Raymond B. Magana v. Commissioner

118 T.C. No. 30UNITED STATES TAX COURT
RAYMOND B. MAGANA, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10306-00L. Filed May 31, 2002.
Held: Under sec. 6330(c)(4), I.R.C., in this
judicial proceeding involving respondent’s proposed
collection activity, petitioner is precluded from
relitigating a statute of limitations issue that was
previously adjudicated in a related District Court
proceeding. Respondent’s motion for summary judgment
with regard thereto is granted.
Held, further, in our review for an abuse of
discretion under sec. 6330(d)(1), I.R.C., of
respondent’s determination, generally we consider only
arguments, issues, and other matter that were raised at
the collection hearing or otherwise brought to the
attention of the Appeals Office. This case does not
involve an allegation of recent, unusual illness or
hardship, or other special circumstance, that might
cause us to make an exception to the general rule set
forth herein and to consider petitioner’s new hardship
argument.
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Paul H. Durham, for petitioner.
William F. Castor, for respondent.
OPINION
SWIFT, Judge: This matter is before us on respondent’s
motion under Rule 121 for summary judgment. Petitioner
challenges respondent’s Appeals Office determination sustaining
the filing of Federal tax liens relating to petitioner’s $472,532
assessed and unpaid Federal income tax deficiency for 1980.
Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code as applicable to the
year in issue.
The issues for decision on respondent’s motion for summary
judgment are whether we, in reviewing respondent’s notice of
determination under section 6330(d)(1) for an abuse of
discretion: (1) May consider a statute of limitations contention
that was asserted by petitioner and adjudicated against
petitioner in a prior District Court proceeding; and (2) shall
consider a new issue that was not raised by petitioner at his
collection hearing with respondent’s Appeals Office.
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Background
At the time the petition was filed, petitioner resided in
Bartlesville, Oklahoma.
Based on an amended Federal income tax return filed by
petitioner for 1980, on April 23, 1984, respondent assessed
against petitioner the above $472,532 Federal income tax
deficiency.
In November of 1988, petitioner submitted an offer in
compromise that was rejected by respondent. In October of 1990,
the statute of limitations on collection under section 6502 was
amended to provide a 10-year period from the date of assessment
for the collection of Federal taxes (extended from 6 years).
Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508, sec.
11317(a)(1), 104 Stat. 1388-458.
On May 19, 1995, the United States brought an action in the
District Court for the Northern District of Oklahoma to reduce to
judgment respondent’s above $472,532 unpaid Federal income tax
assessment against petitioner for 1980. United States v. Magana,
No. 95-CV-462-K (N.D. Okla., Jan. 26, 2000). In the above
District Court proceeding, petitioner asserted that the period of
limitations on collection of petitioner’s unpaid tax liability
for 1980 had expired as of May 19, 1995, the day on which the
above suit was filed by the United States against petitioner.
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On or about November 19, 1999, respondent mailed to
petitioner copies of Forms 668(Y)(c), Notices of Federal Tax
Liens (lien filings), that respondent, on November 19, 1999, had
filed in various counties in Oklahoma with respect to
petitioner’s above unpaid $472,532 tax liability for 1980.
On December 22, 1999, petitioner requested in writing from
respondent’s Appeals Office a collection hearing under section
6320 seeking release of respondent’s lien filings relating to
petitioner.
In petitioner’s request for a collection hearing, petitioner
asserted only that the period of limitations on collection under
section 6502 of petitioner’s unpaid tax liability for 1980 had
expired and therefore that respondent’s lien filings with regard
thereto were untimely and improper. Petitioner did not indicate
any other basis for his challenge to the appropriateness of
respondent’s lien filings. Petitioner did not allege hardship,
and petitioner did not offer any alternative to the lien filings.
On January 26, 2000, in United States v. Magana, supra, the
District Court granted the United States’ motion for summary
judgment, and on February 22, 2000, the District Court entered a
judgment against petitioner in favor of the United States in the
amount of $472,532 with respect to petitioner’s unpaid tax
liability for 1980.
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In its ruling on the United States’ motion for summary
judgment relating to petitioner’s unpaid tax liability for 1980,
the District Court concluded that the period of limitations on
collection of petitioner’s tax liability for 1980 remained open.
