Mark P. Hafner ( 2023 )

United States Tax Court
T.C. Summary Opinion 2023-27MARK P. HAFNER,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
—————
Docket No. 4514-21SL. Filed August 29, 2023.
—————
Mark P. Hafner, pro se.
Zachary T. King and Martha Jane Weber, for respondent.
SUMMARY OPINION
WEILER, Judge: This case was heard pursuant to the provisions
of section 7463 1 of the Internal Revenue Code in effect when the Petition
was filed. Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this Opinion shall not be treated as
precedent for any other case.
This is a collection due process (CDP) case in which petitioner
seeks review pursuant to section 6330 of a determination by the Internal
Revenue Service (IRS or respondent) Independent Office of Appeals 2
(Appeals) upholding a proposed levy collection action for tax periods
1 Unless otherwise indicated, statutory references are to the Internal Revenue
Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, and Rule references are to
the Tax Court Rules of Practice and Procedure. All monetary amounts are rounded to
the nearest dollar.
2 On July 1, 2019, the IRS Office of Appeals was renamed the IRS Independent
Office of Appeals. See Taxpayer First Act, Pub. L. No. 116-25, § 1001, 133 Stat. 981,
983 (2019).
Served 08/29/23
2
ending June 2014, September 2014, December 2014, and March 2015
(periods at issue).
Following a brief trial the issues for decision are (1) whether
petitioner is entitled to contest the section 6672 trust fund recovery
penalty (TFRP) liabilities for the periods at issue and (2) whether
Appeals’ decision upholding the IRS’s levy action and denying
petitioner’s collection alternatives was an abuse of discretion. For the
reasons set forth below, we will affirm Appeals’ determination.
Background
This case was tried during the Court’s Mobile, Alabama, trial
session. After trial the parties filed a Stipulation of Facts, which
includes the administrative record. The stipulated facts are
incorporated in our findings by this reference. Petitioner resided in
Florida when he timely filed the Petition.
I. Tax Liabilities
Petitioner’s TFRP liabilities for the periods at issue stem from
being a manager and equal owner, along with Edward Perillo and James
Licursi, of Cinco Investments, LLC (Cinco), a Florida limited liability
company. Cinco owned and operated a restaurant called “Mango’s on the
Bayou” in Fort Walton Beach, Florida. Each member of Cinco had the
authority to transact business on its behalf. Petitioner accounted for the
employment taxes of Cinco and was principally responsible for the filing
of Forms 940, Employer’s Annual Federal Unemployment (FUTA) Tax
Return, and Forms 941, Employer’s Quarterly Federal Tax Return,
during the periods at issue. Additionally, petitioner was a signatory on
Cinco’s bank accounts and was authorized to issue checks, to effect
deposits, and to make payments therefrom. The TFRP liabilities stem
from Cinco’s operation of Mango’s on the Bayou.
In 2014 Revenue Officer (RO) Lisa Henderson was assigned to the
collection of the outstanding employment tax liabilities of Cinco. On July
16, 2015, RO Henderson prepared and forwarded Form 4183,
Recommendation re: Trust Fund Recovery Penalty Assessment, to her
group manager, who, on July 17, 2015, approved the assessment of the
TFRPs against petitioner for the periods at issue. Form 4183 indicates
RO Henderson’s determination that petitioner is “willful and
responsible for [the] TFRP assessment.”
3
On July 23, 2015, the IRS issued petitioner Letter 1153 and Form
2751, Proposed Assessment of Trust Fund Recovery Penalty, which were
mailed via certified mail to his last known address in Crestview, Florida.
Respondent supplied a copy of U.S. Postal Service Form 3811, Domestic
Return Receipt, which evidences that petitioner received and accepted
Letter 1153 and Form 2751. Petitioner does not dispute that the
signature on the Form 3811 is his own signature.
Form 2751 apprised petitioner that Cinco had failed to pay over
employment taxes and that he was responsible for the TFRP liabilities3
for the periods at issue. Letter 1153 informed petitioner of his right to
appeal the IRS’s determination to the local Appeals Office, which he
exercised by faxing a written protest of the TFRPs on September 21,
2015. In his protest, petitioner disagreed with the finding that he was a
responsible person under section 6672 and argued that he lacked the
requisite knowledge of the payroll tax liabilities and the capacity to pay
them. By letter dated October 9, 2015, petitioner was informed that his
protest was being forwarded to an Appeals officer (AO) for consideration
and that he would be contacted for the purpose of scheduling a
conference. On October 21, 2015, petitioner’s protest was assigned to AO
Victoria Johnson in the Jacksonville, Florida, Appeals Office.
