Procedure. We round all monetary amounts to the
nearest dollar.
FINDINGS OF FACT
Some of the facts have been stipulated and are found accordingly. The
parties’ stipulations of facts, with accompanying exhibits, are incorporated herein
by this reference.
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[*3] Petitioner and her husband, Byron Hatcher, were married in 1991 and
remain married. The mailing address used at the time of filing this petition is a
mailbox at a Pack Mart shipping business in Sebastian, Florida.
Petitioner was born in the United States and spent her childhood in the
United States. Petitioner attended, but did not complete, college. Petitioner began
her career in the early 1990s providing secretarial services including accounting
and bookkeeping services.
In the early 1990s petitioner had a secretarial and bookkeeping services
company in Daytona, Florida. This business lasted until 1996. Petitioner worked
full time for her company, and she had no clients outside the United States.
In late 1996 petitioner’s husband and Mr. Uhrig, a friend and business
associate of petitioner, began a business venture called American Barristers which
provided trust formation and incorporation services. Some of the business entities
were incorporated in the Carribean. Petitioner handled the accounting aspects of
these entities and trusts. Petitioner also performed bookkeeping services for Mr.
Uhrig.
Petitioner had ownership interests in several entities, including Equity
Mutual Funding, Inc. Petitioner had signature authority for a bank account of
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[*4] Prudential Trustees and initiated numerous transfers of funds by mail,
telephone, and facsimile.
In February 1991 petitioner and her husband purchased a home in Ponce
Inlet, Florida, where they resided until the home was sold in May 1994. Petitioner
moved into a condominium in Daytona Beach, Florida, which was purchased in
May 1994 and sold in 1997. From 1999 until 2002 petitioner resided in a
townhouse in Grant, Florida. In June 2002 petitioner moved to a boat that she and
her husband owned and moored in City of Fort Pierce, Florida. Petitioner resided
there until Hurricane Frances destroyed the boat in 2004. Petitioner did not use
the boat to travel. In 2002 petitioner’s husband rented an apartment in the
Bahamas.
After Hurricane Frances destroyed her and her husband’s boat, petitioner
moved into a condominium in Sebastian, Florida, owned by her in-laws. In
November 2004 petitioner purchased a condominium in Vero Beach, Florida, and
she moved into this condominium in May 2005 when construction was completed.
In September 2006 petitioner purchased a recreational vehicle kept at Lake Marian
Paradise in Kenansville, Florida, until May 2011.
On July 15, 1993, respondent assessed the 1992 trust fund recovery penalty
against petitioner for $59,374. This penalty is associated with one of petitioner’s
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[*5] clients who added her as a signatory to its bank account. On July 26, 1993,
respondent filed a notice of lien against petitioner in Volusia County, Florida. The
notice of lien stated that “unless notice of lien is refiled by * * * [August 14,
2002], this notice shall constitute the certificate of release of lien as defined in
IRC 6325(a).” Respondent did not refile the notice of lien by August 14, 2002,
and the notice of lien was automatically released. On or around December 30,
2010, respondent filed a Form 12474-A, Revocation of Certificate of Release of
Federal Tax Lien, in Volusia County, Florida, with respect to the 1992 trust fund
recovery penalty.
Petitioner and her husband filed a joint Federal income tax return for 2001
in February 2004. That 2001 return was mailed from the Bahamas in August 2003
and lists a Bahamian mailing address for petitioner and her husband. Petitioner
and her husband’s 2002, 2003, and 2004 joint tax returns list the same Bahamian
mailing address. Petitioner’s 2004 joint tax return included a Schedule C-EZ, Net
Profit From Business, which listed a Bahamian mailing address for her consulting
business.
On February 8, 2011, respondent mailed petitioner a Notice of Federal Tax
Lien Filing and Your Right to a Hearing under IRC 6320, informing her that
respondent had filed an NFTL with respect to the 1992 trust fund recovery
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[*6] penalty. This NFTL was not recorded in the county of petitioner’s last known
address. On March 15, 2011, respondent mailed petitioner a second Notice of
Federal Tax Lien Filing and Your Right to a Hearing under IRC 6320, informing
her that respondent had filed an NFTL (this time, in the county of petitioner’s last
known address) with respect to the 1992 trust fund recovery penalty. This notice
was mailed to the mailbox at Pack Mart in Sebastian, Florida, and this address was
the last known address for petitioner.
