McElhaney v. Commissioner

Case: 15-60546 Document: 00513530475 Page: 1 Date Filed: 06/02/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-60546 FILED
June 2, 2016
JAMES LEE MCELHANEY, Lyle W. Cayce
Clerk
Petitioner - Appellant
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent - Appellee
Appeal from the Decision
of the United States Tax Court
TC No. 17561-14
Before KING, SOUTHWICK, and HAYNES, Circuit Judges.
PER CURIAM:*
James Lee McElhaney appeals from the Tax Court’s grant of summary
judgment to the Commissioner of Internal Revenue regarding McElhaney’s
outstanding tax liability from 1998. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
In 2004, James Lee McElhaney pled guilty to wire fraud. As part of his
plea agreement, McElhaney agreed to file corrected federal tax returns for the
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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years 1998 through 2002 and pay any resulting back taxes, interest, and
penalties. This appeal concerns his outstanding tax liability for the year 1998.
In February 2005, McElhaney and his ex-wife, Lisa Price, entered into an
agreement with the Internal Revenue Service (“IRS”) regarding additional
taxes owed and a fraud penalty for 1998. They both signed a Form 4549, in
which they consented to immediate assessment and collection of the
outstanding amount and waived their appeal rights with the IRS or the Tax
Court. At that time, Price requested “innocent spouse” relief from joint and
several liability. The IRS subsequently assessed the agreed-upon tax and
penalty for 1998 along with interest and filed notice of a tax lien.
In January 2006, McElhaney was sentenced to 60 months’ imprisonment
and three years of supervised release for his wire fraud conviction. McElhaney
began serving his sentence in March 2006. In January and March 2006,
McElhaney received notices of the IRS’s federal tax lien and his right to a
Collection Due Process (“CDP”) hearing, at which he could challenge the
collection action and request payment alternatives. He did not request a CDP
hearing in response to either notice.
In November 2006, because of Price’s earlier “innocent spouse” relief
request, the IRS followed internal procedures to create separate “mirrored”
accounts for each spouse. The balance from the joint filing account for the 1998
tax liability was transferred to separate accounts for McElhaney and Price. In
December, Price was granted “innocent spouse” relief, and the tax liability
balance in her separate account was abated. The full tax liability balance
remained in McElhaney’s separate account.
McElhaney was released from incarceration and began his period of
supervision in September 2009. One of the conditions of his supervised release
required him to cooperate with the IRS and pay outstanding taxes, interest,
and penalties. McElhaney claims that his probation officer instructed him to
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request from the IRS statements for tax years 1998 to 2003. He did so. The
IRS sent transcripts for the joint filing account for McElhaney and Price, which
showed that the balance of the 1998 tax liability had been “transferred to split
liability account” and then the liability had been subtracted from the account
under the entry “Write-off of balance due.” The transcript for 1998 had a zero
balance. He claims he provided these transcripts to his probation officer.
In 2010, while still on supervised release, McElhaney claims he received
a notice of tax due from the IRS for the tax years 1998 to 2003. He asserts that
he sent copies of the joint filing account transcripts he had received previously
and explained he thought the balance had been written-off. In August 2012,
McElhaney received a letter from the probation office informing him that his
supervised release period had ended.
McElhaney did not hear any more about his 1998 tax liability until
February 2014, when he received a “Notice of Intent to Levy and Notice of Your
Right to Hearing.” He requested a CDP hearing and sent copies of the joint
filing account transcripts that showed a zero balance. The IRS Office of
Appeals sent McElhaney a letter scheduling a telephonic CDP hearing and
explaining that the joint filing account transcript reflected a zero balance
because the 1998 tax liability had been transferred to the spouses’ separate
accounts. The letter instructed McElhaney that he would be unable to
challenge the underlying tax liability at the CDP hearing because he had not
taken previous opportunities to do so. McElhaney also received a transcript
for his separate account, which showed the balance due for 1998 was
$113,588.58. After the telephonic CDP hearing, the IRS Office of Appeals
issued a “Notice of Determination” sustaining the proposed levy action because
all statutory, administrative, and procedural requirements had been met and
McElhaney had offered no collection alternative.
