Willard J. Belton & Martha-Alexander Belton

United States Tax Court
T.C. Memo. 2023-13WILLARD J. BELTON AND MARTHA-ALEXANDER BELTON,
Petitioners
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent
—————
Docket No. 22438-19P. Filed January 24, 2023.
—————
Ps had unpaid tax liabilities for nine taxable years
(relevant years). R attempted to collect those liabilities,
but had little success.
Ultimately, R certified to the Secretary of State that
each P has a “seriously delinquent tax debt” within the
meaning of I.R.C. § 7345(b) for the relevant years. Ps filed
a joint Petition under I.R.C. § 7345(e)(1) challenging the
certifications.
Ps filed a Motion for Summary Judgment urging the
Court to find R’s I.R.C. § 7345 certifications erroneous
because, according to Ps, certain losses from a year after
the relevant years should have reduced their tax liabilities
below the threshold in I.R.C. § 7345(b)(1)(B). R filed a
competing Motion for Summary Judgment arguing that
(1) the Court lacks jurisdiction to review the liabilities
underlying the I.R.C. § 7345 certifications and (2) the
I.R.C. § 7345 certifications should be sustained because
they were properly made.
Held: We lack jurisdiction to review the liabilities
underlying the I.R.C. § 7345 certifications. See Adams v.
Commissioner, No. 1527-21P, 160 T.C. (Jan. 24, 2023).
Served 01/24/23
2
[*2] Held, further, R has not demonstrated how the
portion of the administrative record submitted with his
Motion supports the conclusion that the unpaid, legally
enforceable tax liabilities for one of the relevant years
satisfied the requirements of I.R.C. § 7345(b)(1)(C).
Held, further, although R has demonstrated that the
portion of the administrative record submitted with his
Motion supports the conclusion that the unpaid, legally
enforceable tax liabilities for the remaining relevant years
satisfied the requirements of I.R.C. § 7345(b)(1)(C) at the
time of the certifications, Ps’ outstanding liabilities for
those remaining years do not meet the minimum threshold
set forth in I.R.C. § 7345(b)(1)(B) and (f) to be considered a
“seriously delinquent tax debt.”
Held, further, R is entitled to partial summary
judgment with respect to the question of our jurisdiction to
review the liabilities underlying an I.R.C. § 7345
certification.
Held, further, given the portion of the administrative
record submitted with R’s Motion and his explanation of
that record thus far, R has not yet shown he is entitled to
summary judgment that the I.R.C. § 7345 certifications in
this case were properly made, and R’s Motion on this point
will be denied without prejudice to its being renewed.
Held, further, Ps are not entitled to summary
judgment.
—————
Willard J. Belton and Martha-Alexander Belton, pro se.
Susan K. Bollman, for respondent.
3
[*3] MEMORANDUM OPINION
TORO, Judge: Acting pursuant to section 7345, 1 the Internal
Revenue Service (IRS) certified to the Secretary of State that each
petitioner, Willard J. Belton and Martha-Alexander Belton, has a
“seriously delinquent tax debt” related to unpaid joint federal income
tax liabilities for the years 2004, 2005, 2006, 2007, 2008, 2009, 2010,
2014, and 2015 and, in the case of Mr. Belton, his separate income tax
liability for 2012 (section 7345 certifications). The Beltons seek our
review of those certifications under section 7345(e). They have moved
for summary judgment under Rule 121 contending that the section 7345
certifications were improper as a matter of law. The Commissioner has
also moved for summary judgment (and supplemented his Motion)
maintaining that the section 7345 certifications were proper.
The case presents two important questions. First, we must decide
whether we have jurisdiction to consider the Beltons’ challenges to the
tax liabilities underlying their section 7345 certifications. Second, we
must decide what the statute requires the Commissioner to show to be
entitled to summary judgment when he relies on levies to prove the
existence of a “seriously delinquent tax debt” under section 7345(b).
Specifically, we must address whether the requirement of section
7345(b)(1)(C)(ii) that a levy “is made pursuant to section 6331” means
that, to prevail on summary judgment, the Commissioner must
demonstrate how the record before us shows that he acted in conformity
with section 6331 in making the relevant levy.
As we explain below, on the first question, we follow our decision
in Adams v. Commissioner, No. 1527-21P, 160 T.C. (Jan. 24, 2023), and
conclude that we lack jurisdiction to address the Beltons’ challenges to
their underlying liabilities. On the second question, we conclude that,
when the Commissioner relies on levies to prove the existence of a
“seriously delinquent tax debt,” to prevail on a motion for summary
judgment, the Commissioner must demonstrate how the record before
us shows that the levies on which he relies were made in conformity with
the requirements of section 6331. We further conclude that, in view of
the partial administrative record the Commissioner has submitted to us
thus far, the Commissioner has failed to make the requisite showing.
1 Unless otherwise indicated, all statutory references are to the Internal
Revenue Code (I.R.C. or Code), Title 26 U.S.C., in effect at all relevant times, all
regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), 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.
4
[*4] Accordingly, we will grant partial summary judgment to the
Commissioner with respect to the question of our jurisdiction to review
the Beltons’ underlying liabilities, but will deny his Motion, as
supplemented, with respect to the question of whether the section 7345
certifications were properly made without prejudice to it being renewed.
We will also deny the Beltons’ Motion.
Background
The following facts are drawn from the parties’ pleadings and
Motion papers, including the Exhibits attached thereto. See Rule 121(b).
The Exhibits included with the Commissioner’s Motion include portions
(but not all) of the administrative record that formed the basis for the
Commissioner’s certifications. The facts below are stated solely for the
purpose of ruling on the Motions before us and not as findings of fact in
this case. See Whistleblower 769-16W v. Commissioner, 152 T.C. 172,
173 (2019). The Beltons resided in Louisiana when they filed their
Petition.
I. The Beltons’ Unpaid Tax Liabilities and IRS Collection Efforts
The Beltons did not pay in full their joint federal income tax
liabilities for the years 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2014,
and 2015. In addition, Mr. Belton did not pay in full his separate federal
income tax liability for 2012. For convenience, we refer to these years
collectively as the relevant years.
In an effort to collect the unpaid liabilities, the IRS filed a notice
of federal tax lien for each of the taxable years 2004, 2005, 2006, 2007,
2008, 2009, and (with respect to Mr. Belton only) 2012. (As the careful
reader will note, for reasons the record does not reveal, the IRS did not
file notices of federal tax lien for 2010, 2014, and 2015.) As required by
section 6320, the IRS also issued to the Beltons notices of federal tax
lien filings informing them of their right to collection due process
hearings. The Beltons appear to have requested collection due process
hearings in response to certain of these notices, but they either withdrew
those requests or waived their rights to judicial review with respect to
any determinations made by the IRS Office of Appeals in response to
those requests. 2 With respect to the notices for which the Beltons did
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). We will use the name in effect at the times relevant to this case, i.e., the
Office of Appeals or Appeals.
5
[*5] not seek collection due process hearings, it is undisputed that the
time for seeking such hearings has lapsed.
