Derrick Barron Tartt v. Commissioner

T.C. Memo. 2019-112
UNITED STATES TAX COURT
DERRICK BARRON TARTT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4973-18L. Filed September 3, 2019.
Derrick Barron Tartt, pro se.
Mayer Y. Silber and Kerrington A. Hall, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioner
seeks review pursuant to sections 6320(c)1 and 6330(d) of the determination by the
1
All statutory references are to the Internal Revenue Code 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.
-2-
[*2] Internal Revenue Service (IRS or respondent) to uphold the filing of a notice
of Federal tax lien (NFTL). The IRS initiated the collection action with respect to
petitioner’s Federal income tax liabilities for 2013-2015. He contends that he is
not obligated to pay the tax liabilities he reported on those returns because of
claims he has advanced against the U.S. Government in unrelated litigation.
Finding petitioner’s arguments frivolous, we will grant respondent’s motion for
summary judgment and sustain the collection action.
Background
The following facts are derived from the parties’ motion papers, including
the declaration and exhibits accompanying respondent’s motion. See Rule 121(b).
Petitioner resided in Florida when he filed his petition.
A. Petitioner’s Unrelated Litigation
In December 2000 petitioner filed substantially identical complaints against
a hospital and a medical practice, alleging employment discrimination. The U.S.
District Court for the Northern District of Illinois dismissed the first case for fail-
ure to state a claim and failure to prosecute, and it dismissed the second on res
judicata grounds. The U.S. Court of Appeals for the Seventh Circuit affirmed both
judgments. See Tartt v. Nw. Cmty. Hosp., 453 F.3d 817 (7th Cir. 2006).
-3-
[*3] Petitioner then filed a complaint alleging that the participants in the preced-
ing lawsuits--including the defendants, their attorneys, the presiding judges, and
the U.S. Government--had joined in a conspiracy to deprive him of employment
benefits. The Court of Appeals summarily affirmed the dismissal of that action
and imposed sanctions on petitioner for frivolous filings. See Tartt v. Magna
Health Sys., No. 17-1023, 2017 WL 4772538 (7th Cir. Feb. 14, 2017).
B. Proceedings in This Case
For 2013, 2014, and 2015 petitioner filed Federal income tax returns re-
porting taxable income of $159,712, $171,307, and $292,524, respectively. He
calculated the tax due on these amounts but did not pay any portion of the balance
due. For each year the IRS assessed the tax shown as due, additions to tax under
sections 6651 and 6654, and interest. As of May 2017 petitioner’s aggregate un-
paid tax liabilities for 2013-2015 exceeded $217,000.
In an effort to collect these unpaid liabilities the IRS filed an NFTL and, on
May 2, 2017, issued petitioner a Notice of Federal Tax Lien Filing and Your Right
to a Hearing. He timely requested a CDP hearing, stating that he could not pay the
balance and that he had “a Federal lawsuit in which the Government has denied
due process of law that has resulted in loss of millions.” He made no reference to
his 2013-2015 tax liabilities (or anything else relevant to the NFTL filing) but as-
-4-
[*4] serted that he would seek certiorari from the Court of Appeals’ judgment
affirming the dismissal of his conspiracy claims.
His case was assigned to a settlement officer (SO) from the IRS Appeals Of-
fice. The SO verified that the assessments had been properly made, that the IRS
had timely sent notice and demand for payment to petitioner’s last known address,
that there remained a balance due, and that the NFTL filing otherwise complied
with applicable law and administrative procedure. The SO acknowledged receipt
of petitioner’s hearing request and scheduled a telephone conference for August
30, 2017. The SO advised him that she could not consider a collection alternative
unless he submitted a Form 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, with supporting financial information.