On April 18, 2011, petitioner submitted a timely Form 12153, Request for a
Collection Due Process or Equivalent Hearing (CDP hearing request), in response
to the March 15, 2011, NFTL. Petitioner alleged that the filing of the NFTL was
time barred.
Between July and September 2011 petitioner and a settlement officer spoke
at least six times over the phone. For at least one of those conversations, the
settlement officer initiated the call and reached petitioner on her cell phone, which
had an area code that covered portions of central Florida.
On August 22, 2011, petitioner and the settlement officer had a telephone
discussion during which petitioner stated that she had been unable to get her travel
records from the Department of Homeland Security. The settlement officer told
her that she did not need to provide those records to him but that he would
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[*7] consider other documentation, such as a utility bill, that showed a United
States address other than a mailbox. On September 14, 2011, the settlement
officer received from petitioner copies of summonses, a copy of her passport
pages, and other documentation.
On September 21, 2011, petitioner and the settlement officer held a
telephone CDP hearing. The settlement officer told petitioner that he had
reviewed the documents she gave him and none of the documents proved that she
resided in the United States.
Respondent’s administrative record include travel dates for petitioner from
Department of Homeland Security records. These travel records show the
following:
Arrival/Departure Date
Arrival in Fla. 1/16/2001
Arrival in Fla. 2/19/2001
Arrival in Fla. 5/5/2001
Arrival in Fla. 6/20/2001
Arrival in Fla. 9/24/2001
Arrival in Fla. 3/25/2002
Arrival in Fla. 5/27/2002
Arrival in Fla. 6/17/2002
Arrival in Fla. 6/30/2002
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[*8] Arrival in Fla. 7/27/2002
Arrival in Fla. 8/18/2002
Arrival in Fla. 9/3/2002
Arrival in Fla. 9/5/2002
Arrival in Fla. 9/28/2002
Arrival in Fla. 11/11/2002
Arrival in Fla. 11/13/2002
Arrival in Fla. 12/1/2002
Arrival in Fla. 12/4/2002
Departure to Nassau 12/13/2002
Arrival in Fla. 12/14/2002
Arrival at Hopkins
International (Cleveland,
Ohio) from Dorval
Montreal 12/31/2002
Departure to Nassau 1/8/2003
Departure to Nassau 1/14/2003
Departure to Nassau 1/24/2003
Arrival in Fla. 1/29/2003
Departure to Nassau 2/27/2003
Arrival in Fla. 3/7/2003
Departure to Nassau 4/6/2003
Arrival in Fla. 4/11/2003
Departure to Nassau 4/16/2003
Arrival in Fla. 5/1/2003
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[*9] Departure to Nassau 5/21/2003
Arrival in Fla. 6/5/2003
Departure to Nassau 6/23/2003
Arrival in Fla. 7/14/2003
Departure to Nassau 8/16/2003
Arrival in Fla. 8/23/2003
Departure to Nassau 9/7/2003
Arrival in Fla. 9/14/2003
Departure to Nassau 9/28/2003
Arrival in Fla. 10/3/2003
Departure to Nassau 11/2/2003
Arrival in Fla. 11/6/2003
Departure to Nassau 12/1/2003
Arrival in Fla. 12/5/2003
Arrival in Fla. 2/10/2004
Arrival in Fla. 3/2/2004
Arrival in Fla. 4/8/2004
Departure to Nassau 4/30/2004
Arrival in Fla. 5/10/2004
Departure to Nassau 6/16/2004
Arrival in Fla. 7/1/2004
Departure to Nassau 7/29/2004
Arrival in Fla. 8/30/2004
Departure to Nassau 8/25/2004
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[*10] Departure to Nassau 8/31/2004