In a further effort to collect the Beltons’ unpaid tax liabilities, the
IRS issued a notice of intent to levy for each of the relevant years,
informing the Beltons of their right to a collection due process hearing
under section 6330. The Beltons requested collection due process
hearings in response to certain of these notices, but either made such
requests untimely, withdrew the requests, or waived their rights to
judicial review of any notice of determination issued by Appeals. The
Commissioner actually levied on the Beltons’ right to receive their state
income tax refunds in 2010, 2014, and 2015 through an automated levy
process known as the State Income Tax Levy Program, as described in
Discussion Part II.B.5.b below. 3
For all the relevant years, the Beltons sought collection
alternatives such as installment agreements and offers-in-compromise.
We discuss these efforts in greater detail in Discussion Part II.B.5.b.
II. Federal Disaster Declaration and Disaster Losses
Because the Beltons maintain that their unpaid federal income
tax liabilities for the relevant years are affected by certain losses they
incurred in 2016, we provide some context concerning those losses.
In August 2016, severe storms and flooding affected portions of
Louisiana, including Baton Rouge, where the Beltons lived. On August
14, 2016, the President declared that a major disaster existed in the
State of Louisiana as a result of the flooding (FEMA Disaster No. 4277).
The Beltons claim they incurred losses with respect to certain personal
property during the storms. They reported these losses by attaching
Form 4684, Casualties and Thefts, to their 2016 Form 1040, U.S.
Individual Income Tax Return.
Although the record is unclear as to the exact nature of the
damages the Beltons suffered during the storms, they listed “[p]ersonal
[p]roperty,” “[l]easehold [i]mprovements ([r]eplacement or [r]epair of
physical damages),” “[m]achinery [and] [e]quipment,” and “[e]conomical
3 The Commissioner may have also levied with respect to the outstanding
liabilities for 2004, 2005, 2006, 2007, 2008, 2009, and (with respect to Mr. Belton only)
2012, but, as we discuss below, in light of the notices of federal tax lien issued for those
years, consideration of any levies made for those years is unnecessary to our
disposition.
6
[*6] [injury] [l]osses” on Form 4684, in Section A, Personal Use
Property. The Beltons assert that the disaster losses would have
eliminated their outstanding tax liability. For purposes of deciding the
Commissioner’s Motion, we take their assertion to be true. Therefore,
we assume that the Beltons incurred properly deductible disaster losses
of an amount sufficient to reduce their unpaid tax liabilities below the
threshold set forth in section 7345(b)(1)(B) and (f).
The Beltons appear to have reported the same losses on a Form
1040X, Amended U.S. Individual Income Tax Return, for the taxable
year 2016. By filing an amended return, the Beltons may have intended
to take advantage of section 165(i)(1), which allows taxpayers to deduct
disaster losses for the year immediately preceding a disaster (in this
case, 2015). 4 But, if that was their intention, the Beltons checked the
wrong box on their Form 1040X. Instead of indicating that the amended
return was for the taxable year 2015, they checked the box indicating it
was for the taxable year 2016.
The Beltons reported the disaster losses in an unusual way on
their returns. For example, they claimed the standard deduction and
reported the disaster losses as credits on Line 73 of their 2016 Form
1040 and Line 15 of their 2016 Form 1040X. But disaster losses give
rise to deductions, not credits, and should have been reported (among
other places) on Line 40 of the 2016 Form 1040 and Line 2 of the 2016
Form 1040X. The computational effect of the positions the Beltons took
was to treat the disaster losses as if they reduced the Beltons’ tax
liability dollar-for-dollar, rather than reducing their taxable income
(which would in turn have reduced their tax liability by a much smaller
amount). In short, the Beltons filed two returns for the taxable year
2016, both of which reported disaster losses as credits for that year. 5
Faced with the unusual positions in the two filings, the IRS appears to
have not applied the disaster losses to the Beltons’ account at all.
4 Additionally, section 172(b)(1)(E) (as in effect at that time) allowed taxpayers
to carry back disaster losses for the three preceding taxable years (here, 2013–15).
Although the Beltons argue that an amendment to section 172 permitted them to carry
back disaster losses for the five preceding taxable years, that provision applies only to
losses arising in 2018, 2019, or 2020. I.R.C. § 172(b)(1)(D) (added by the Coronavirus
Aid, Relief, and Economic Security Act, Pub. L. No. 116-136, § 2303(b), 134 Stat. 281,
353 (2020)).
5 Between the time they filed their 2016 Form 1040 and their 2016 Form
1040X, the Beltons slightly revised the size of the casualty loss they claimed to have
incurred from $85,438 to $86,928.
7
[*7] III. Certification of the Beltons’ Tax Debts as Seriously
Delinquent
In December 2019, the Commissioner made two section 7345
certifications with respect to the Beltons’ outstanding tax debts. He
issued a Notice of Certification of Your Seriously Delinquent Federal
Tax Debt to the State Department (Notice of Certification) for each 6 of
the Beltons. These Notices of Certification informed the Beltons that
the IRS had made section 7345 certifications with respect to their
unpaid tax liabilities, that the State Department had been notified of
the section 7345 certifications, and that the State Department could
revoke their passports or refuse to issue them new passports based on
the section 7345 certifications. 7 See 22 U.S.C. § 2714a; 22 C.F.R.
§ 51.60(h)(2). The Beltons petitioned this Court to review the section
7345 certifications under section 7345(e).
IV. Proceedings in Our Court
The Beltons moved for summary judgment. We construe their
submissions liberally given that they are representing themselves. See
Rule 31(d) (“All pleadings shall be so construed as to do substantial
justice.”); Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam)
6 In general, the Beltons are each jointly and severally liable for their unpaid
tax liabilities as individuals who are married, filing jointly. See I.R.C. § 6013(d)(3).
But, for the taxable year 2012, the Beltons filed their federal income tax returns
separately. Based on these separate returns, the IRS assessed Mr. Belton an amount
for which Ms. Belton was not liable. The sum of Mr. Belton’s total unpaid tax liabilities
is not the same as the sum of Ms. Belton’s total unpaid tax liabilities, and the
Commissioner issued two separate section 7345 certifications.
7 On October 7, 2019, the Commissioner also notified the Beltons of the IRS’s
intent to levy upon their Social Security benefits to satisfy their unpaid tax liabilities
pursuant to section 6331(h). The Beltons attached this notice to their Petition and
make certain challenges as to its propriety in their Motion for Summary Judgment.
Although in their Petition the Beltons checked the box indicating that they are seeking
review of a notice of determination concerning collection action, they did not attach
such a notice, and the Commissioner asserts that no such notices have been issued to
the Beltons for any of the relevant years.
On November 19, 2021, the Commissioner moved to dismiss for lack of
jurisdiction the Beltons’ claims regarding the proposed levy on their Social Security
benefits. We agree with the Commissioner that we lack jurisdiction to consider the
challenged action because no notice of determination concerning collection actions
under section 6330 has been issued to the Beltons. I.R.C. § 6330(d); Rule 330(b); see also
Orum v. Commissioner, 123 T.C. 1, 7–12 (2004), aff’d, 412 F.3d 819 (7th Cir. 2005).
