Dudley and Dorothy Moorhous v. Commissioner

116 T.C. No. 20UNITED STATES TAX COURT
DUDLEY AND DOROTHY MOORHOUS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10761-00L. Filed April 23, 2001.
On Mar. 16, 1999, R mailed to P-H a final notice
of intent to levy concerning P-H’s unpaid tax
liabilities for the years 1987 through 1992 and 1997.
On Apr. 27, 1999, R mailed to P-W a final notice of
intent to levy concerning P-W’s unpaid tax liabilities
for the years 1989 through 1992. On May 10, 1999, Ps
filed a joint request for an administrative hearing
with the Internal Revenue Service Office of Appeals
(Appeals Office). P-H failed to file his request for
an administrative hearing within the 30-day period
prescribed in sec. 6330, I.R.C.
Despite P-H’s failure to file a timely request for
an Appeals Office hearing, R granted P-H a so-called
equivalent hearing. P-W was granted an administrative
hearing pursuant to sec. 6330, I.R.C. On Oct. 6, 2000,
R issued a “decision letter” to P-H stating that R
would proceed with collection against him. On Oct. 6,
2000, R issued a determination letter to P-W stating
that R would proceed with collection against her and
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informing her of her right to challenge the
determination in Court. On Oct. 16, 2000, Ps filed a
joint petition for review with the Court. In response
to the petition, R filed a motion to dismiss for lack
of jurisdiction as to P-H and to strike as to certain
taxable years.
Held: R’s decision to conduct a so-called
equivalent hearing did not result in a waiver by R of
the time restrictions imposed upon P-H for requesting
an Appeals Office hearing pursuant to sec. 6330, I.R.C.
Kennedy v. Commissioner, 116 T.C. __ (2001), followed.
Held, further, insofar as the petition filed
herein purports to be a petition for review filed by P-
H, the Court lacks jurisdiction on the ground that R
did not issue a determination letter to P-H pursuant to
sec. 6330, I.R.C., due to P-H’s failure to file a
timely request for an Appeals Office hearing under sec.
6330(a)(2) and (3)(B) and (b), I.R.C.
Held, further, R was not barred from issuing
separate notices of intent to levy to P-H and P-W
despite the fact that they may have filed joint returns
for the years in issue. The term “person” as used in
sec. 6330, I.R.C., does not require R to treat a
husband and wife who filed a joint return for a
particular year as a single unit.
John F. Rodgers, for petitioners.
Jeffrey E. Gold, for respondent.
OPINION
RUWE, Judge: This case was assigned to Special Trial Judge
Robert N. Armen, Jr., pursuant to the provisions of section
7443A(b)(4) and Rules 180, 181, and 183.1 The Court agrees with
1
Unless otherwise indicated, all section references are to
(continued...)
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and adopts the Opinion of the Special Trial Judge, which is set
forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
ARMEN, Special Trial Judge: This matter is before the Court
on respondent’s Motion To Dismiss For Lack Of Jurisdiction And To
Strike With Respect To Dudley Moorhous And As To Taxable Years
1987, 1988, and 1997. As explained in detail below, we shall
grant respondent’s motion.
Background
On or about March 16, 1999, respondent mailed to petitioner
Dudley Moorhous a Final Notice Of Intent To Levy And Notice Of
Your Right To A Hearing (notice of intent to levy) concerning his
unpaid tax liabilities for the years 1987 through 1992 and 1997.2
Petitioner Dudley Moorhous received the notice of intent to levy
on March 18, 1999, as reflected on the U.S. Postal Service Form
3811, Domestic Return Receipt, that was executed upon delivery of
the notice. On or about April 27, 1999, respondent mailed to
petitioner Dorothy Moorhous a notice of intent to levy concerning
1
(...continued)
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
2
The notice of intent to levy stated that petitioner
Dudley Moorhous owed amounts from prior notices, additional
penalties, and interest totaling $24,944.87, $21,014.05,
$17,849.47, $10,228.66, $9,947.46, $19,333.82, and $101.23 for
the years 1987, 1988, 1989, 1990, 1991, 1992, and 1997,
respectively.
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her unpaid tax liabilities for the years 1989 through 1992.3
There is no dispute that the above-described notices of intent to
levy were mailed to petitioners’ last known address. See sec.
6330(a)(2)(C). Both of the above-described notices of intent to
levy stated in pertinent part: “If you don’t pay the amount you
owe, make alternative arrangements to pay, or request Appeals
consideration within 30 days from the date of this letter, we may
take your property”.
