Wright v. Comm'r , 92 T.C.M. 525 ( 2006 )

T.C. Memo. 2006-273
UNITED STATES TAX COURT
RAYMOND WRIGHT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 6240-01L. Filed December 26, 2006.
Raymond Wright, pro se.
Patricia A. Riegger, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
VASQUEZ, Judge: This case is before the Court on remand
from the U.S. Court of Appeals for the Second Circuit for further
consideration consistent with its opinion in Wright v.
Commissioner, 381 F.3d 41, 46-47 (2d Cir. 2004), vacating and
*
This opinion supplements Wright v. Commissioner, T.C.
Memo. 2002-312, vacated and remanded 381 F.3d 41 (2d Cir. 2004).
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remanding T.C. Memo. 2002-312. Unless otherwise indicated, all
section references are to the Internal Revenue Code, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Background
On March 27, 2003, in response to a payoff figure that
respondent gave him for his 1987 and 1989 tax liabilities,
petitioner made a voluntary payment of $15,550. Respondent
applied $3,625 to petitioner’s 1987 tax liability. This
satisfied petitioner’s 1987 tax liability in full.
In Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), we
held that in section 6330 proceedings when the tax liability for
a particular year has been paid in full, we lack jurisdiction to
determine whether an overpayment exists or to order a refund or
credit for that year and we must dismiss that year as moot.
Petitioner’s case is before the Court pursuant to our section
6330 jurisdiction--it is not before the Court pursuant to our
section 6404 jurisdiction. See id. at 12-13. The parties do not
dispute that petitioner’s 1987 tax liability has been paid in
full. Accordingly, we shall dismiss the 1987 year as moot. See
id.
Respondent applied the balance of the $15,550 March 27,
2003, payment to petitioner’s 1989 tax year. Respondent alleges
that after applying the remaining $11,925 to petitioner’s 1989
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tax year there remained a balance due of $1,659.38 which
consisted solely of interest.
Although the March 27, 2003, payment was made during the
pendency of petitioner’s appeal, apparently neither party brought
this payment (or the satisfaction of petitioner’s 1987 tax year)
to the attention of the Court of Appeals, nor does it appear that
the Court of Appeals took it into account. Furthermore, the
satisfaction of petitioner’s 1987 tax year was not brought to the
Court’s attention until after the second trial of this case in
2006.
On October 13, 2004, the Court of Appeals issued its mandate
vacating and remanding the decision of this Court. In remanding
this case to this Court for further proceedings, the Court of
Appeals ordered that such a proceeding should be confined to
consideration of the following issues (the four issues): (a)
Whether petitioner’s 1993 tax refund was sent to him by the
Internal Revenue Service (IRS) in 1994; (b) if not, whether
petitioner timely received notice from the IRS that his refund
had not been applied to his 1987 and 1989 tax deficiencies; (c)
if not, whether petitioner’s current tax liability should be
consequently adjusted by, inter alia, an abatement of interest
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pursuant to section 6404(e); and (d) in any case, whether the
current interest abatement that petitioner had already received
was correct in the light of (1) the IRS’s failure to give
petitioner the appropriate withholding credits for 1987 and 1989,
and (2) his June 21, 1994, payment of $6,681.22.
On October 19, 2004, the Court ordered the parties to file,
on or before November 2, 2004, written status reports in which
the parties were to advise the Court of their positions regarding
the appropriate means for this Court to implement the mandate of
the Court of Appeals. On November 2, 2004, respondent filed his
status report, and on November 5, 2004, petitioner filed his
status report (with a service date of November 2, 2004). In his
November 2004 status report, respondent stated that he was
awaiting detailed transcripts of petitioner’s tax accounts to
address the four issues as outlined in the mandate of the Court
of Appeals.
On February 2, 2005, the Court again ordered the parties to
file, on or before February 16, 2005, written status reports in
which the parties were to advise the Court of their positions
regarding the appropriate means for this Court to implement the
mandate of the Court of Appeals. On February 15, 2005,
respondent filed his status report, and on February 18, 2005,
petitioner filed his status report (with a service date of
February 16, 2005).