We will therefore dismiss this portion of the Beltons’ case as the Commissioner
requests.
8
[*8] (explaining that documents filed by pro se litigants are “to be
liberally construed” (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)));
see also Gray v. Commissioner, 138 T.C. 295, 298 (2012) (“All claims in
a petition should be broadly construed so as to do substantial justice,
and a petition filed by a pro se litigant should be liberally construed.”),
supplemented by 140 T.C. 163 (2013). Using these principles of
construction for pro se litigants, we understand the Beltons to argue
that, if the IRS had taken into account in 2015 the disaster losses they
claimed in their 2016 Form 1040X, their unpaid federal income tax
liabilities for the relevant years would have been below the $52,000
threshold required for the Commissioner to certify those liabilities as
seriously delinquent tax debt under section 7345. Thus, on the Beltons’
view, if the Court were to consider the underlying liabilities at issue,
they would prevail. 8
The Commissioner responded to the Beltons’ Motion. Relying on
our decision in Ruesch v. Commissioner, 154 T.C. 289 (2020), aff’d in
part, vacated and remanded in part, 25 F.4th 67 (2d Cir. 2022), he
maintains that we lack jurisdiction to review the underlying liabilities
that gave rise to the section 7345 certifications.
The Commissioner also filed his own Motion for Summary
Judgment. The Motion argues that the Beltons “each have a seriously
delinquent debt as defined by section 7345.” Resp’t’s Mot. for
Summ. J. 5. The Motion also maintains that “[t]he attached [literal]
account transcripts show all assessments and abatements of tax,
penalties, and interest; all payments credited; [and] any notices of lien
and levy issued pursuant to I.R.C. §§ 6320 and 6330.” Id. at ¶ 8.
Following a conference call between the parties and the Court to
discuss the pending Motions, the Court invited the parties to express
their
8 The Beltons also sought civil damages under section 7432 based on an alleged
failure by the IRS to release a lien under section 6325. The Commissioner resisted the
request, noting that “the Tax Court has no jurisdiction to order such damages under
section 7432, which authorizes a taxpayer to ‘bring a civil action for damages against
the United States in a district court of the United States.’ ” Resp. to Pet’rs’ Mot. for
Summ. J. ¶ 5 (quoting I.R.C. § 7432(a)). The Commissioner is correct on this score,
meaning that we have no authority to provide the relief the Beltons seek under
section 7432 and therefore cannot grant summary judgment in their favor on this
point.
9
[*9] views on whether the requirements of I.R.C. § 7345(b)(1)(C)
have been satisfied in this case, especially with respect to
any “levy . . . made pursuant to section 6331.” I.R.C.
§ 7345(b)(1)(C)(ii). Specifically, the Court wishes to have
the parties’ views on how compliance with § 7345(b)(1)(C)
is demonstrated by the record before the Court.
In response to this invitation, the Commissioner supplemented his
Motion, and the Beltons filed a Response reiterating the view that the
section 7345 certifications were improper.
Discussion
I. Background Law
A. Summary Judgment
The purpose of summary judgment is to expedite litigation and
avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp.
v. Commissioner, 90 T.C. 678, 681 (1988).
Generally, in cases in which the Court’s review is not confined to
the administrative record, the Court may grant summary judgment
when there is no genuine dispute as to any 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), aff’d, 17 F.3d 965 (7th Cir. 1994).
In such cases, the moving party bears the burden of proving that
summary judgment is warranted. Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986); Espinoza v. Commissioner, 78 T.C. 412, 416 (1982). And, in
deciding whether to grant summary judgment in such cases, we
construe factual materials and inferences drawn from them in the light
most favorable to the adverse party. Sundstrand Corp., 98 T.C. at 520.
But, as we recognized in Van Bemmelen v. Commissioner, 155
T.C. 64, 78 (2020), in cases in which the Court “must confine [itself] to
the administrative record to decide whether there has been an abuse of
discretion,” the ordinary “summary judgment standard is not generally
apt.” In those cases, “summary judgment serves as a mechanism for
deciding, as a matter of law, whether the agency action is supported by
the administrative record and is not arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” Id. at 79.
Our Court has not yet decided the scope of review and the
standard of review for cases arising under section 7345. As we observed
10
[*10] in Rowen v. Commissioner, 156 T.C. 101, 106 (2021), “we need not
do so . . . . [when] there is no dispute between the parties with respect to
the evidence we should consider . . . [, and when] our decision would be
the same whether we reviewed the Commissioner’s certification de novo
or for abuse of discretion.” The circumstances before us here are similar
to those in Rowen. As we describe below, the parties have no dispute
about the record. And, on the record the parties have placed before us
thus far, our decision would be the same whether we followed the
ordinary summary judgment standard or the modified Van Bemmelen
standard. Therefore, we once again have no occasion to decide the scope
of review and the standard of review for cases in which the merits of the
Commissioner’s certification pursuant to section 7345 are at issue.
For convenience, however, and following the parties’ lead, in the
discussion that follows we use the terminology of the ordinary summary
judgment standard.
B. Certifications of Seriously Delinquent Tax Debts
If the Commissioner certifies that a taxpayer has “a seriously
delinquent tax debt,” section 7345(a) provides that the certification shall
be transmitted “to the Secretary of State for action with respect to
denial, revocation, or limitation of [the taxpayer’s] passport.” 9 The
Commissioner is responsible for notifying the taxpayer of the
certification. I.R.C. § 7345(d).
1. Definition of “Seriously Delinquent Tax Debt”
The term “seriously delinquent tax debt” is defined in
section 7345(b). It generally means
an unpaid, legally enforceable Federal tax liability of an
individual —
(A) which has been assessed,
(B) which is greater than $50,000, and
9 Section 7345 outlines a two-step procedure whereby the Commissioner sends
certification to the Secretary of the Treasury, who then transmits the certification to
the Secretary of State. In practice, the IRS follows a one-step procedure whereby the
Commissioner, as the Secretary’s delegate, transmits the certification directly to the
State Department. See I.R.C. § 7701(a)(11); Internal Revenue Manual (IRM)
5.1.12.27.1, .6, .8 (Dec. 20, 2017).
11
[*11] (C) with respect to which —
(i) a notice of lien has been filed pursuant to
section 6323 and the administrative rights under
section 6320 with respect to such filing have been
exhausted or have lapsed, or
(ii) a levy is made pursuant to section 6331.
I.R.C. § 7345(b)(1). The threshold amount described in subparagraph
(B) is modified by subsection (f) to account for inflation. The threshold
amount relevant here (i.e., the amount for the year when the section
7345 certifications were made) was $52,000. Rev. Proc. 2018-57, § 3.59,
2018-49 I.R.B. 827, 838.