Arrival in Fla. 8/30/2004
Arrival in Fla. 9/1/2004
Arrival in Fla. 9/29/2004
Arrival in Fla. 10/8/2004
Departure to Nassau 11/4/2004
Arrival in Fla. 11/16/2004
Departure to Nassau 12/2/2004
Arrival in Fla. 12/8/2004
Departure to Nassau 1/3/2005
Arrival in Fla. 1/11/2005
Departure to Nassau 2/10/2005
Arrival in Fla. 2/17/2005
Departure to Nassau 3/6/2005
Arrival in Fla. 3/8/2005
Arrival in Fla. 5/2/2005
Departure to Nassau 5/18/2005
Arrival in Fla. 5/25/2005
Departure to Nassau 6/23/2005
Departure to Nassau 6/26/2005
Arrival in Fla. 7/7/2005
Departure to Nassau 9/12/2005
Arrival in Fla. 9/16/2005
Departure to Nassau 10/31/2005
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[*11] Arrival in Fla. 11/5/2005
Departure to Nassau 10/5/2006
Arrival in Fla. 10/10/2006
Departure to Nassau 11/27/2006
Arrival in Fla. 11/30/2006
Arrival in Fla. 1/31/2007
Departure to Nassau 1/24/2007
Arrival in Fla. 1/31/2007
Departure to Nassau 3/1/2007
Arrival in Fla. 3/12/2007
Departure to Nassau 3/29/2007
Arrival in Fla. 5/4/2007
Departure to Nassau 5/21/2007
Arrival in Fla. 6/4/2007
Departure to Nassau 6/17/2007
Arrival in Fla. 6/28/2007
Departure to Nassau 7/3/2007
Arrival in Fla. 7/13/2007
Departure to Nassau 7/22/2007
Arrival in Fla. 8/7/2007
Departure to Nassau 8/24/2007
Arrival in Fla. 9/1/2007
Departure to Nassau 9/27/2007
Arrival in Fla. 10/5/2007
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[*12] Departure to Nassau 11/5/2007
Arrival in Fla. 11/17/2007
Departure to Nassau 11/30/2007
Arrival in Fla. 12/13/2007
Departure to Nassau 1/15/2008
Arrival in Fla. 1/26/2008
Departure to Nassau 2/17/2008
Arrival in Fla. 2/29/2008
Departure to Nassau 3/27/2008
Arrival in Fla. 4/6/2008
Departed to Zurich,
Switzerland 4/13/2008
Arrived in FL from
Zurich 4/30/2008
Departure to Nassau 5/1/2008
Arrival in Fla. 5/9/2008
Departure to Nassau 5/26/2008
Arrival in Fla. 7/2/2008
Departure to Nassau 7/22/2008
Arrival in Fla. 8/7/2008
Departure to Nassau 8/14/2008
Arrival in Fla. 9/2/2008
Departure to Amsterdam
from Tenn. 9/18/2008
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[*13] Arrival in Tenn.
from Amsterdam 10/2/2008
Departure to Nassau 10/14/2008
Arrival in Fla. 10/29/2008
Departure to Santo
Domingo 11/29/2008
Arrival in Fla. from Santo
Domingo 12/10/2008
Departure to Santo
Domingo 12/28/2008
Arrival in Fla. from Santo
Domingo 1/5/2009
Arrival in Fla. 2/28/2009
Departure to Nassau 2/23/2009
Departure to Nassau 3/30/2009
Arrival in Fla. 5/6/2009
Departure to Nassau 5/28/2009
Arrival in Fla. 7/23/2009
Departure to Nassau 8/11/2009
Arrival in Fla. 8/17/2009
Arrival in Fla. 10/20/2009
Departure to Nassau 11/8/2009
Arrival in Fla. 11/13/2009
Departure to Nassau 12/5/2009
Arrival in Fla. 12/16/2009
Departure to Nassau 12/31/2009
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[*14] Arrival in Fla. 1/13/2010
Departure to Nassau 2/17/2010
Arrival in Fla. 2/20/2010
Departure to Nassau 4/6/2010
Arrival in Fla. 5/6/2010
Departure to Nassau 5/18/2010
Arrival in Fla. 7/2/2010
Departure to Nassau 7/10/2010
On August 7, 2006, petitioner signed a declaration submitted to the U.S.
District Court for the Southern District of Florida stating that petitioner and her
husband lived in Nassau, Bahamas, and that the Vero Beach, Florida, residence
never was intended to be their residence.