On May 10, 1999, petitioners filed with the Internal Revenue
Service Office of Appeals (Appeals Office) a joint request for a
collection hearing, Form 12153, with respect to their tax
liabilities for the years 1987 through 1992 and 1997. Although
the Appeals Office concluded that petitioner Dudley Moorhous
failed to file his request for a hearing within the time
prescribed in section 6330, the Appeals Office granted petitioner
Dudley Moorhous a so-called equivalent hearing. See sec.
301.6330-1T(i), Temporary Proced. & Admin. Regs., 64 Fed. Reg.
3413 (Jan. 22, 1999).
On October 6, 2000, the Appeals Office issued to petitioner
Dudley Moorhous a “decision letter” stating that respondent would
3
The notice of intent to levy stated that petitioner
Dorothy Moorhous owed amounts from prior notices, additional
penalties, and interest totaling $17,909.98, $10,266.83,
$9,980.32, and $19,400.89, for the years 1989, 1990, 1991, and
1992, respectively.
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proceed with collection by way of levy for the years 1987 through
1992 and 1997. The decision letter stated in pertinent part:
Your due process hearing request was not filed within
the time prescribed under Section 6320 and/or 6330.
However, you received a hearing equivalent to a due
process hearing except that there is no right to
dispute a decision by the Appeals Office in court under
IRC Sections 6320 and/or 6330.
On October 6, 2000, the Appeals Office issued to petitioner
Dorothy Moorhous a Notice of Determination Concerning Collection
Action(s) Under Sections 6320 and/or 6330 (notice of
determination). The notice of determination stated that
petitioner Dorothy Moorhous was not eligible for an offer-in-
compromise. The notice of determination further stated that
respondent would proceed with collection with respect to
petitioner Dorothy Moorhous’ tax liabilities for the years 1989
through 1992 and that petitioner Dorothy Moorhous would have 30
days to file a petition with the Tax Court contesting the matter.
On October 16, 2000, petitioners filed with the Court a
joint Petition For Lien Or Levy Action Under Code Sections
6320(c) Or 6330(d). See Rule 331(b). The petition states in
pertinent part that petitioners challenge petitioner Dudley
Moorhous’ individual liabilities for the years 1987 and 1988 and
petitioners’ joint liabilities for the years 1989 through 1992
and 1997. The petition includes an allegation that respondent
erred in failing to decide the offer-in-compromise that
petitioners filed with respondent in 1997.
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In response to the petition, respondent filed a Motion To
Dismiss For Lack Of Jurisdiction And To Strike With Respect To
Dudley Moorhous And As To Taxable Years 1987, 1988, And 1997.
Respondent asserts that the Court lacks jurisdiction with respect
to petitioner Dudley Moorhous on the ground that the “decision
letter” issued to him does not constitute a determination letter
sufficient to invoke the Court’s jurisdiction pursuant to section
6330(d). Respondent contends that petitioner Dorothy Moorhous is
the only proper petitioner before the Court. However, respondent
asserts that the Court lacks jurisdiction with respect to
petitioner Dorothy Moorhous as to the taxable year 1997 on the
ground that neither the notice of intent to levy nor the
determination letter that was issued to her included that taxable
year.4
Petitioner Dudley Moorhous filed an objection to
respondent’s motion to dismiss asserting: (1) Respondent failed
to file his motion to dismiss in a timely manner; (2) where a
husband and wife have filed a joint return, the term “person” as
used in section 6330 should be read as referring to both husband
and wife, thereby barring respondent from issuing separate
notices of intent to levy to petitioners; and (3) to the extent
4
Originally, respondent asserted that the Court lacks
jurisdiction with respect to petitioner Dorothy Moorhous as to
the taxable years 1987, 1988, and 1997. However, respondent
later modified his position, as discussed in the text, infra.
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that respondent’s determination letter to petitioner Dorothy
Moorhous rejected petitioners’ joint offer-in-compromise,
petitioner Dudley Moorhous should be permitted to file a petition
challenging the determination letter.
This matter was called for hearing at the Court’s motions
session held in Washington, D.C. Counsel for both parties
appeared at the hearing and offered argument in respect of
respondent’s motion to dismiss. During the hearing, counsel for
respondent clarified that respondent’s motion to dismiss and to
strike should only have requested that the taxable year 1997 be
stricken, inasmuch as the petition clearly states that
petitioners are challenging petitioner Dudley Moorhous’
individual liability for the taxable years 1987 and 1988 and not
petitioner Dorothy Moorhous’ liability for those years.
Discussion
Section 6331(a) provides that if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by way of a levy upon the person’s property.
Section 6331(d) provides that at least 30 days prior to
proceeding with enforced collection by way of a levy on a
person's property, the Secretary is obliged to provide the person
with a final notice of intent to levy, including notice of the
administrative appeals available to the person.