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In his February 2005 status report, respondent stated that
(1) he had forwarded to petitioner copies of petitioner’s
transcripts of accounts which addressed the four issues as
outlined in the mandate of the Court of Appeals, (2) he had asked
petitioner to contact him as soon as possible to discuss the
same, (3) petitioner had not contacted respondent, and (4)
respondent was preparing computations pursuant to Rule 155 for
petitioner to review.
In his February 2005 status report, petitioner (1) alleged
that inappropriate ex parte communications had taken place
between the Court and respondent, (2) complained about the date
petitioner’s November 2004 status report was filed, (3) alleged
that the Court of Appeals made conclusions regarding the four
issues outlined in its mandate rather than remanding the four
issues for further proceedings, and (4) stated that he received
on February 4, 2005, copies of his transcripts of accounts that
respondent had forwarded to him.
Despite being ordered by the Court twice to advise the Court
of their positions regarding the appropriate means for this Court
to implement the mandate of the Court of Appeals, neither party
advised the Court what further proceedings he believed were
necessary to implement the mandate of the Court of Appeals.
From the submitted status reports, it appeared to the Court
that in order to implement the mandate of the Court of Appeals a
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trial with the presentation of testimonial and documentary
evidence might be required. Accordingly, on March 30, 2005, upon
due consideration of and in order to implement the mandate of the
Court of Appeals, which remanded this case to this Court for
further proceedings, and for cause the Court ordered: (A) The
parties to file status reports outlining proposed schedules for
the preparation of this case for trial in order to advise the
Court regarding the appropriate means for this Court to implement
the mandate of the Court of Appeals; (B) that the proposed
schedules shall include dates for: (1) Filing any dispositive
motions on any issue; (2) completing of all discovery requests
and requests for admissions taking into account the scope of the
requests and the responses required, and to permit timely
responses to be served and, if required, filed; (3) filing all
motions to compel stipulation; (4) filing all motions to compel
discovery; (5) filing any motions with respect to the conduct of
the trial; (6) filing motions in limine; (7) exchanging by the
parties initial listings of transcripts, stipulations, and
documents that they would like considered by the Court during
remand proceedings; (8) providing the Court complete
identification of the parts of the record (transcripts,
stipulations of fact, and documents) that have previously been
marked as part of the record in this case that the parties would
like to be considered during remand proceedings; and (9) filing
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and completion of any other matters required to prepare for
trial; (C) that the parties advise the Court whether they
believed that a trial of this case will be necessary, that the
case may be disposed of by a motion for summary judgment, or that
the case may be submitted fully stipulated pursuant to Rule 122;
(D) that respondent’s and petitioner’s status reports shall be
limited to discussing their proposed schedules for the
preparation for trial of this case and advising the Court whether
they believe that a trial of this case will be necessary, that
the case may be disposed of by a motion for summary judgment, or
that the case may be submitted fully stipulated pursuant to Rule
122 in order for this Court to implement the mandate of the Court
of Appeals; and (E) that the status report shall not include any
arguments addressing the merits of four issues remanded to this
Court for further proceedings. Respondent’s status report was
due on or before April 18, 2005. Petitioner’s status report was
due on or before May 9, 2005.
On April 19, 2005, respondent filed his status report with
the Court. On May 13, 2005, petitioner filed his status report
with the Court. Petitioner and respondent agreed that further
trial was not necessary and that this case could be disposed of
by a motion for summary judgment. The parties advised the Court
that they each would file a motion for summary judgment by June
3, 2005.
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On May 26, 2005, the Court ordered the parties to file any
motions for summary judgment on or before June 17, 2005.
On June 17, 2005, respondent filed a motion for summary
judgment, an affidavit in support of respondent’s motion for
summary judgment from Marie E. Small, and a declaration of Jeanne
Moisa, court witness coordinator, in support of respondent’s
motion for summary judgment, with attached Exhibit A, Certificate
of Assessments, Payments, and Other Specified Matters, for
petitioner’s 1990, 1991, 1992, 1993, and 1994 tax years, and
Exhibit B, Certificate of Assessments, Payments, and Other
Specified Matters, for petitioner’s 1987, 1988, and 1989 years.