United States v. Magana, supra.1
Petitioner’s motion for rehearing was denied in the above
District Court case, and petitioner did not appeal the District
Court judgment. On June 18, 2000, that judgment became final.
Fed. R. App. P. 4(a)(1)(B). In United States v. Magana, supra,
petitioner was represented by counsel.
During petitioner’s collection hearing with respondent’s
Appeals Office, petitioner, by way of counsel, again asserted the
same statute of limitations contention. Also during the
collection hearing, petitioner did not allege hardship, and
petitioner did not wish to discuss any alternatives to the lien
filings. Respondent’s Appeals Office memorandum expressly states
in this regard that petitioner’s counsel “did not desire a
discussion with regard to alternatives” to the lien filings and
“Therefore, Appeals is unable to make an alternative
determination that is less intrusive” than the lien filings.
1
The District Court’s ruling was based on the execution by
petitioner of an extension of the period of limitations on
collection, on an offer in compromise submitted by petitioner to
respondent, and on the referred-to statutory extension of the
period of limitations on collection from 6 years to 10 years.
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On August 31, 2000, respondent’s Appeals Office mailed to
petitioner a notice of determination in which respondent’s lien
filings were sustained. In the above notice of determination,
with regard to the statute of limitations contention asserted by
petitioner, respondent’s Appeals Office concluded that the period
of limitations on collection had not expired. Also in the notice
of determination, respondent’s Appeals Office concluded that,
because petitioner did not wish to discuss any collection
alternatives and because petitioner did not raise any concerns
regarding collection other than the statute of limitations, the
lien filings balanced the need for efficient collection of taxes
with the legitimate concerns of petitioner that the lien filings
be no more intrusive than necessary.
On September 29, 2000, petitioner timely filed a petition
herein for our review of the above notice of determination. In
his petition, petitioner reiterated his claim that the period of
limitations on collection had expired with respect to his tax
liability for 1980 and therefore that respondent’s lien filings
were untimely and improper. The basis for petitioner’s statute
of limitations contention was that he allegedly had not executed
an extension of the period of limitations on the collection of
petitioner’s unpaid tax liability for 1980.
Also in his petition, petitioner, for the first time, raised
hardship as an objection to respondent’s lien filings (namely,
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petitioner’s physical illness and the resulting cloud on title to
petitioner’s residence, petitioner’s only significant asset).
Petitioner makes no other argument with regard to the propriety
of respondent’s notice of determination.
On February 13, 2002, at the hearing before us on
respondent’s motion for summary judgment, petitioner’s counsel
acknowledged that petitioner’s ill health was not recent but had
extended back over 20 years. Further, at that hearing, in
response to a question from the Court as to why hardship had not
been raised at petitioner’s collection hearing or otherwise
brought to the attention of respondent’s Appeals Office,
petitioner’s counsel acknowledged that he had had an opportunity
at the collection hearing to raise hardship but that he had
chosen not to do so.
Discussion
Statute of Limitations
Respondent argues that under section 6330(c)(4) and under
the principle of collateral estoppel petitioner is precluded in
this case from asserting that no effective extension to extend
the period of limitations on collection of petitioner’s unpaid
tax liability for 1980 was executed by petitioner. We agree with
respondent.
Section 6330(c)(4) expressly provides that taxpayers, at
collection hearings before respondent’s Appeals Office, may not
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raise issues that were previously raised by taxpayers and
considered in any other administrative or judicial proceeding in
which the taxpayers meaningfully participated. See secs.
301.6320-1(e)(1), 301.6330-1(e)(1), Proced. & Admin. Regs. These
statutory and regulatory prohibitions are directly applicable to
the statute of limitations contention that petitioner previously
litigated in United States v. Magana, No. 95-CV-462-K (N.D.
Okla., Jan. 26, 2000), that he sought to raise at his collection
hearing, and that he now asks this Court to consider.2
Petitioner is precluded from raising the statute of
limitations contention.
New Issue
As indicated, petitioner for the first time in his petition
raised hardship as an objection to respondent’s lien filings.
In respondent’s motion for summary judgment, respondent
asserts that, under the abuse of discretion standard that applies
to our review of respondent’s lien filings, petitioner’s new
ground for opposing respondent’s lien filings (namely, hardship)
is not properly before this Court.