The statute provides exceptions from this definition. For
instance, a seriously delinquent tax debt does not include “a debt with
respect to which collection is suspended . . . because a due process
hearing under section 6330 is requested or pending” or because relief
from joint and several liability is sought pursuant to subsection (b), (c),
or (f) of section 6015. I.R.C. § 7345(b)(2)(B). Additionally, no “debt that
is being paid in a timely manner pursuant to an [installment] agreement
. . . under section 6159 or [a compromise agreement under section] 7122”
is a seriously delinquent tax debt. I.R.C. § 7345(b)(2)(A).
If a certification is found to be erroneous or if the certified debt is
fully satisfied or ceases to be seriously delinquent because of one of the
exceptions, then the IRS must reverse its certification and notify the
Secretary of State and the taxpayer. I.R.C. § 7345(c)(1), (d). “In the case
of a certification found to be erroneous, such notification shall be made
as soon as practicable after such finding.” I.R.C. § 7345(c)(2)(D).
2. Our Role in Reviewing Section 7345 Certifications
Section 7345(e)(1) permits a taxpayer who has been certified as
having a seriously delinquent tax debt to petition this Court to
determine “whether the certification was erroneous or whether the [IRS]
has failed to reverse the certification.” Our jurisdiction in reviewing
certifications of seriously delinquent tax debts is set forth in section
7345(e)(1). If we find that a certification was erroneous, we “may order
the Secretary [of the Treasury] to notify the Secretary of State that such
certification was erroneous.” I.R.C. § 7345(e)(2). The statute specifies
no other form of relief that we may grant. Adams, No. 1527-21P, 160
T.C., slip op. at 8 (citing Ruesch v. Commissioner, 25 F.4th at 70).
12
[*12] II. Application to the Beltons’ Case
A. The Beltons’ Challenge to Their Underlying Liabilities
The Beltons assert that, at the time of the section 7345
certifications, they had incurred losses sufficient to reduce their
outstanding federal income tax liabilities for the relevant years below
the relevant threshold. See I.R.C. § 7345(b)(1)(B), (f). Thus, in their
view, they did not owe “a seriously delinquent tax debt,” and their
section 7345 certifications were erroneous. The Commissioner urges
that the statute does not authorize us to consider the arguments the
Beltons advance and seeks summary judgment on this point. 10
In view of the Commissioner’s Motion for Summary Judgment,
we assume that, as a factual matter, the Beltons would be able to
demonstrate on the record that was before the Commissioner at the time
of the section 7345 certifications or at least on a properly supplemented
10 On June 7, 2021, the Commissioner filed a separate Motion addressing two
other points. First, the Commissioner moved the Court to dismiss the Beltons’ case
insofar as it relates to purported notices of determination for the relevant years and
the taxable year 2016. The Commissioner argues that no notices of determination for
the relevant years or 2016 were attached to the Petition and, based on a diligent search
of his records, there is no record of any such notice having been issued. The Beltons
offer no response on this point. Based on the foregoing, we will grant the
Commissioner’s Motion and dismiss the case in so far as it relates to notices of
determination issued with respect to the relevant years and the taxable year 2016. See
I.R.C. § 6330(d); Rule 330(b); see also Atl. Pac. Mgmt. Grp., LLC v. Commissioner, 152
T.C. 330, 335 (2019) (“Absent a determination letter [the taxpayer] lacks the
‘jurisdictional hook’ to enter this Court.” (citing Adolphson v. Commissioner, 842 F.3d
478, 485 (7th Cir. 2016))); Orum, 123 T.C. at 7–12.
Second, the Commissioner also moved the Court to strike the Petition’s
references to the taxable year 2016 because that year is not one of the taxable years
upon which the Commissioner based his section 7345 certifications and because no
other provision of the Code grants the Court jurisdiction to redetermine the Beltons’
underlying tax liability for that year. But we generally can draw factual inferences
based on taxable years not at issue when they directly bear on the underlying tax
liability for a taxable year properly at issue. See, e.g., Ron Lykins, Inc. v.
Commissioner, 133 T.C. 87, 103–06 (2009) (concluding that a net operating loss
carryback could have been litigated in a case challenging the deficiency determined for
the carryback year); Keith v. Commissioner, 115 T.C. 605, 621 (2000) (“We have
jurisdiction to consider . . . facts related to years not in issue as may be necessary for
redetermination of tax liability for the period before the Court.”). Here, the taxable
years at issue are the years upon which the section 7345 certifications are based. The
Beltons’ tax liabilities for those years could well be affected by the carryback of a
disaster loss that occurred during the taxable year 2016. Accordingly, we will deny
the Commissioner’s Motion To Strike.
13
[*13] record that they had sufficiently large losses to reduce their
outstanding federal income tax liabilities below the relevant threshold.
See Sundstrand Corp., 98 T.C. at 520. We must therefore confront a
threshold issue: does section 7345 authorize us to look behind the
outstanding liabilities as of the time of the certification and consider
issues that affect the determination of those liabilities?
As the Commissioner points out, this Court previously answered
the question in the Commissioner’s favor in Ruesch, holding that we do
not have jurisdiction to redetermine the tax liabilities underlying a
section 7345 certification. On appeal, the U.S. Court of Appeals for the
Second Circuit vacated for mootness the portion of our order in Ruesch
resolving the jurisdictional question. See Ruesch v. Commissioner, 25
F.4th at 71–72. 11
In Adams, a division opinion filed today, we observed that,
“although our opinion in Ruesch was deprived of its precedential effect
[because of the Second Circuit’s vacatur, that opinion] has not lost its
persuasive value,” and we saw “no reason to depart from it.” Adams,
160 T.C., slip op. at 12. We went on to “readopt our holding in Ruesch,
concluding that we do not have jurisdiction to review the liabilities
underlying the certification of a seriously delinquent tax debt.” Id.
at 12–13 (citing Ruesch, 154 T.C. at 295–98).
As applied to this case, our conclusion in Adams means that we
cannot redetermine the tax liabilities underlying the Beltons’ section
7345 certifications. We therefore decline to address the merits of their
arguments concerning the losses claimed to have been incurred in 2016.
B. Whether the Section 7345 Certifications Were Erroneous
Having determined that we do not have jurisdiction to consider
the Beltons’ challenges to their underlying liabilities, we turn now to our
proper role as described by section 7345(e)(1) — i.e., to “determine
whether the certification was erroneous.” An action is “erroneous” if it
11 The Second Circuit vacated in part the Ruesch order because, at the time we
issued the order (and the opinion setting out our reasoning in support of the order),
the taxpayer had already received (from the IRS) the only relief she could under section
7345: the reversal of her section 7345 certification. The Second Circuit concluded that
the question of mootness is an antecedent question to the question of jurisdiction.
Ruesch v. Commissioner, 25 F.4th at 71–72. Here, by contrast, the Beltons’ section
7345 certifications are still in effect, and whether we have jurisdiction to redetermine
their underlying liabilities remains a live controversy.