That same day, petitioner filed a motion to submit case under
Rule 122.
On June 27, 2005, petitioner filed a motion for summary
judgment with attached exhibits (transcripts and a letter).
On September 19, 2005, the Court denied respondent’s above-
referenced motion for summary judgment, petitioner’s above-
referenced motion for summary judgment, and petitioner’s above-
referenced motion to submit case under Rule 122.
On October 28, 2005, petitioner filed a motion for
reconsideration of the Court’s September 19, 2005, order denying
his motions for summary judgment and to submit the case without
trial under Rule 122.
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On November 7, 2005, the Court denied this motion. We
stated: (1) That at some time it might have been possible for
the parties to settle this matter after an informal meeting and
exchange of information, see Branerton Corp. v. Commissioner, 61
T.C. 691 (1974); (2) that it also might have been possible for
the parties to submit pursuant to Rule 122 the evidence necessary
to allow the Court to implement the mandate of the Court of
Appeals; and (3) that although the Court gave the parties ample
opportunity to resolve this case without additional trial, from
the motions and status reports submitted by the parties it was
evident to the Court that in order to implement the mandate of
the Court of Appeals a trial with the presentation of testimonial
and documentary evidence would be required.
Additionally, the Court ordered petitioner and respondent to
present at the trial testimonial and documentary evidence to
establish: (1) Whether the IRS sent petitioner his 1993 tax
refund in 1994; (2) if not, whether petitioner timely received
notice from the IRS that his refund had not been applied to his
1987 and 1989 tax deficiencies; (3) if not, whether petitioner’s
current tax liability should be consequently adjusted by an
abatement of interest pursuant to section 6404(e); (4) whether
the current interest abatement that petitioner had already
received was correct in the light of (a) the IRS’s failure to
give petitioner the appropriate withholding credits for 1987 and
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1989, and (b) petitioner’s June 21, 1994, payment of $6,681.22;
and (5) how respondent computed the interest for the years in
issue.
Furthermore, the Court ordered the case set for further
trial at a special session of the Court that was to commence on
January 26, 2006, and advised the parties that the Court would
not be inclined to grant any continuances in this case.
Additionally, the Court ordered the parties to identify the parts
of the record (transcripts, stipulations of fact, and documents)
that previously had been marked as part of the record in this
case and that the parties would like to be considered during
remand proceedings. The Court also ordered that the evidence and
argument presented in all subsequent filings with the Court and
at the trial that was to be held during the January 26, 2006,
special session should be confined to the four issues as outlined
in the mandate of the Court of Appeals.
On December 6, 2005, despite the Court’s statement in the
November 7, 2005, order that we would not be inclined to grant
any continuances in this case, respondent filed a motion for
continuance of trial.
On January 5, 2006, after giving petitioner the opportunity
to file an objection (which he filed on January 3, 2006), we
denied respondent’s motion for continuance of trial.
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On January 26, 2006, petitioner filed a motion to sanction
respondent’s counsel, a motion to strike, and a motion to require
respondent to file motion to withdraw or substitution of counsel.
On January 26, 27, and 30, 2006, the Court conducted further
trial of the case.
On January 30, 2006, petitioner filed a motion for mistrial
or, in the alternative, to enforce Court Rules on withdrawal and
substitution of counsel, and other remedies. The Court took this
motion and the three motions petitioner filed on January 26,
2006, under advisement.
On May 1, 2006, respondent filed his opening brief, and on
May 3, 2006, petitioner filed his opening brief. On June 15,
2006, respondent filed his reply brief, and on June 19, 2006,
petitioner filed his reply brief.
On August 9, 2006, on account of our ongoing review of this
case, we ordered respondent to file, on August 28, 2006, a status
report stating (and containing documentation to support) whether
petitioner’s 1989 liability had been fully paid as of that date
and, if not, the amount of petitioner’s outstanding balance for
1989 as of that date. Furthermore, we ordered petitioner to
file, on or before September 8, 2006, a reply to respondent’s
status report stating whether petitioner agreed with respondent’s
status report or, if petitioner disagreed with respondent’s
status report, stating (and containing documentation to support)
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whether his 1989 liability had been fully paid as of August 28,
2006, and, if not, the amount of his outstanding balance for 1989
as of that date.