On February 24, 2016, an Appeals conference was held with
petitioner, his personal representative, and AO Johnson. After
considering the written protest and other documents received from
petitioner, AO Johnson denied petitioner’s protest of the TFRP liabilities
by letter dated May 11, 2016, upholding the proposed assessment made
by RO Henderson for the periods at issue. Petitioner claims that he
never received this letter; however, at trial, he confirmed that the
address is correct.
II. CDP Proceeding
On April 29, 2019, in an effort to collect petitioner’s TFRP
liabilities for the periods at issue, respondent issued him Notices CP90,
Intent to Seize Your Assets and Notice of Your Right to a Hearing. On
May 23, 2019, petitioner timely submitted Form 12153, Request for a
Collection Due Process or Equivalent Hearing, requesting a CDP
hearing for the TFRP liabilities assessed against him. On the Form
3 The Form 2751 issued to petitioner also lists an outstanding TFRP liability
for tax period ending December 2013. However, tax period ending December 2013 is
not at issue in this case.
4
12153 petitioner checked the boxes “Proposed Levy or Actual Levy” and
“I cannot Pay Balance” as the basis for the CDP hearing request and the
reason he disagrees with the levy action, respectively.
Petitioner’s CDP hearing was assigned to AO Karina Rego in the
Miami, Florida, Appeals Office. On December 12, 2019, AO Rego sent
petitioner a Letter 4837, scheduling a telephone CDP hearing for
January 23, 2020. Petitioner and his personal representative failed to
attend the January 23, 2020, hearing. Petitioner provided AO Rego a
completed Form 433–A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, dated January 30, 2020, along
with other financial documentation.
The CDP hearing was rescheduled for February 10, 2020. Upon
reviewing the Form 433–A and the other documentation petitioner
provided, AO Rego determined that he could afford to make a minimum
monthly payment of $1,997. AO Rego ensured that all requirements of
applicable law and administrative procedure were followed when the
Notice of Federal Tax Lien was filed and the Final Notice of Intent to
Levy was issued, 4 confirming that there was a valid assessment, a
balance was due, and notices were properly issued.
During the CDP hearing and subsequent phone calls petitioner
sought to challenge the TFRP liabilities for the periods at issue and
requested lien withdrawal or currently-not-collectible (CNC) status as a
possible collection alternative. 5 Moreover, petitioner informed AO Rego
that he would be proceeding with an offer-in-compromise (OIC).
AO Rego determined that petitioner was precluded from
challenging the TFRP liabilities since he had previously submitted a
protest and a determination had already been made that he was both
willful and responsible for the TFRP assessment. AO Rego noted that
petitioner does not meet the IRS’s “fresh start” criteria since his TFRP
liabilities exceed $25,000, and that he would need to file Form 12277,
Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax
Lien, if petitioner sought this form of relief. In the light of petitioner’s
4 The notice of determination in this case concerns the multiple April 29, 2019,
levy notices for the periods at issue. Lien withdrawal was considered as possible relief
with respect to the levy action.
5 AO Rego made the suggestion of an installment agreement as a possible
collection alternative, but petitioner was not amenable to the proposed monthly
payment amount.
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personal financial situation, which affords him the ability to make
monthly payments towards the TFRP liabilities, AO Rego determined
that petitioner was not eligible for CNC status.
Lastly, petitioner’s OIC package, including Form 656–L, Offer in
Compromise (Doubt as to Liability), which offered $500 to compromise
the TFRP liabilities and reiterated his claim that he was not responsible
for the TFRP assessment, was received on March 9, 2020. AO Rego
forwarded petitioner’s OIC to the Centralized Offer in Compromise unit.
It was determined that petitioner was precluded from challenging the
TFRP liabilities at the CDP hearing because of Appeals’ prior
determination.
Appeals issued a notice of determination dated January 12, 2021,
sustaining the proposed levy action, and petitioner timely petitioned
this Court for redetermination.
Discussion
I. Standard of Review
We have jurisdiction to review Appeals’ determination pursuant
to section 6330(d)(1). See Murphy v. Commissioner, 125 T.C. 301, 308
(2005), aff’d, 469 F.3d 27 (1st Cir. 2006). Where the underlying tax
liability is not at issue, we review the determination of Appeals for abuse
of discretion. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Commissioner, 114 T.C. 176, 182 (2000). In reviewing for abuse of
discretion, we must uphold Appeals’ determination unless it is arbitrary,
capricious, or without sound basis in fact or law. See Murphy, 125 T.C.
at 320; Taylor v. Commissioner, T.C. Memo. 2009-27, 2009 WL 275721,
at *9. We do not substitute our judgment for that of Appeals, but
consider “whether, in the course of making its determination, the
Appeals Office complied with the legal requirements of an
administrative hearing.” Charnas v. Commissioner, T.C. Memo. 2015-
153, at *7.