On October 13, 2011, respondent issued to petitioner the decision letter
sustaining the filing of the NFTL.
OPINION
I. Evidentiary Issue
Respondent objected to Exhibit 47-J, an Internal Revenue Service (IRS)
memorandum regarding petitioner’s husband with respect to a different tax matter,
on the grounds of hearsay and attorney-client privilege. On February 3, 2014,
respondent filed a status report providing information and exhibits pertaining to
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[*15] respondent’s objection on the ground of attorney-client privilege.
Respondent withdrew the attorney-client privilege objection in respondent’s
posttrial answering brief and raised a relevance objection to Exhibit 47-J.
Respondent contends that Exhibit 47-J is irrelevant because it does not
reference the specific tax periods of petitioner’s separate liabilities, the total
amount due, or the collection actions taken by respondent. Petitioner contends
that the exhibit bears strong probative value in establishing how actively
respondent was actually trying to collect petitioner’s tax liabilities before the
period of limitations expired.
Evidence is relevant if it has any tendency to make a fact more or less
probable than it would be without the evidence and the fact is of consequence in
determining the action. Fed. R. Evid. 401. Exhibit 47-J concerns petitioner’s
husband with respect to a different tax matter and is not relevant to collection of
the 1992 trust fund recovery penalty. Therefore, Exhibit 47-J is not admitted.
II. Trust Fund Recovery Penalty
Section 6672(a) imposes a penalty--commonly referred to as the trust fund
recovery penalty--for willfully failing to collect, account for, and pay over income
and employment taxes of employees. This penalty is assessed and collected in the
same manner as taxes against a person who is “an officer or employee of a
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[*16] corporation * * * who as such officer, [or] employee * * * is under a duty to
perform”, in this case, the duties to which section 6672 refers. Sec. 6671. Such
persons are referred to as “responsible persons”, a term which may be broadly
applied. Mason v. Commissioner, 132 T.C. 301, 321 (2009).
III. CDP Generally
Section 6320(a)(1) requires the Secretary to provide written notice to a
taxpayer when the Secretary has filed an NFTL against the taxpayer’s property and
property rights. See also sec. 6321. Additionally, the Secretary must notify the
taxpayer of his or her right to a collection due process hearing. Sec. 6320(a)(3)(B)
and (C).
If the taxpayer requests a CDP hearing, the hearing is conducted by the
Appeals Office. Sec. 6320(b)(1). At the hearing the taxpayer may raise any
relevant issue relating to the unpaid tax or the proposed collection action. Secs.
6320(c), 6330(c)(2)(A). Once the settlement officer makes a determination, the
taxpayer may appeal the determination to this Court. Secs. 6320(c), 6330(d)(1).
Section 6330(d)(1) provides this Court with jurisdiction to review an appeal
from the Commissioner’s determination to proceed with collection activity.
Respondent admitted that the settlement officer should have issued a Notice of
Determination Concerning Collection Action(s) under Section 6320 and/or 6330
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[*17] (notice of determination) instead of the decision letter. Respondent
concedes that the decision letter should be treated as a notice of determination for
jurisdictional purposes.1 See Craig v. Commissioner, 119 T.C. at 259.
IV. Petitioner’s Contention
Petitioner contends that respondent is time barred from collecting the 1992
trust fund recovery penalty because the 10-year period of limitation expired under
section 6502(a)(1) on July 15, 2003. Section 6502(a)(1) provides generally that if
the assessment of any tax imposed by the code is made within the relevant period
of limitation, then the tax may be collected by levy as long as the levy is made
within 10 years after the assessment. The amount of any tax imposed generally
must be assessed within three years after the tax return is filed. Sec. 6501(a). The
parties do not dispute that the July 15, 1993, assessment took place within the
three-year period of limitations for assessment.
1
Respondent acknowledges that the February 8, 2011, notice and NFTL
were not mailed to petitioner’s last known address. Respondent acknowledges
also that the March 15, 2011, notice and NFTL constitute a “substitute CDP
notice”. See sec. 301.6320-1(b)(2), Q&A-B3, (c)(3), Example (4), Proced. &
Admin. Regs. As a result, petitioner’s request for a CDP hearing was timely and
the settlement officer erred in treating petitioner’s CDP hearing as an equivalent
hearing and issuing a decision letter instead of a notice of determination.