In his August 28, 2006, status report, respondent stated:
(1) That petitioner’s balance due for 1989 as of August 28, 2006,
was $1,659.38; (2) that petitioner had paid his tax and additions
to tax for 1989 in full and that the balance due was interest;
(3) on March 27, 2003, petitioner paid $11,925 towards his 1989
tax year on the basis of an IRS employee’s misstatement that this
amount would pay his balance in full; (4) the payment, however,
resulted in a credit balance of $24.03 being reflected on
petitioner’s 1989 account; (5) petitioner’s 1989 account balance,
however, mistakenly did not include $442.63 of interest due (in
addition to the $11,925) as of March 27, 2003; (6) respondent
admitted that pursuant to section 301.6404-2(c), Example (11),
Proced. & Admin. Regs., quoting petitioner an incorrect balance
due was a ministerial error; (7) on September 14, 2005,
respondent issued petitioner an erroneous refund of $1,240.78 for
1989; and (8) on September 14, 2005, petitioner’s 1989 account
reflected a balance due of $90.
Discussion
The extended proceedings of this case recounted supra have
brought to light the numerous misstatements and errors made by
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respondent through the handling of petitioner’s 1987 and 1989 tax
years.
For example, respondent represented to the Court that as of
the date of the filing of his reply brief following the trial of
this case in 2002 respondent had abated the interest associated
with petitioner’s withholding credit for 1989. Wright v.
Commissioner, T.C. Memo. 2002-312 n.9. On the basis of
respondent’s proffer, we stated: “The record does not contain
evidence that the aforementioned interest has been abated;
therefore, we will incorporate respondent’s concession of this
issue into our decision.” Id. Respondent’s proffer to the
Court, however, was a misstatement. As the Court of Appeals
stated:
We also observe that Wright was entitled to receive an
additional interest abatement based on the IRS’s
failure to give him a proper withholding credit of
$278.00 in 1989. The Tax Court’s decision stated that
the IRS had represented that statutory interest related
to this withholding credit would be abated. Wright II,
2002 Tax Ct. Memo LEXIS 332 at *16 n. 9, 2002 WL
31875118. Although the IRS assures us that an interest
abatement has been credited to Wright for this 1989
withholding credit, it has made no effort either to
substantiate this claim in the appellate record or even
to describe the amount of the abatement. [Wright v.
Commissioner, 381 F.3d at 46 n.2.]
During the appeal and remand, respondent and respondent’s
witnesses recounted numerous errors regarding the handling of
petitioner’s 1987 and 1989 tax years--and oftentimes neither
respondent nor the witness could account for how those errors
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occurred.1 As recently as his August 28, 2006, status report,
respondent essentially admitted that the IRS made mistakes
regarding the computation of petitioner’s interest, including,
but not limited to, quoting petitioner an incorrect payoff figure
and sending petitioner an allegedly “erroneous” refund on account
of respondent’s erroneous calculations and a keystroke error by
an IRS employee.
Another example is contained in respondent’s opening brief
and his August 28, 2006, status report. In his opening brief,
respondent alleged that as of January 24, 2006, the amount of
1
The Court of Appeals stated:
the IRS seemed equally unsure about several basic and
crucial facts. The parties' confusion is
understandable; the relevant timeline and tax amounts
have been reconstructed using photocopied forms,
computer screen printouts, and dot-matrix printouts of
tax account balances. Many of these records have no
supporting explanation (and therefore are inscrutable
to any non-employee of the IRS), many are from time
periods that are not the same, and even the documents
that are from similar time periods often contain
amounts that are inexplicably contradictory.
* * * * * * *
This “21-R” report is a computer screen printout of
approximately twenty lines of abbreviations,
alphanumeric codes, dates, and digits that are
indecipherable to us without additional explanation. *
* * [Wright v. Commissioner, 381 F.3d 41, 44, 45 (2d
Cir. 2004), vacating and remanding T.C. Memo. 2002-
312.]