14
[*14] is “inconsistent with the law or the facts.” Rowen, 156 T.C. at 117
(quoting Erroneous, Black’s Law Dictionary (10th ed. 2014)). We will
therefore consider whether the Commissioner has shown (based on the
materials currently before us) that the requirements of the statute were
satisfied at the time of the Beltons’ section 7345 certifications.
The definition of “seriously delinquent tax debt” provides a
statutory framework with which the Commissioner must comply when
making a section 7345 certification. We will analyze each element of the
definition in turn. Before turning to that analysis, however, we pause
briefly to explain how the IRS tracks some of the information that is
necessary to our analysis.
1. IRS Computer Systems and Transcripts of Account
The IRS maintains in its computer systems a great deal of
information regarding each taxpayer’s federal tax obligations. The IRS
uses a computer interface called the Integrated Data Retrieval System
(IDRS) to retrieve data from those systems. 12 Upon request from an
authorized person, the IRS can generate transcripts of account to show
some of the information stored in its computer systems. See generally
IRM 21.2.3 (Sept. 6, 2022).
One kind of transcript is a “literal account transcript.” That
transcript shows basic taxpayer data for a particular taxable year for a
particular type of tax. For example, a transcript for the taxpayer’s
income tax for a given year shows whether a return was filed, the filing
status, adjusted gross income, and so on. The transcript also shows IRS
activity for that year by displaying transaction codes accompanied by
descriptors called “explanation[s] of transaction.” For example, the
codes may show that the IRS began an examination, engaged in certain
collection activity, and the like. The explanations distinguish “literal”
account transcripts from other types of transcripts, which contain
various transaction codes but not explanations. 13
Another kind of transcript is the “TXMODA transcript.” A
TXMODA transcript, like a literal account transcript, contains current
12IDRS is essentially the interface between the IRS’s employees and various
computer systems. Kaeckell v. Commissioner, T.C. Memo. 2002-114, 2002 Tax Ct.
Memo LEXIS 119, at *5 n.2.
13 A literal transcript is a transcript in “plain English” with a minimum of
“computerese.” Keene v. Commissioner, T.C. Memo. 2002-277, 2002 Tax Ct. Memo
LEXIS 286, at *12 n.7.
15
[*15] account information obtained from the IRS’s computer systems,
but presented differently. 14 TXMODA transcripts omit the descriptors
and instead provide individual “action codes” for each transaction code.
TXMODA transcript action codes can be more specific than a literal
account transcript’s descriptors because the specific actions they
represent are often explained in greater detail in the IRM. Put in plain
English, people might find it easier to understand literal account
transcripts, but have access to more information in a TXMODA
transcript.
With that brief detour out of the way, we turn back to definition
of “seriously delinquent tax debt.”
2. Section 7345(b)(1) — Unpaid, Legally Enforceable
Federal Tax Liability
The introductory text of section 7345(b)(1) provides that the term
“seriously delinquent tax debt” means “an unpaid, legally enforceable
Federal tax liability of an individual” that meets certain requirements
(discussed further below). There is no dispute that, as of the time of the
section 7345 certifications, each of the Beltons had an unpaid, legally
enforceable federal tax liability (putting to the side the Beltons’
challenge to the underlying liability that we addressed above). Thus,
the introductory text of section 7345(b)(1) was satisfied at the time of
the certification.
3. Section 7345(b)(1)(A) — Assessment
Section 7345(b)(1)(A) provides that the tax liability underlying a
section 7345 certification must have been assessed. Section 6201(a)(1)
directs the Secretary of the Treasury to “assess all taxes determined by
the taxpayer or by the Secretary as to which returns or lists . . . are
made.” An assessment is made when the IRS makes an entry in its
books that the taxpayer owes tax. I.R.C. § 6203; Hibbs v. Winn, 542 U.S.
88, 100 (2004); Baltic v. Commissioner, 129 T.C. 178, 183 (2007).
The Commissioner provided literal account transcripts for the
relevant years to demonstrate that the IRS had assessed the amounts
shown on the Beltons’ Notices of Certification as seriously delinquent
14 “TXMODA” is the command code that is entered into IDRS to obtain the
transcript. Kaeckell, 2002 Tax Ct. Memo LEXIS 119, at *5 n.2.
16
[*16] tax debt before the date of certification. 15 The Beltons do not
contend otherwise. Therefore, the assessment requirement of
subparagraph (A) was met at the time of the section 7345 certifications.
4. Section 7345(b)(1)(B) — Threshold Amount
Section 7345(b)(1)(B) provides that the tax debt underlying a
section 7345 certification must exceed $50,000. Under section 7345(f),
at the time the Beltons’ section 7345 certifications were made, this
amount had increased to $52,000 to account for inflation. Rev. Proc.
2018-57, § 3.59.
Including interest and penalties that had been assessed, when the
Commissioner made the two section 7345 certifications, Mr. Belton
owed at least $66,779 in assessed, unpaid federal tax liabilities and Ms.
Belton owed at least $64,556 in assessed, unpaid federal tax liabilities. 16
Therefore, the threshold amount requirement of subparagraph (B) was
met at the time of certification (assuming the remaining requirements
of section 7345(b)(1) are met for each year). 17
15On the Beltons’ literal account transcripts for the relevant years, transaction
code “150” followed by the descriptor “Tax return filed” or “Amended return filed”
shows an assessment of tax. Additional transaction codes on their literal account
transcripts for the relevant years, such as code “300” accompanied by the descriptor
“Additional tax assessed by examination,” code “196” accompanied by the descriptor
“Interest charged for late payment,” or code “276” accompanied by the descriptor
“Penalty for late payment of tax,” each followed by a dollar amount, show other times
when the Commissioner assessed tax. See Roberts v. Commissioner, 118 T.C. 365, 371
n.10 (2002) (recognizing that an Appeals officer’s reliance on account transcripts to
verify assessment was not an abuse of discretion), aff’d per curiam, 329 F.3d 1224 (11th
Cir. 2003).
16 In general, interest continues to run on a tax debt until it is paid. I.R.C. § 6601.
17 The Beltons’ literal account transcripts reflect that the Beltons made certain
small payments on their debt after the date of the section 7345 certifications.
Additionally, the amounts they owed for 2006 and 2007 were written off after the
certifications because of the expiration of the limitations period. The literal account
transcript for each year contains two entries that read “Passport certified seriously
delinquent tax debt reversal.” The Commissioner explains that “petitioners have no
liabilities remaining for tax years 2006 and 2007, and their certifications for those
years have been systemically reversed.” Resp’t’s Mot. for Summ. J. 6 n.4.
As a result of these events, the total amount of one or both of the Beltons’
seriously delinquent tax debts may have dropped below the threshold in
section 7345(b)(1)(B) after the date of the certifications. But this does not suggest that
the certifications were erroneous or that they should have been reversed. Once a valid
17
[*17] 5. Section 7345(b)(1)(C) — Procedural Requirements
In our section 7345 jurisprudence, we have not yet had occasion
to address in detail the specific requirements of subparagraph (C) of
section 7345(b)(1). Subparagraph (C) provides two different paths for
the Commissioner to meet the remaining definitional requirements of
section 7345(b)(1).