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[*18] V. Burden of Production and Proof
The bar of the statute of limitations is an affirmative defense, and the party
raising this defense must specifically plead it and prove it. Rules 39, 142(a)(1);
Hoffman v. Commissioner, 119 T.C. 140, 146 (2002). Consequently, a taxpayer
who raises the 10-year period of limitations as an affirmative defense must
establish a prima facie case that the period of limitations on collection has expired
by proving that the Commissioner filed the NFTL after the expiration of the period
of limitations on collection. Jordan v. Commissioner, 134 T.C. 1, 5-6 (2010). If
the taxpayer establishes such a prima facie case, the burden of production then
shifts to the Commissioner to prove that an exception to the period of limitations
applies. See sec. 6502(a)(2); Jordan v. Commissioner, 134 T.C. at 6. The burden
of proof, i.e., the ultimate burden of persuasion, never shifts from the party who
pleads the bar of the period of limitations on collection. Jordan v. Commissioner,
134 T.C. at 6.
The March 15, 2011, NFTL was filed well beyond 10 years after the June
15, 1993, date upon which petitioner’s 1992 trust fund recovery penalty liability
was assessed. Petitioner has established a prima facie case that the statute of
limitations precludes respondent from collecting the 1992 trust fund recovery
penalty. See Jordan v. Commissioner, 134 T.C. at 5 (holding that the reasoning of
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[*19] a case regarding the three-year period of limitations on assessment also
applies to the 10-year period of limitations on collection); Hoffman v.
Commissioner, 119 T.C. at 146 (finding that the taxpayer established a prima facie
case that the relevant assessment was made outside the three-year period of
limitations under section 6501(a)). The burden of production shifts to respondent.
See Hoffman v. Commissioner, 119 T.C. at 146. Respondent must introduce
evidence that collection is not barred by the 10-year period of limitations. See id.If respondent makes such a showing, the burden of going forward with the
evidence shifts back to petitioner. See id. Notwithstanding the shifting of the
burden of going forward, the burden of proof remains with petitioner. See id.VI. Standard of Review
Where the validity of the underlying tax liability is properly at issue, we
review the determination de novo. Sego v. Commissioner, 114 T.C. 604, 609-610
(2000); Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Where the validity
of the underlying tax liability is not properly at issue, we review the determination
for abuse of discretion. Hoyle v. Commissioner, 131 T.C. 197, 200 (2008); Goza
v. Commissioner, 114 T.C. at 182.
We have held that a challenge to the 10-year period of limitations on
collection is a challenge to the underlying liability. E.g., Jordan v. Commissioner,
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[*20] 134 T.C. at 8; Hoffman v. Commissioner, 119 T.C. at 145; Boyd v.
Commissioner, 117 T.C. 127, 130 (2001). Because it is a challenge to the
underlying liability, a taxpayer may dispute the underlying liability at the Appeals
Office hearing (and have such a dispute reviewed by this Court) only if the
taxpayer did not receive a statutory notice of deficiency for such tax liability or did
not otherwise have an opportunity to dispute it. Sec. 6330(c)(2)(B). Petitioner
had no prior opportunity to raise the issue of the underlying liability on the basis
of the expiration of the 10-year period of limitations on collection. See Jordan v.
Commissioner, 134 T.C. at 8. Therefore, we will review de novo2 whether the
period of limitations under section 6502 expired as to collection of the 1992 trust
fund recovery penalty.
Under a de novo standard of review, we consider all of the relevant
evidence introduced at trial. Respondent contends that the Court should not
consider any evidence that was not in the administrative record at the time of the
Appeals hearing. See Murphy v. Commissioner, 469 F.3d 27 (1st Cir. 2006), aff’g
2
Respondent argues, on the basis of Roberts v. Commissioner, T.C. Memo.
2004-100, that the abuse of discretion standard is the applicable standard of
review. Roberts is factually distinguishable from this case. Moreover, because
Jordan v. Commissioner, 134 T.C. 1 (2010), Hoffman v. Commissioner, 119 T.C.