The Court of Appeals also noted that it had “doubts inspired by
the IRS’s past calculation errors against Wright’s account”. Id.
at 45.
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interest systematically and manually assessed for 1989 on
petitioner’s tax account, after an alleged abatement of interest,
was $8,144.50. In his August 28, 2006, status report, respondent
alleged that as of that date the outstanding balance due (i.e.,
interest due) on petitioner’s 1989 tax account was $1,659.38.
Petitioner’s testimony (at both trials) was credible. He
consistently testified and averred that he did not receive his
1993 refund. Respondent contended, however, that petitioner
received his 1993 refund in 1995. The documentary and
testimonial evidence respondent offered was contradictory,
contained numerous errors, and lacked credibility. Furthermore,
this contention is a concession by respondent that petitioner was
correct and that respondent did not send the 1993 refund to
petitioner in 1994.
Accordingly, with regard to the first question posed by the
Court of Appeals--whether the IRS sent petitioner his 1993 tax
refund in 1994--we conclude that it did not. Furthermore, we
conclude that respondent never sent petitioner his refund for
1993.
In his June 17, 2005, motion for summary judgment,
respondent did not answer the second and third questions posed by
the Court of Appeals--if not, whether petitioner timely received
notice from the IRS that his refund had not been applied to his
1987 and 1989 tax deficiencies; and if not, whether petitioner’s
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current tax liability should be consequently adjusted by, inter
alia, an abatement of interest pursuant to section 6404(e).
With regard to the second question posed by the Court of
Appeals--if not, whether petitioner timely received notice from
the IRS that his refund had not been applied to his 1987 and 1989
tax deficiencies--we conclude, on the basis of petitioner’s
credible evidence, respondent’s admissions, and the lack of
credibility of the documentary and testimonial evidence
respondent offered--which was contradictory and contained
numerous errors--that petitioner did not receive notice from the
IRS that his refund had not been applied to his 1987 and 1989 tax
deficiencies.
With regard to the third question posed by the Court of
Appeals--if not, whether petitioner’s current tax liability
should be consequently adjusted by, inter alia, an abatement of
interest pursuant to section 6404(e)--we conclude, on the basis
of petitioner’s credible evidence, respondent’s admissions, and
the lack of credibility of the documentary and testimonial
evidence respondent offered--which was contradictory and
contained numerous errors--that petitioner’s current tax
liability should be adjusted by abating the interest for 1989
pursuant to section 6404(e).
Since 1992, petitioner has repeatedly asked respondent for a
payoff figure so that he could pay the liabilities at issue in
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full. When he received a payoff figure from respondent, he paid
that amount. In his August 28, 2006, status report, respondent
admitted that on March 27, 2003, petitioner was quoted an
incorrect payoff figure and this was a ministerial error pursuant
to the regulations. See also Krugman v. Commissioner, 112 T.C.
230 (1999); Douponce v. Commissioner, T.C. Memo. 1999-398.
Accordingly, we conclude that for 1989 interest from March 27,
2003, to the present shall be abated. We note, however, that we
lack jurisdiction to determine whether an overpayment exists or
to order a refund or credit for 1989 to the extent that the
amount of the abatement of interest exceeds the amount remaining
unpaid for 1989. See Greene-Thapedi v. Commissioner, 126 T.C. 1
(2006).
With regard to the fourth question posed by the Court of
Appeals--in any case, whether the current interest abatement that
petitioner had already received was correct in light of (1) the
IRS’s failure to give petitioner the appropriate withholding
credits for 1987 and 1989, and (2) his June 21, 1994, payment of
$6,681.22--on the basis of petitioner’s credible evidence,
respondent’s admissions, and the lack of credibility of the
documentary and testimonial evidence offered by respondent, which
was contradictory and contained numerous errors, that respondent
has failed to establish that the current interest abatement is
correct.
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As a final matter, we shall deny petitioner’s outstanding
motions.
To reflect the foregoing,
An appropriate order
and decision will be entered.