Specifically, the Commissioner must demonstrate that, with
respect to the liabilities underlying the section 7345 certification, either
“(i) a notice of lien has been filed pursuant to section 6323 and the
administrative rights under section 6320 with respect to such filing have
been exhausted or have lapsed, or (ii) a levy is made pursuant to section
6331.” I.R.C. § 7345(b)(1)(C) (emphasis added). Either of these paths,
alone, is sufficient to meet the procedural requirements of subparagraph
(C) for a particular year at issue.
The text of clause (i) plainly states that a notice of lien must have
been filed and that the taxpayer’s administrative rights with respect to
the notice of lien filing must have lapsed or been exhausted. But the
reference to section 6323 evinces additional requirements. Not only
must a notice of lien have been filed, but the notice must have been filed
“pursuant to section 6323.” I.R.C. § 7345(b)(1)(C)(i); see also I.R.C.
§ 6323(f). 18 Similarly, clause (ii) provides that levy must have been
“made pursuant to section 6331.” I.R.C. § 7345(b)(1)(C)(ii). We therefore
must determine what Congress meant by the words “pursuant to” and
what they demand of the Commissioner when making a section 7345
certification. See Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002)
(“As in all statutory construction cases, we begin with the language of
the statute.”).
When the words of a statute are plain, they should be accorded
their usual significance. See Old Colony Tr. Co. v. Commissioner, 301
U.S. 379, 383 (1937); see also Food Mktg. Inst. v. Argus Leader Media,
139 S. Ct. 2356, 2362, 2364 (2019). When an action is taken “pursuant
certification is made, section 7345(c)(1) and (2) provides that a debt ceases to be a
seriously delinquent debt only if (as relevant here) the debt “has been fully satisfied or
has become legally unenforceable.” (Emphasis added.) Since at least some of the
Beltons’ debt remains outstanding and legally enforceable, this requirement has not
been satisfied.
18 In general, section 6323(f) provides rules for the proper filing of a federal tax
lien. I.R.C. § 6323(a) (providing that such a lien “shall not be valid . . . until notice
thereof which meets the requirements of subsection (f) has been filed”).
18
[*18] to” the terms of, in this case, a statute, that action is “done in
consequence or in prosecution” of the statute; the action is “agreeable”
to the statute and in “conform[ance]” and “accord[ ]” with it; the actor
“follow[ed]” its terms. See Old Colony Tr. Co. v. Commissioner, 301 U.S.
at 383 (quoting Pursuant to, Webster’s New International Dictionary,
Unabridged (2d ed. 1935)) (answering the question of whether a trustee
acted “pursuant to” the terms of a trust agreement); see also Conoco, Inc.
v. Skinner, 970 F.2d 1206, 1215 (3d Cir. 1992) (relying on the definition
of the phrase “pursuant to” set forth in Old Colony in applying another
statute using that phrase).
As in Old Colony, we take the phrase “pursuant to” as used in
clauses (i) and (ii) to mean that, to make a section 7345 certification
properly, the Commissioner must have acted in accordance with the
terms of sections 6323 and 6331, respectively. Cf. Brownstone v. United
States, 465 F.3d 525, 531 (2d Cir. 2006) (observing that actions taken
“in violation of” a provision are not “pursuant to” that provision (citing
Old Colony Tr. Co. v. Commissioner, 301 U.S. at 383–84)). 19 Put another
way, the Commissioner may not properly make a section 7345
certification if, in attempting to meet either the lien or levy
requirements of subparagraph (C), he contravened the terms of either
section 6323 or section 6331, as applicable. And, if he did so anyway,
such a certification would have been erroneous. See Rowen, 156 T.C.
at 111 (“[A]n action is ‘erroneous’ if it is ‘[i]ncorrect’ or ‘inconsistent with
the law or the facts.’ ” (quoting Erroneous, Black’s Law Dictionary (10th
ed. 2014))).
Having considered the text of the statute and our role in
reviewing whether the Commissioner met the specific requirements of
19 Cf. McNeil v. United States, No. CV 20-329, 2021 WL 1061221, at *5 (D.D.C.
Mar. 18, 2021) (“Section 7345 defines ‘seriously delinquent tax debt’ as ‘an unpaid,
legally enforceable Federal tax liability of an individual’ that has been ‘assessed,’ is
‘greater than $50,000’ and is subject to a notice of lien or a levy. 26 U.S.C. § 7345(b)(1).
The provision’s focus on these characteristics—nonpayment, enforceability,
assessment, an amount over $50,000, and the appropriate lien or levy—suggests that
they are the proper focus of the Court’s determination under § 7345(e).” (Emphasis
added.)), aff’d per curiam sub nom. McNeil v. Dep’t of State, No. 21-5161, 2022 WL
4349598 (D.C. Cir. Sept. 20, 2022); McNeil, 2022 WL 4349598, at *1 (“Assuming the
truth of appellant’s allegations, they fail to support a plausible claim that he does not
have an unpaid, legally enforceable Federal tax liability above the statutory threshold
amount, or that the other elements of a seriously delinquent tax debt under 26 U.S.C.
§ 7345(b)(1) are not met.” (Emphasis added.)).
19
[*19] subparagraph (C) of section 7345(b)(1) in making a section 7345
certification, we turn next to whether he did so in the Beltons’ case.
a. Clause (i) — Notice of Federal Tax Lien and
Exhaustion or Lapse of Administrative Rights
For the taxable years 2004, 2005, 2006, 2007, 2008, 2009, and
2012, the Commissioner provided literal account transcripts to show
that the IRS filed notices of federal tax liens for those years in
accordance with section 6323. 20 Nothing in the transcripts suggests any
defect with respect to the notices, nor do the Beltons allege that there
were any defects. The transcripts also show that the Beltons’
administrative rights under section 6320 have been exhausted or have
lapsed. This is sufficient to establish that the Commissioner satisfied
the requirements of section 7345(b)(1)(C)(i) for 2004, 2005, 2006, 2007,
2008, 2009, and 2012. See generally United States v. Chem. Found., Inc.,
272 U.S. 1, 14–15 (1926) (“The presumption of regularity supports the
official acts of public officers, and, in the absence of clear evidence to the
contrary, courts presume that they have properly discharged their
official duties.”).
The amounts of the unpaid tax liabilities outstanding for Mr. and
Ms. Belton just for the years for which the IRS filed a notice of federal
tax lien — $42,898 and $40,675, respectively — are insufficient (by
themselves) to justify the Commissioner’s certifications of the Beltons’
tax debts as seriously delinquent. Therefore, for one or more of the
taxable years underlying his section 7345 certifications for which the
Commissioner did not meet the conditions of clause (i) (relating to the
liens), the Commissioner must show that he met the conditions of clause
(ii) (relating to levies).
b. Clause (ii) — Levy Made
The Commissioner alleges in his Motion (as supplemented) that,
as of the time of the section 7345 certifications, he had made levies
20 For example, the descriptor accompanying transaction code “582” on the
Beltons’ literal account transcripts states “Lien placed on assets due to balance owed,”
which means that the IRS filed a Notice of Federal Tax Lien. Transaction code “971”
is a miscellaneous code that is used with various explanations of transactions. As
relevant to the liens here, the various descriptors on the Beltons’ transcripts state:
“Issued notice of lien filing and right to Collection Due Process hearing,” “Collection
due process request received timely,” and “Collection due process (hearing) resolved by
Appeals—Notice of Determination letter issued, you waived judicial review or
withdrew the hearing request.”