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McElhaney petitioned the Tax Court for review of the IRS Office of
Appeals’ decision. Both McElhaney and the Commissioner moved for summary
judgment. The Tax Court denied McElhaney’s motion, but granted the
Commissioner’s. The Tax Court held McElhaney could not challenge the
underlying tax liability both because he had signed Form 4549, which
contained a waiver of appeal, and because he had not taken previous
opportunities to request a CDP hearing. The Tax Court also held the IRS
Office of Appeals did not abuse its discretion in sustaining the proposed levy
because McElhaney had failed to offer collection alternatives or submit the
necessary financial information to proceed with a collection alternative. The
Tax Court denied his motion for reconsideration. McElhaney appeals.
DISCUSSION
On a petition for review from a CDP hearing, the Tax Court reviews the
decisions of the IRS Office of Appeals regarding the underlying tax liability de
novo and the other administrative determinations for an abuse of discretion.
Jones v. Comm’r, 338 F.3d 463, 466 (5th Cir. 2003). We apply these same
standards on de novo review of the Tax Court’s decision to grant the
Commissioner summary judgment. Id. We must determine whether the
Commissioner has carried the burden of proving that there is “no genuine
dispute as to any material fact” and that the Commissioner is “entitled to
judgment as a matter of law.” FED. R. CIV. P. 56(a). McElhaney cannot rely on
“[m]ere conclusory allegations” to survive summary judgment. See Moss v.
BMC Software, Inc., 610 F.3d 917, 922 (5th Cir. 2010).
As a preliminary matter, we note that McElhaney does not challenge
parts of the Tax Court’s ruling in his briefing. First, he does not address the
Tax Court’s holding that the IRS Office of Appeals did not abuse its discretion
because he failed to offer any collection alternatives or submit the necessary
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financial information to proceed with a collection alternative. He also does not
address the Tax Court’s reliance on Form 4549. These issues are treated as
abandoned. See Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994).
Instead, McElhaney argues that the tax liability was “written-off” or
“settled” when the United States District Court, United States Attorney, and
probation officer released him from supervision in 2012. He contends that he
can raise this argument now because the alleged settlement occurred after his
earlier opportunities for a CDP hearing and is analogous to a bankruptcy
discharge, which can be raised at a CDP hearing as a challenge to the
appropriateness of collection actions. See 26 U.S.C. § 6330(c)(2)(A)(ii). He
theorizes that the IRS directed him to settle his tax liability with the United
States Attorney’s office in a May 2007 letter. He then claims that an August
2012 letter from the probation office concerning the end of his supervised
release demonstrates that he satisfied all conditions of his supervised release,
including resolving his tax liability. McElhaney urges that his probation
officer relied on the joint filing account transcripts with a zero balance to
release him from supervision.
First, McElhaney cites no evidence supporting his speculation that the
probation officer relied on the transcripts. More fundamentally, his argument
incorrectly assumes his supervised release could only end when he completed
all of the conditions. As the Commissioner argued below in Tax Court,
supervised release simply ends when the time period expires, unless modified
or terminated under Section 3583. 18 U.S.C. § 3583. Aside from this
argument, McElhaney fails to provide any evidence showing the 1998 tax
liability was settled. The letters he relies on do not demonstrate any
settlement occurred. Accordingly, McElhaney fails to show a genuine dispute
of material fact to survive summary judgment.
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McElhaney also claims summary judgment was improper because the
Tax Court identified a question of fact when it denied McElhaney’s summary
judgment motion. This argument lacks merit. When a court reviews cross-
motions for summary judgment, it must consider each independently. White
Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420 F.3d 366, 370 (5th Cir.
2005). McElhaney’s failure to meet his burden does not preclude the
Commissioner from meeting his burden, especially when the Commissioner
submitted more evidence with its motion.
Finally, McElhaney argues that the Commissioner is equitably estopped
from collecting amounts owed for the year 1998 because the IRS had previously
sent the joint filing account transcripts showing a zero balance. McElhaney
never presented this argument to the Tax Court, so we do not consider it. See
Savers Fed. Sav. & Loan Ass’n v. Reetz, 888 F.2d 1497, 1501 n.5 (5th Cir. 1989).
AFFIRMED.
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