2
Also, based on collateral estoppel, petitioner would be
precluded from relitigating in this Court the statute of
limitations contention that was adjudicated in the District Court
proceeding. See Graham v. Commissioner, 76 T.C. 853, 856-857
(1981); see also Gass v. United States, 4 Fed. Appx. 565, 568
(10th Cir. 2001) (applying collateral estoppel to bar the
taxpayers’ claims previously litigated in the Tax Court).
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Under section 6330(d)(1), respondent’s notices of
determination generally are to be reviewed only for an abuse of
discretion. Lunsford v. Commissioner, 117 T.C. 183, 185 (2001);
Nicklaus v. Commissioner, 117 T.C. 117, 120 (2001); Davis v.
Commissioner, 115 T.C. 35, 39 (2000); Sego v. Commissioner, 114
T.C. 604, 609-610 (2000); Goza v. Commissioner, 114 T.C. 176,
181-182 (2000) (citing H. Conf. Rept. 105-599, at 266 (1998),
1998-3 C.B. 755, 1020); MRCA Info. Servs. v. United States, 145
F. Supp. 2d 194, 198 (D. Conn. 2000).
Under that standard of review, generally it would be
anomalous and improper for us to conclude that respondent’s
Appeals Office abused its discretion under section 6330(c)(3) in
failing to grant relief, or in failing to consider arguments,
issues, or other matter not raised by taxpayers or not otherwise
brought to the attention of respondent’s Appeals Office. McCoy
Enters., Inc. v. Commissioner, 58 F.3d 557, 563 (10th Cir. 1995)
(“The Tax Court * * * cannot find an abuse of discretion where
there is no evidence that the Commissioner exercised any
discretion at all”), affg. T.C. Memo. 1992-693; Estate of Chimblo
v. Commissioner, T.C. Memo. 1997-535, affd. 177 F.3d 119 (2d Cir.
1999); see also secs. 301.6320-1(f)(2), Q&A-F5, 301.6330-1(f)(2),
Q&A-F5, Proced. & Admin. Regs.
Accordingly, in our review for an abuse of discretion under
section 6330(d)(1) of respondent’s determination, generally we
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consider only arguments, issues, and other matter that were
raised at the collection hearing or otherwise brought to the
attention of the Appeals Office.
In this case, because petitioner’s alleged longstanding
illness and hardship were not raised as an issue and were not
otherwise brought to respondent’s attention in connection with
petitioner’s collection hearing with respondent’s Appeals Office,
petitioner may not now raise hardship for the first time before
this Court. Petitioner herein has not established any credible
basis for us to make an exception to the above general rule. See
The Inner Office, Inc. v. United States, No. 3:00-CV-2576-L, 2001
U.S. Dist. LEXIS 20617, at *5-6 (Magis. N.D. Tex., Dec. 11, 2001)
(“In seeking * * * [judicial] review of a Notice of
Determination, the taxpayer can only ask the court to consider an
issue that was raised in the taxpayer’s * * * [collection]
hearing.”), adopted on this issue 89 AFTR 2d 2002-1311 (N.D. Tex.
2002); see also Miller v. Commissioner, 115 T.C. 582, 589 n.2
(2000) (“we would not consider * * * [taxpayer’s] alternative
request * * * because the record does not establish that he
raised that issue at his Appeals Office hearing”), affd.
per curiam 21 Fed. Appx. 160 (4th Cir. 2001); Sego v.
Commissioner, supra at 612 (“Matters raised after a hearing do
not reflect on whether the determinations that are the basis of
this petition were an abuse of discretion.”).
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This case does not involve an allegation of recent, unusual
illness or hardship, or other special circumstance, that might
cause us to make an exception to the general rule set forth
herein and to consider petitioner’s new hardship argument.
Further, under section 6334(a)(13) and (e), respondent may not
levy upon petitioner’s principal residence without approval of a
Federal District Court.3
For the reasons stated, we shall grant respondent’s motion
for summary judgment.
An appropriate order and
decision will be entered.
3
Also, we note that this case does not involve a claim under
sec. 6015 for relief from joint and several liability, and the
general rule set forth herein is not intended to control the
issue of whether such a claim under sec. 6015 may be raised in a
collection proceeding under sec. 6330(d)(1) for the first time in
this Court. We leave that question for another day.