140 (2002), and Boyd v. Commissioner, 117 T.C. 127 (2001), are directly on
point, we follow them. See Jordan v. Commissioner, 134 T.C. at 8 n.6.
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[*21] 125 T.C. 301 (2005). Since this is a de novo review, we will consider all
evidence and not just the administrative record. Jordan v. Commissioner, 134 T.C.
at 9.
VII. Period of Limitations on Collection
A. Statutory Framework
1. Code
Section 6502 provides that “[w]here the assessment of any tax imposed by
this title has been made within the period of limitation properly applicable thereto,
such tax may be collected by levy or by a proceeding in court, but only if the levy
is made or the proceeding begun--(1) within 10 years after the assessment of the
tax”. Section 6503(c) provides that “[t]he running of the period of limitations on
collection after assessment prescribed in section 6502 shall be suspended for the
period during which the taxpayer is outside the United States if such period of
absence is for a continuous period of at least 6 months.”
2. Regulations
Section 301.6503(c)-1(b), Proced. & Admin. Regs., provides:
The running of the period of limitations on collection after
assessment prescribed in section 6502 * * * is suspended for the
period * * * during which the taxpayer is absent from the United
States if such period is a continuous period of absence from the
United States extending for 6 months or more. * * *. The taxpayer
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[*22] will be deemed to be absent from the United States for purposes
of this section if he is generally and substantially absent from the
United States, even though he makes casual temporary visits during
the period. * * *
B. Parties’ Arguments
Respondent contends that section 301.6503(c)-1(b), Proced. & Admin.
Regs., is a valid interpretation of section 6503(c) because the phrase “continuous
period” is sufficiently vague, such that Congress did not directly speak to the
precise issue, and the interpretation of section 301.6503(c)-1(b), Proced. &
Admin. Regs., is not arbitrary, capricious, or manifestly contrary to the statute.
See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-
844 (1984) (holding that an agency’s interpretation of a statute is given deference
if (1) Congress has not directly spoken to the precise question at issue and (2) the
agency’s chosen interpretation is reasonable and not arbitrary or capricious in
substance or manifestly contrary to the statute); see also Carlebach v.
Commissioner, 139 T.C. 1, 9-10 (2012). In particular, respondent notes that
“continuous” does not necessarily mean “uninterrupted”. Respondent further
contends that petitioner resided in the Bahamas and any traveling she did to the
United States during the six-month periods consisted of casual and temporary
visits, such that the period of limitations was tolled.
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[*23] Petitioner contends that section 6503(c) is not ambiguous and therefore, the
statute must be applied according to its plain meaning. See Nat’l Cable &
Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967 (2005). Petitioner
further contends that section 301.6503(c)-1(b), Proced. & Admin. Regs., is
invalid. See United States v. Nesline, 590 F. Supp. 884 (D. Md. 1984).
C. Discussion
There is no need to decide whether section 301.6503(c)-1(b), Proced. &
Admin. Regs., is valid. Assuming, for the sake of argument, that the regulation is
valid, the record nevertheless does not support respondent’s claim that petitioner
was generally and substantially absent for six-month periods and made only casual
and temporary visits to the United States.
D. Petitioner’s Positions
Petitioner provided testimony concerning where she lived throughout the
relevant period. Petitioner testified that she lived in Grant, Florida, from
approximately 1999 through June 2002, and then she lived in Fort Pierce, Florida,
on a boat. Petitioner testified that Hurricane Frances destroyed the boat on
September 6, 2004. Petitioner testified that after the boat was destroyed, she
stayed with her in-laws in Sebastian, Florida, for about four months. Mr. Uhrig
testified that petitioner lived in her in-laws condominium in Sebastian, Florida,
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[*24] after the hurricane. Petitioner provided documents from the City of Fort
Pierce Financing Department that showed fees associated with the docking of
petitioner’s boat. These documents show the last name of petitioner’s husband
and an address in Nassau, Bahamas. Petitioner testified that the address was an
address that her husband was using at the time and she would pick up the
statements in person. Petitioner testified that she purchased a condominium at the
end of 2004 in the name of Culver P. Holding, Inc., and she moved into it in the
spring of 2005.