20
[*20] pursuant to section 6331 with respect to the Beltons’ unpaid tax
liabilities for the relevant years. If the Commissioner can demonstrate
how this was done based on the record he has placed before us, he will
have satisfied the conditions of clause (ii) of subparagraph (C), and the
procedural requirements of subparagraph (C) of section 7345(b)(1) will
have been met. As we now explain, we conclude that his Motion shows
such satisfaction as to 2010 and 2014, but not as to 2015.
i. Requirements of Clause (ii)
Nested within clause (ii) are two specific requirements: first, that
levy actually was made (that is, the issuance to the taxpayer of a notice
of intent to levy would not suffice for this purpose), and, second, that the
levy was made properly.
As to the actual making of a levy, section 7701(a)(21) provides
that “[t]he term ‘levy’ includes the power of distraint and seizure by any
means,” but the term “levy” is not otherwise defined in the Code. The
Treasury Regulations offer an indication of how a levy is made: “Levy
may be made by serving a notice of levy on any person in possession of,
or obligated with respect to, property or rights to property subject to
levy, including receivables, bank accounts, evidences of debt, securities,
and salaries, wages, commissions, or other compensation.” Treas. Reg.
§ 301.6331-1(a)(1). The regulations explain that such notice may be
served by mail. Id. para. (c) (“A notice of levy may be served by mailing
the notice to the person upon whom the service of a notice of levy is
authorized . . . . In such a case the date and time the notice is delivered
to the person to be served is [generally] the date and time the levy is
made.”). The Supreme Court has elaborated on this definition, stating:
Levy upon tangible property normally is effected by service
of forms of levy or notice of levy and physical seizure of the
property. Where that is not feasible, the property is posted
or tagged. Because intangible property is not susceptible
of physical seizure, posting, or tagging, levy upon it is
effected by serving the appropriate form upon the party
holding the property . . . .
G.M. Leasing Corp. v. United States, 429 U.S. 338, 350 (1977) (first
citing Treas. Reg. § 301.6331-1(a)(1); and then citing Phelps v. United
States, 421 U.S. 330, 335–37 (1975)).
As to the proper making of a levy (i.e., for a levy to be “pursuant
to section 6331”), it must not contravene the terms of that section. This
21
[*21] includes any of the section 6331 rules that protect taxpayers
against a levy action. See, e.g., I.R.C. § 6331(k).
ii. The Commissioner’s Position
The Commissioner’s June 7, 2021, Motion originally pointed to
the Beltons’ literal account transcripts to show he satisfied the
conditions of clause (ii). 21 Specifically, the Commissioner argued that
the descriptor “First Levy Issued on Module” proved that the core
condition of clause (ii) was met — i.e., that the Commissioner had
actually made a levy with respect to the liabilities underlying the section
7345 certifications. 22
To further support his position, the Commissioner supplemented
his Motion and provided TXMODA transcripts for the Beltons’ 2010,
2014, and 2015 taxable years. The Commissioner draws our attention
to two action codes—action codes “600” and “640”—that appear on those
transcripts.
The IRM explains that action code 600 is displayed on modules
for tax accounts that are included in the State Income Tax Levy
Program, or “SITLP.” IRM 5.19.9.2.1(4) (Oct. 20, 2016). The SITLP is
an automated levy program under which the proceeds of a taxpayer’s
state income tax refund can be applied to a federal tax liability. (Not all
states participate in SITLP, but Louisiana does.) The IRM also
indicates that action code 600 will only appear when “the levy has been
served.” Id. We take this to mean that action code 600 is generated
21 The descriptors accompanying transaction code 971 on the Beltons’ literal
account transcripts state: “Collection due process Notice of Intent to Levy—Issued”;
“Collection due process Notice of Intent to Levy—return receipt signed”; “First Levy
Issued on Module”; “Account match for federal levy payment program”; “Collection due
process levy (hearing) request or levy and lien (hearing) request received”; “Collection
due process equivalent (hearing) request received”; “Collection due process (hearing)
resolved by Appeals—Notice of Determination letter issued, you waived judicial review
or withdrew the hearing request”; and “Collection due process equivalent (hearing)
resolved by Appeals—decision letter issued or you withdrew the hearing request.”
22 “A Tax Module is a record of tax data for a specific taxpayer covering only
one tax period.” IRM 4.71.2.2(4) (Oct. 29, 2019). The tax modules for each taxpayer
are maintained in a “Master File” that IRS employees can access through IDRS. IRM
4.71.2.2(1)–(3); see also Hawkins v. Commissioner, T.C. Memo. 2008-168, 2008 WL
2736247, at *1 n.4 (referring to the “Individual Master File Tax Modules reflecting
petitioner’s account in the [IRS]’s computer system”).
22
[*22] when the state is notified that the Commissioner wishes to levy
upon a taxpayer’s state income tax refund.
Action code 640 is explained in IRM 5.19.1.5.19.5(1) and (2) (Dec.
26, 2017). The IRM states that “[Transaction code] 971 [action code]
640, has been created to identify tax periods for which levy action has
occurred. . . . This transaction code will be systemically uploaded,
beginning January 2017, the first time a module has been included on
levy actions occurring after this date.” Id.In the Commissioner’s view, the TXMODA transcripts, and in
particular action codes 600 and 640, are sufficient to establish that the
requirements of clause (ii) have been satisfied for 2010, 2014, and 2015.
iii. Analysis
We begin by noting that the descriptor included in the Beltons’
literal account transcripts—“First Levy Issued on Module”—does not
have enough specificity to tell us what the Commissioner actually did
and how he met the statutory requirements. That descriptor by itself
does not prove compliance with section 7345(b)(1)(C)(ii).
Turning next to the TXMODA transcripts, and bearing the
presumption of regularity in mind, we agree that, absent any allegations
or evidence that the levies were improper, action codes 600 and 640
would usually suffice to show that the Commissioner properly levied
upon the taxpayers’ right to receive any state income tax refund by
providing notice to the appropriate state official.
After reviewing the Beltons’ TXMODA transcripts for 2010 and
2014, we conclude that the Commissioner has shown that he met the
requirements of section 7345(b)(1)(C)(ii) for those years by sending
notice to the appropriate official for the State of Louisiana levying on
the Beltons’ right to receive any state income tax refund. The Beltons
do not appear to dispute this conclusion.
But for 2015 the Beltons’ TXMODA transcript and literal account
transcript contain entries that raise questions about the validity of the
Commissioner’s levy. And the Commissioner has offered no account of
those entries, as described further below.