Petitioner did not respond to these communications. Nor did he call the SO
at the time of the hearing (or at any other time). The SO then sent him a “last
chance” letter, offering him an additional 14 days to submit the requested informa-
tion and anything else he wished her to consider. Fifteen days later, the SO re-
ceived a letter from petitioner in which he stated: “It’s my position that the United
States owes more than owed, therefore, [I] will not pay any debt to the United
States until the debt owed is settle[d] through the courts or settlement.” He did not
-5-
[*5] otherwise address his tax liabilities for 2013-2015 and supplied no
information bearing on his entitlement to a collection alternative.
Having received no relevant information from petitioner, the SO began to
close the case on the basis of information in the administrative file. While doing
so she noted that petitioner lived in a federally declared disaster area. She called
petitioner and left a voice message asking that he contact her if he wished to
schedule additional CDP proceedings. He never responded. On February 5, 2018,
after the disaster area designation was lifted, the SO closed the case.
On February 15, 2018, the IRS issued petitioner a notice of determination
sustaining the NFTL filing, and he timely petitioned this Court for review. As the
basis for his position he stated: “I dispute the IRS determination letter due to con-
spiracy of the Northern District of Illinois * * * and 7th Circuit Court of Appeals,
State of Illinois, several Federal agencies including the Departments of Treasury,
Defense, Justice, Labor and Commerce, and several corporations * * * to deny
rights and benefits of military and civilian employment that far exceeds any debt
ow[ed] any federal agency.” On April 18, 2019, respondent filed a motion for
summary judgment, to which petitioner responded on June 7, 2019. His response
reiterates his conspiracy claims without addressing the facts or law relevant to
disposition of respondent’s motion.
-6-
[*6] Discussion
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). 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 deciding whether to grant summary judg-
ment, we construe factual materials and inferences drawn from them in the light
most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. 520. How-
ever, the nonmoving party may not rest upon mere allegations or denials of his
pleadings but instead must set forth specific facts showing that there is a genuine
dispute for trial. Rule 121(d); see Sundstrand Corp., 98 T.C. 520. We conclude
that there are no material facts in dispute and that this case is appropriate for sum-
mary adjudication.
B. Standard of Review
Section 6330(d)(1) does not prescribe the standard of review that this Court
should apply in reviewing an IRS administrative determination in a CDP case.
But our case law tells us what standard to adopt. Where the taxpayer’s underlying
-7-
[*7] tax liability is properly before us, we review the SO’s determination de novo.
Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). In all other respects we
review the IRS’ decision for abuse of discretion only. Id. at 182. Abuse of dis-
cretion exists when a determination is “arbitrary, capricious, or without sound
basis in fact or law.” Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d,
469 F.3d 27 (1st Cir. 2006); Holloway v. Commissioner, T.C. Memo. 2007-175,
94 T.C.M. 25, 28, aff’d, 322 F. App’x 421 (6th Cir. 2008).
C. Underlying Tax Liability
A taxpayer may dispute the existence or amount of his underlying liability
in a CDP case if he “did not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute * * * [it].” Sec.
6330(c)(2)(B). Having self-reported his tax liabilities for 2013-2015, petitioner
was entitled to challenge them before the SO. But to mount a proper challenge he
was required to present the SO with evidence that his correct tax liabilities for
2013-2015 were different from the amounts that he reported. See Moriarty v.
Commissioner, T.C. Memo. 2017-204, 114 T.C.M. 441, 443 (“‘An issue is
not properly raised if the taxpayer fails * * * to present to Appeals any evidence
* * * after being given a reasonable opportunity’ to do so.” (quoting section
301.6330-1(f)(2), Q&A-F3, Proced. & Admin. Regs.)), aff’d per order, 2018 WL
-8-
[*8] 4924349 (6th Cir. Sept. 19, 2018); Ligman v. Commissioner, T.C. Memo.
2015-79, 109 T.C.M. 1405, 1406 (holding that taxpayer did not properly
challenge his self-reported liability when he presented the SO with no evidence
regarding it).