Petitioner testified that she originally bought the condominium as a real
estate investment that she would fix up and sell. This condominium has not been
sold, and petitioner testified that the Government placed an alter ego lien on the
property.
Petitioner testified that she owned, in addition to the above property, a
recreational vehicle which was kept at Lake Marian Paradise in Kenansville,
Florida. This vehicle was purchased in 2006, and petitioner placed this vehicle in
storage in 2011. Petitioner testified that she stayed at this vehicle on a continuing
basis from September 2006 to 2011, and she provided receipts from Lake Marian
Paradise which show August 17, 2006, as the check-in date and November 30,
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[*25] 2011, as the check-out date. This vehicle was purchased through a company
that petitioner owned.
Petitioner testified that she obtained a mailbox at the Pack Mart in
Sebastian, Florida, because her property in Grant, Florida, on Highway 1 had a
mailbox that was frequently hit by cars. Petitioner testified that Pack Mart
provided a more secure location for receiving mail and that she has had the
mailbox since 1999 or 2000.
Petitioner testified that she became ill in 2004 while in the Bahamas and she
was treated at Doctors Hospital in the Bahamas. Petitioner testified that she had
her followup care in Florida.
Petitioner testified that her husband rented a furnished one-bedroom
apartment in Nassau, Bahamas, and the lease was from September 2002 until
February 2012. Petitioner testified that she did not travel as often as her husband
but would travel to Nassau for two to three days at a time. Petitioner testified that
she considered herself to reside in the United States; and to support her position,
petitioner provided a Florida driver’s license and proof of automobile insurance.
Petitioner testified that she had health insurance in the United States.
Mr. Uhrig testified that petitioner was living in Grant, Florida, in the 1990s
and early 2000s and that she lived on a boat in Fort Pierce, Florida, in 2004. He
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[*26] testified that petitioner spent more time in the United States than her
husband and that she was in the United States more than she was in the Bahamas.
Department of Homeland Security documents showed that petitioner
traveled frequently between Florida and Nassau, Bahamas, from 2000 to 2010.
Petitioner testified that sometimes she would be through customs and because of
the weather or a mechanical failure the flight would be canceled. This would
result in passport records’ showing consecutive arrivals. Petitioner provided
copies of pages from her passport for relevant years. Petitioner testified that she
has not left the United States since February 8, 2012, and she has been residing at
the Vero Beach condominium that she purchased in 2004.
In June 2001 petitioner received documents from the Department of
Homeland Security pursuant to her Freedom of Information Act Request.
According to these records and her passport records, petitioner was never out of
the United States for a six-month period. According to these records, petitioner
was outside the United States for 35 days in 1997, 16 days in 1998, 10 days in
1999, 16 days in 2000, 34 days in 2001, 102 days in 2002, and 116 days in 2003.
Petitioner testified that in the early 1990s she had a secretarial business that
offered accounting and bookkeeping services. This business was in Daytona,
Florida, and petitioner was the owner-operator. This business continued until the
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[*27] mid-1990s, and petitioner did not have any customers outside the United
States. Petitioner testified that this business was not outside the United States, but
she was not able to name specific customers. After this business ended petitioner
with her husband invested in real estate.
Petitioner testified that she had a working relationship with Mr. Uhrig, who
had a business relationship with her husband. Mr. Uhrig had a law firm called
American Barristers in Orlando, Florida, and petitioner provided accounting
services, including management of his Interest on Lawyer Trust Accounts.
American Barristers also had a separate office in the Bahamas. Petitioner testified
that she was doing this work through 2004 and that she had other customers in
Florida, but she did not identify them.
Mr. Uhrig testified that he owned a law firm called American Barristers and
there was also a Bahamian corporation called American Barristers. Mr. Uhrig
testified that petitioner performed administrative and bookkeeping services until
2004. Mr. Uhrig explained that as part of petitioner’s responsibilities she would
come to Orlando every couple of weeks and they would often go to First National
Bank in Winter Park, Florida, which held the trust accounts.