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In the Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, sec. 3401, 112 Stat. 685, 746, Congress
enacted new sections 6320 (pertaining to liens) and 6330
(pertaining to levies) to provide protections for taxpayers in
tax collection matters. Section 6330 generally provides that the
Commissioner cannot proceed with enforced collection by way of
levy until the taxpayer has been given notice of and the
opportunity for an administrative review of the matter (in the
form of an Appeals Office hearing) and, if dissatisfied, the
taxpayer may seek judicial review of the administrative
determination. See Davis v. Commissioner, 115 T.C. 35, 37
(2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000).
Section 6330(a) provides in pertinent part that the
Secretary shall notify a person in writing of his or her right to
an Appeals Office hearing regarding a notice of intent to levy by
mailing such notice by certified or registered mail, return
receipt requested, to such person’s last known address. Section
6330(a)(2) provides that the prescribed notice shall be provided
not less than 30 days before the day of the first levy with
respect to the amount of the unpaid tax for the taxable period.
Further, section 6330(a)(3)(B) provides that the prescribed
notice shall explain that the person has the right to request an
Appeals Office hearing during the 30-day period under paragraph
(2).
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Section 6330(c) prescribes the matters that may be raised by
a taxpayer at an Appeals Office hearing. In sum, section 6330(c)
provides that a taxpayer may raise collection issues such as
spousal defenses, the appropriateness of the Commissioner's
intended collection action, and possible alternative means of
collection, such as an offer-in-compromise. Section
6330(c)(2)(B) provides that the existence and amount of the
underlying tax liability can be contested at an Appeals Office
hearing only if the taxpayer did not receive a notice of
deficiency for the taxes in question or did not otherwise have an
earlier opportunity to dispute such tax liability. See Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,
supra.
Where the Appeals Office issues a determination letter to a
taxpayer following an administrative hearing regarding a notice
of intent to levy, section 6330(d)(1) provides that the taxpayer
will have 30 days following the issuance of such determination
letter to file a petition for review with the Tax Court or
Federal District Court. See Offiler v. Commissioner, 114 T.C.
492, 498 (2000). We have held that the Court’s jurisdiction
under sections 6320 and 6330 depends on the issuance of a valid
determination letter and the filing of a timely petition for
review. See Meyer v. Commissioner, 115 T.C. 417, 421 (2000);
Offiler v. Commissioner, supra at 498.
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1. Petitioner Dudley Moorhous’ Failure To Make a Timely
Request for an Administrative Hearing
On March 16, 1999, respondent issued to petitioner Dudley
Moorhous a notice of intent to levy. Petitioner Dudley Moorhous
received the notice of intent to levy on March 18, 1999, as
reflected on the U.S. Postal Service Form 3811 that was executed
upon delivery of the notice. The notice informed petitioner
Dudley Moorhous that he had 30 days from the date of the notice
to file a request for an Appeals Office hearing.
On April 27, 1999, respondent issued to petitioner Dorothy
Moorhous a notice of intent to levy.
On or about May 10, 1999, petitioners submitted to the
Appeals Office a joint request for a hearing. The 30-day period
prescribed in section 6330(a)(2) and (3)(B) during which
petitioner Dudley Moorhous had to file a timely request for an
Appeals Office hearing expired no later than Monday, April 19,
1999. Because petitioners’ joint request for an Appeals Office
hearing was not timely with respect to the notice of intent to
levy issued to petitioner Dudley Moorhous, the Appeals Office was
not obliged to provide him with the administrative hearing
contemplated under section 6330. On the other hand, because
petitioners’ joint request for an Appeals Office hearing was
timely with respect to the notice of intent to levy issued to
petitioner Dorothy Moorhous, the Appeals Office was obliged to
provide her with a section 6330 hearing.
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2. Equivalent Hearing
In lieu of a hearing under section 6330(b), the Appeals
Office granted petitioner Dudley Moorhous a so-called equivalent
hearing. Consistent with the Court’s holding in Kennedy v.
Commissioner, 116 T.C. ___ (2001), we hold that the decision to
conduct an equivalent hearing did not result in a waiver by
respondent of the time restrictions within which petitioner
Dudley Moorhous was required to request an Appeals Office hearing
under section 6330.5
3. Decision Letter
On October 6, 2000, following the equivalent hearing, the
Appeals Office issued to petitioner Dudley Moorhous a decision
letter stating that respondent would proceed with collection
against him. The decision letter unambiguously states that the
equivalent hearing was not intended to serve as an Appeals Office
hearing within the meaning of section 6330. On the other hand,
on October 6, 2000, the Appeals Office issued to petitioner
Dorothy Moorhous a determination letter stating that she would be
permitted to seek review of the matter in court.