In some circumstances a taxpayer may properly challenge his underlying tax
liability by showing that it should be reduced by application of an overpayment
tax credit existing in his account for another year. E.g., Weber v. Commissioner,
138 T.C. 348, 360 (2012); Landry v. Commissioner, 116 T.C. 60, 62 (2001); see
Dixon v. Commissioner, 141 T.C. 173, 184 (2013) (discussing applicable standard
of review). But a taxpayer may do this only where “a credit from another tax year
indisputably exists.” Del-Co W. v. Commissioner, T.C. Memo. 2015-142, 110
T.C.M. 119, 120. “[W]e do not have jurisdiction under section 6330 to
‘determine an overpayment of an unrelated liability.’” Id. (quoting Weber, 138
T.C. 366).
At the CDP hearing petitioner did not contend (or supply evidence) that his
reported 2013-2015 tax liabilities were incorrect. Nor did he allege that he has an
“available credit” from another year that could be applied to reduce those liabi-
lities. See Weber, 138 T.C. 372. Rather, he wishes to offset against those lia-
-9-
[*9] bilities a monetary judgment that he seeks in litigation deemed frivolous by
every court to consider the question.
We lack jurisdiction to consider petitioner’s collateral attack on his 2013-
2015 tax liabilities. Neither the SO nor we have authority to second-guess the de-
cisions of the courts that have ruled against him. Even if we had such jurisdiction,
no legal authority exists for offsetting, against an assessed Federal tax liability, a
claim against the Government in a totally unrelated matter. Because petitioner has
not raised a proper challenge to his underlying tax liabilities, we review the SO’s
determination for abuse of discretion only.
D. Abuse of Discretion
In determining whether the SO abused her discretion we consider whether
she: (1) properly verified that the requirements of any applicable law or admin-
istrative procedure had been met, (2) considered any relevant issues petitioner
raised, and (3) determined whether the “collection action balances the need for the
efficient collection of taxes with the legitimate concern of * * * [petitioner] that
any collection action be no more intrusive than necessary.” See sec. 6330(c)(3).
Our review of the record establishes that the SO clearly satisfied all three require-
ments.
- 10 -
[*10] The SO did not abuse her discretion by declining to consider a collection
alternative and closing this case. Petitioner initially indicated interest in a collec-
tion alternative, but he did not offer one; nor did he supply any of the financial in-
formation necessary to enable the SO to consider one. We have consistently held
that it is not an abuse of discretion for an Appeals officer to reject collection alter-
natives and sustain collection action where (as here) the taxpayer has repeatedly
failed, after being given sufficient opportunities, to make an offer or supply the
necessary forms and information. See, e.g., Solny v. Commissioner, T.C. Memo.
2018-71, at *10; Gentile v Commissioner, T.C. Memo. 2013-175, 106 T.C.M.
(CCH) 75, 77, aff’d, 592 F. App’x 824 (11th Cir. 2014).
E. Frivolous Position Penalty
Section 6673(a)(1) authorizes this Court to impose a penalty not in excess
of $25,000 “[w]henever it appears to the Tax Court” that a taxpayer has instituted
or maintained a proceeding “primarily for delay” or has taken a position that is
“frivolous or groundless.” The purpose of section 6673 is to compel taxpayers to
conform their conduct to settled tax principles and to deter the waste of judicial
resources. See Coleman v. Commissioner, 791 F.2d 68, 71 (7th Cir. 1986);
Bruhwiler v. Commissioner, T.C. Memo. 2016-18, 111 T.C.M. 1071, 1074.
- 11 -
[*11] Petitioner’s arguments are frivolous, and he has wasted considerable re-
sources of respondent and this Court. His conduct is thus deserving of a penalty.
But this appears to be his first appearance in the Tax Court, and we have not yet
had the occasion to advise him of the risk he faced. While we will refrain from
imposing sanctions now, we warn him that we will be less generous in the future.
To reflect the foregoing,
Decision will be entered for
respondent.