Petitioner testified that from 2002 to 2004 she was involved in closings
related to the Atlantis Trust Fund and was responsible for making disbursements
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[*28] to the noteholders. Petitioner testified that some of the accounts that she
worked on were moved to Equity Mutual Fund, Inc. Petitioner testified that she
would physically go to the bank to request a wire transfer or a check and that the
bank was in Fort Pierce, Florida. Petitioner explained that to make a wire transfer,
she would meet with customer service and fill out a form which required her
signature. In addition, petitioner explained that a counter credit, which was an
item on her Bank of America statements for Equity Mutual Fund, Inc., required
her to go to the bank in person. Her Bank of America statements for 2003, 2004,
and 2005 showed counter credits.
Petitioner testified that she had a debit account for her Equity Mutual Fund,
Inc. account and that she was the only one who used the card. Petitioner testified
that she never used this card outside the United States.
Petitioner testified that during a 2006 deposition before the Department of
Justice she testified that her address was in the Bahamas. She testified that the
deposition pertained to her husband’s tax case, and she explained that she believed
it to be a general question about where she lived with her husband. She also
explained that she answered “five years” in reference to how long she lived in the
Bahamas, meaning that they had the apartment for five years. Petitioner testified
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[*29] that she was not asked whether she lived continuously in the Bahamas or
whether she had other residences.
Petitioner testified that her husband was the primary taxpayer and she
signed their tax returns as the spouse. In regard to the Bahamian address,
petitioner testified that her husband wanted to use the Bahamian address because
that was “where he was coming and going from.” Petitioner further explained that
her husband wanted to be sure that he received everything regarding their tax
returns.
E. Respondent’s Position
Respondent contends that petitioner was continuously outside the United
States from 2002 until sometime in 2012 and that the running of the period of
limitations was suspended. Respondent argues that the tolling period began in
2002 and did not cease thereafter until 2012. To support respondent’s argument
respondent contends that petitioner provided them with mail service facility
addresses or Bahamian addresses. Respondent further contends that petitioner’s
2006 signed deposition stated that she lived in the Bahamas.
Respondent argues that even though petitioner made visits to the United
States from her residence in the Bahamas, she has not demonstrated how these
visits are more than casual temporary visits. Respondent contends that the
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[*30] Department of Homeland Security and passport records cannot be relied
upon to show all of petitioner’s international travel.
Respondent contends that petitioner’s estimate of days spent outside the
United States is unreliable. Respondent supports this contention with evidence
that petitioner performed financial transactions via mail and wire.
A IRS revenue officer, Rachel Koenig, testified that Department of
Homeland Security records are incomplete and that they do not always list the
departures. She further testified that these records were accurate as they related to
specific departures and arrivals.
VIII. Conclusion
Petitioner provided credible testimony about where she lived, and the
testimony of Mr. Uhrig corroborated her testimony. Petitioner provided testimony
and supporting evidence that she retained a residence in Florida and did not have a
permanent residence in the Bahamas. She testified that frequently she visited her
husband in the Bahamas, and Department of Homeland Security records show
frequent visits to the Bahamas.
Petitioner provided testimony to explain the discrepancies about her
address. From the evidence, we conclude petitioner lived in the United States and
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[*31] traveled back and forth to the Bahamas. It appears that petitioner’s husband
moved to the Bahamas, but his residence is not at issue in this case.
Respondent’s arguments and evidence were not persuasive that petitioner
moved to the Bahamas beginning in 2002 and from 2002 through 2012 was
generally and substantially outside the United States and made only casual
temporary visits to the United States. Petitioner’s conducting of financial
transactions by mail or wire does not prove that she was outside of the United
States. Respondent relies on the fact that petitioner rented a mailbox. The use of a
mailbox does not indicate that petitioner resided outside the United States. The
Department of Homeland Security records show consistent travel to and from the
United States.
The credible evidence of record fails to establish that petitioner was outside
the United States for any continuous period of at least six months from 2002
through June 15, 2003, including casual and temporary visits. Petitioner
convincingly testified, and the evidence of record reflects, that petitioner resided
and worked in the United States and was never generally and substantially outside
the United States from 2002 through 2012. We conclude that when respondent
filed the NFTL the 10-year period of limitations had expired with respect to the
1992 trust fund recovery penalty.
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[*32] Any contentions we have not addressed are irrelevant, moot, or meritless.
To reflect the foregoing,
Decision will be entered
for petitioner.