5
In Kennedy v. Commissioner, 116 T.C. ___ (2001), we noted
that sec. 6330 does not authorize the Commissioner to waive the
time restrictions imposed therein. Further, in Offiler v.
Commissioner, 114 T.C. 492, 498 (2000), we indicated that where
the taxpayer failed to file a timely request for an Appeals
Office hearing regarding a notice of intent to levy, an Appeals
Office review of the taxpayer’s case pursuant to the Collection
Appeals Program did not result in a determination within the
meaning of sec. 6320 or sec. 6330.
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As previously discussed, because petitioner Dudley Moorhous
failed to file a timely request for an Appeals Office hearing,
the Appeals Office was not obliged to conduct such a hearing. In
this regard, the decision letter issued to petitioner Dudley
Moorhous was not, and did not purport to be, a determination
letter pursuant to section 6320 or section 6330. See Kennedy v.
Commissioner, supra; Offiler v. Commissioner, supra at 495.
Consistent with the foregoing, we shall grant respondent’s
motion to dismiss for lack of jurisdiction as to petitioner
Dudley Moorhous on the ground that the Appeals Office did not
issue a determination letter to petitioner Dudley Moorhous
pursuant to section 6330 due to petitioner Dudley Moorhous’
failure to file a timely request for an Appeals Office hearing
pursuant to section 6330(a)(2) and (3)(B) and (b). In addition,
we shall strike all references in the petition to the taxable
years 1987 and 1988 because those years relate solely to
petitioner Dudley Moorhous; likewise, we shall strike all
references to the taxable year 1997 because (1) such year relates
to petitioner Dudley Moorhous and (2) that year was not included
in the notice of intent to levy and the determination letter that
were issued to petitioner Dorothy Moorhous.
4. Petitioners’ Arguments
Petitioners contend that because petitioners filed joint
returns for a number of the years in issue, the term “person” as
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used in section 6330 should be read as referring to both husband
and wife as a single unit, thereby barring respondent from
issuing separate notices of intent to levy to them.
Petitioners’ contention finds no support in the express
language of section 6330. Simply put, section 6330 does not
direct the Commissioner to treat a husband and wife who have
filed a joint return as a single person for purposes of that
provision. Moreover, petitioners’ argument conflicts with
section 6013(d), which provides that “if a joint return is made,
the tax shall be computed on the aggregate income and the
liability with respect to the tax shall be joint and several.”
Because a husband and wife are treated as jointly and severally
liable for the tax due on a joint return, it follows that the
Commissioner may elect to pursue one or both the spouses for the
collection of the tax. Under the circumstances, we hold that
respondent was free to issue a separate notice of intent to levy
to petitioner Dudley Moorhous before issuing a similar notice to
petitioner Dorothy Moorhous.6 Because petitioners are not
treated as one person under section 6330, petitioner Dudley
6
Indeed, in 1998, the Congress directed the Commissioner to
send, whenever practicable, any notice relating to a joint return
under sec. 6013 separately to each individual filing the joint
return. See Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, sec. 3201(d), (g)(1), 112 Stat.
685, 740.
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Moorhous may not join in challenging the determination letter
issued to petitioner Dorothy Moorhous.
Petitioners also contend that to the extent that
respondent’s determination letter to petitioner Dorothy Moorhous
served as a rejection of petitioners’ joint offer-in-compromise,
petitioner Dudley Moorhous should be permitted to file a petition
challenging the determination letter. Again, petitioners’
argument finds no support in section 6330. Although section
6330(c)(2)(A)(iii) provides that a taxpayer may make an
offer-in-compromise during an Appeals Office hearing, there is no
support for petitioners’ contention that petitioner Dudley
Moorhous should be relieved of the obligation to comply with the
time requirements for filing an Appeals Office hearing pursuant
to section 6330(a). In the end, petitioners’ position begs the
question why petitioner Dudley Moorhous did not timely file a
request for an administrative hearing in response to the notice
of intent to levy issued to him.
As final matter, we reject petitioners’ argument that
respondent’s motion to dismiss is untimely. It is well settled
that questions of jurisdiction may be raised by either party or
the Court sua sponte at any stage of the proceedings. See Smith
v. Commissioner, 96 T.C. 10, 13-14 (1991).
Consistent with the preceding discussion, we shall grant
respondent’s motion in that we shall dismiss this case for lack
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of jurisdiction as to petitioner Dudley Moorhous, and all
allegations in the petition pertaining to the taxable years 1987,
1988, and 1997 will be deemed to be stricken therefrom.
In order to reflect the foregoing,
An appropriate order granting
respondent’s motion to dismiss for
lack of jurisdiction and to strike
will be issued.