II. Underlying Liability
A taxpayer may challenge the existence or amount of his
underlying tax liability only if he “did not receive any statutory notice of
deficiency for such tax liability or did not otherwise have an opportunity
to dispute such tax liability.” I.R.C. § 6330(c)(2)(B). TFRPs are
“assessable penalties” and are therefore not subject to deficiency
procedures. See Chadwick v. Commissioner, 154 T.C. 84, 91 (2020).
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However, a taxpayer has the opportunity to dispute his liability for a
TFRP by filing an appeal with the IRS upon receipt of a Letter 1153. See
Mason v. Commissioner, 132 T.C. 301, 317–18 (2009).
Petitioner does not dispute receiving a Letter 1153, and it has
been stipulated that petitioner participated in a prior Appeals hearing
on February 24, 2016, protesting the TFRP assessments made against
him for Cinco. Since petitioner has previously disputed the underlying
liabilities now at issue, he was not entitled to challenge the underlying
TFRP liabilities at the CDP hearing and is precluded by section
6330(c)(2)(B) from now contesting them in this Court. See Chadwick,
154 T.C. at 89. Accordingly, we will review AO Rego’s determination to
sustain the proposed levy action and denial of collection alternatives on
the basis of an abuse of discretion standard.
III. Abuse of Discretion
In deciding whether AO Rego abused her discretion sustaining
the proposed levy action and denying petitioner’s collection alternatives,
we consider whether she (1) properly verified that the requirements of
applicable law or administrative procedure have been met,
(2) considered any relevant issues petitioners raised, and (3) weighed
“whether any proposed collection action balances the need for the
efficient collection of taxes with the legitimate concern of [petitioner]
that any collection action be no more intrusive than necessary.” See
I.R.C. § 6330(c)(3). Our review of the record establishes that AO Rego
satisfied all of these requirements.
A. Verification
We have authority to review an AO’s satisfaction of the
verification requirement regardless of whether the taxpayer raised the
issue at the CDP hearing. Kidz Univ., Inc. v. Commissioner, T.C. Memo.
2021-101, at *10 (citing Hoyle v. Commissioner, 131 T.C. 197, 200–03
(2008), supplemented by 136 T.C. 463 (2011)). Petitioner did not assert
in his Petition that AO Rego failed to satisfy this requirement and has
not directed this Court’s attention to any facts that would support such
a finding. See Rule 331(b)(4) (“Any issue not raised in the assignments
of error shall be deemed to be conceded.”); Rockafellor v. Commissioner,
T.C. Memo. 2019-160, at *12. In any case, on the basis of our review of
the record before us, we find that AO Rego reviewed the documentation
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relevant to petitioner’s CDP hearing and verified that the applicable
requirements were met. 6 See I.R.C. § 6330(c)(1).
B. Issues Raised
During the CDP hearing petitioner sought to challenge the
underlying TFRP liabilities and his status as a responsible person,
which, as discussed in Part II, he is precluded from challenging.
Petitioner also requested lien withdrawal or CNC status as a possible
collection alternative, and submitted an OIC. Respondent argues that
petitioner has not shown that AO Rego abused her discretion in denying
petitioner’s collection alternatives. We agree. In fact petitioner failed to
raise the issue during the trial or on brief; therefore, we find that he has
abandoned and conceded the issue. See Lunsford v. Commissioner, 117
T.C. 183, 187 (2001).
C. Balancing
Petitioner does not allege in his Petition or argue at any later
point that AO Rego failed to consider “whether any proposed collection
action balances the need for the efficient collection of taxes with the
legitimate concern of the person that any collection action be no more
intrusive than necessary.” See I.R.C. § 6330(c)(3)(C). Therefore,
petitioner has conceded this issue. See Rule 331(b)(4); see also Ansley v.
Commissioner, T.C. Memo. 2019-46, at *19. In any case, there is no
evidence in the record suggesting that AO Rego abused her discretion in
finding that the balancing requirement in section 6330(c)(3)(C) was met.
IV. Conclusion
Finding no abuse of discretion, we will sustain Appeals’
determination. We have considered all of the arguments that the parties
made, and to the extent they are not addressed herein, we find the
arguments to be moot, irrelevant, or without merit.
6 TFRPs are penalties that are subject to the written supervisory approval
requirements of section 6751(b). See Chadwick, 154 T.C. at 94. Petitioner did not raise
the issue of whether the RO complied with the requirements of section 6751(b) before
assessing the TFRPs against him. Nonetheless, the administrative record contains
Form 4183, reflecting the settlement officer’s satisfaction of the verification
requirement. See Blackburn v. Commissioner, 150 T.C. 218, 223 (2018).
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To reflect the foregoing,
An appropriate decision will be entered.