Turning to the Commissioner’s evidence for 2015, we note that
the “First Levy Issued on Module” descriptor on the literal account
transcript is dated June 12, 2017, which corresponds with the date for
23
[*23] action code 640 on the TXMODA transcript. Action code 600 on
the TXMODA transcript is dated April 10, 2017.
The Beltons’ account transcripts for 2015 indicate that the
Beltons were pursuing collection alternatives around the same time the
levy was made. A literal account transcript entry on March 21, 2017,
states that there was a “[p]ending installment agreement.” In what
seems to be a contradiction, a second entry suggests that the installment
agreement was “removed” the same day, while a third suggests that it
was “removed” a month later, on April 18, 2017. Also on April 18, 2017,
the IRS seems to have “[r]eceived [an] offer in compromise” from the
Beltons, which it ultimately “denied” on March 15, 2018. 23
As we have said, section 7345(b)(1)(C)(ii) requires that “a levy [be]
made pursuant to section 6331.” Section 6331 in turn sets out
requirements that a levy must satisfy. As relevant here, section 6331(k)
provides that no levy may be made (1) during the period that an offer-
in-compromise or an offer for an installment agreement is pending,
(2) during the period in which an installment agreement is in effect, or
(3) during the 30 days following the rejection of an offer-in-compromise
or an offer for an installment agreement. I.R.C. § 6331(k)(1) and (2).
There may very well be an explanation for the entries on the
Beltons’ 2015 account transcripts that is consistent with section 6331.
But the Commissioner has not undertaken to provide it. For example,
the Commissioner has not explained whether an installment agreement
or an offer for an installment agreement was pending as of the levy date,
or whether the levy was made during the 30 days following the rejection
of an offer for an installment agreement. The Commissioner also has
not explained the significance of the Beltons’ April 18, 2017, offer-in-
compromise request in light of action code 600 (dated April 10, 2017)
and action code 640 (dated June 12, 2017). The obligation to provide
such explanations rests with the party seeking summary judgment. See
Rowen, 156 T.C. at 115–16 (collecting authorities); see also Rule 121(d);
Schneider v. Kissinger, 412 F.3d 190, 200 n.1 (D.C. Cir. 2005) (“[A]
litigant has an obligation to spell out its arguments squarely and
distinctly . . . .” (quoting United States v. Zannino, 895 F.2d 1, 17 (1st
23 Matching entries appear on the literal account transcripts for all of the
relevant years, suggesting that the Beltons sought collection alternatives with respect
to all their outstanding liabilities. And the literal account transcripts for 2006 reflect
that the Beltons made payments totaling approximately $6,500 dollars on April 17,
2017. It is unclear from the transcript whether the payments were associated with a
collection alternative.
24
[*24] Cir. 1990))). We are therefore unable to conclude at present that
the Commissioner made levy “pursuant to section 6331” for taxable year
2015. See I.R.C. § 7345(b)(1)(C)(ii).
6. Summary
A table summarizing the components of the Beltons’ seriously
delinquent tax debt and the Commissioner’s collection efforts at the time
he made the section 7345 certifications follows.
25
[*25] Notice of Federal
Mr. Belton’s Ms. Belton’s
Tax Lien Filed or
Year Seriously Delinquent Seriously Delinquent
Levy Properly
Tax Debt Tax Debt
Made? 24
2004 $7,795 $7,795 Notice of lien
2005 25 10,444 10,444 Notice of lien
2006 26 7,424 7,424 Notice of lien
2007 26 7,358 7,358 Notice of lien
2008 4,611 4,611 Notice of lien
2009 3,043 3,043 Notice of lien
2010 3,346 3,346 Levy
2012 27 2,223 — Notice of lien
2014 2,556 2,556 Levy
2015 28 Unconfirmed Unconfirmed Unconfirmed
Total $48,800 $46,577
For the taxable years 2004, 2005, 2006, 2007, 2008, 2009, and
2012, the Commissioner issued notices of federal tax liens in accordance
with section 6323. For the taxable years 2010 and 2014, the
Commissioner levied pursuant to section 6331 on the Beltons’ right to
As discussed above, for years where a notice of tax lien was filed we need not
24
determine whether levy was properly made.
25 Because they did not timely file their 2005 tax return, the Commissioner
prepared a separate substitute for return for the each of the Beltons for that year.
Based on the substitute return initially prepared for Ms. Belton, Ms. Belton’s Notice
of Certification includes an additional $2,891 unpaid tax liability for the taxable year
2005, not shown here. Upon acceptance of a joint return filed by the Beltons, this
additional liability was abated but erroneously included in Ms. Belton’s Notice of
Certification. This error would have been harmless if the Commissioner had shown
that levy was properly made for 2015 because Ms. Belton’s unpaid tax liabilities, not
including the additional 2005 liability, would still exceed the threshold in
section 7345(b)(1)(B) and (f).
26 As discussed above, shortly after the Commissioner made the section 7345
certifications, the unpaid account balances for the taxable years 2006 and 2007 were
written off because the periods of limitations on collection for those years had expired.
But we evaluate the certifications without regard to the writeoff. See supra note 17.
27 See supra note 6.
28 The Commissioner has not yet demonstrated how the $17,979 shown on the
Beltons’ Notices of Certification for 2015 qualifies as seriously delinquent tax debt.
26
[*26] receive their state income tax refunds. But the Commissioner has
not yet shown that he made levy “pursuant to section 6331” for the
taxable year 2015, and thus we cannot include the outstanding liability
for that year in the calculations to determine compliance with section
7345(b)(1)(B) and (f). Therefore, the Commissioner has not yet shown
that, when he made the section 7345 certifications, the Beltons had
seriously delinquent tax debt of more than $52,000 for the relevant
years.
To summarize, we find that, on the basis of the arguments made
by the Commissioner in his Motion, as supplemented, and the record he
has submitted so far, summary judgment is not appropriate as to the
issue of whether the section 7345 certifications were properly made. We
note in closing that our holding today does not preclude the
Commissioner from filing another motion for summary judgment to
demonstrate, through the record currently before the Court or through
the introduction of other evidence, that levy was properly made with
respect to the taxable year 2015, either under the SITLP process or some
other levy procedure. But, given the important consequences that may
follow from the Commissioner’s certification that an individual has a
seriously delinquent tax debt—namely, the potential revocation (or
denial) of a passport and the concomitant loss of the ability to travel
outside the country—it is important for this Court to ensure that the
Commissioner has strictly complied with the conditions Congress
established in the statute.
III. Conclusion
In light of the discussion above, we will grant the Commissioner’s
Motion as supplemented insofar as it relates to the issue of our
jurisdiction to review the liability underlying the section 7345
certifications, deny the Commissioner’s Motion as supplemented insofar
as it relates to whether the section 7345 certifications were properly
made, without prejudice to renew the same, and deny the Beltons’
Motion.
To reflect the foregoing,
An appropriate order will be issued.