S & M Trust No. 1 v. Comm'r

T.C. Memo. 2008-72
UNITED STATES TAX COURT
S & M TRUST NO. 1, MARGARETTE S. MCMAHAN, TRUSTEE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Docket No. 12279-07L. Filed March 25, 2008.
Margarette S. McMahan, Trustee, for petitioner.
Gordon P. Sanz, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GOEKE, Judge: This case is before the Court on petitioner’s
motion to vacate order of dismissal for lack of jurisdiction. On
June 15, 2007, respondent filed a motion to dismiss for lack of
jurisdiction on the grounds that no notice of determination under
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section 6320 or section 63301 was sent to petitioner for the tax
years 1993, 1994, and 1995 that would confer jurisdiction on this
Court. Petitioner filed an opposition to the motion. On August
10, 2007, the Court entered an order of dismissal and decision
granting respondent’s motion to dismiss for lack of jurisdiction,
finding that because petitioner received no section 6320 hearing
and respondent did not make a determination pursuant to section
6330, the Court lacked jurisdiction to review the Federal tax
liens in this case. For the reasons stated herein, we will deny
petitioner’s motion.
FINDINGS OF FACT
At the time this petition was filed, petitioner was a trust
with an address in Goliad, Texas.
On March 14, 2007, respondent filed a notice of Federal tax
lien (NFTL) against assets held in the name of petitioner, as
nominee, transferee, and/or alter ego of James K. (deceased) and
Margarette S. McMahan (the McMahans). The NFTL listed unpaid
balances of $59,970.80, $24,019.60, and $63,917.83 as income tax
liabilities of the McMahans for tax years ending 1993, 1994, and
1995 respectively.
1
Unless otherwise indicated, section references are to the
Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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Petitioner sought reconsideration from the Internal Revenue
Service’s (IRS) Collection Appeals Program. On May 8, 2007, the
Collection Appeals Program issued a closing letter which stated
that following a review of petitioner’s case, it was determined
that the area director was correct that the NFTLs should be
filed. In addition, the letter served as notification that the
matter was closed in the Appeals Office. On May 30, 2007,
petitioner filed with this Court a petition challenging the lien
determinations with respect to income tax the McMahans owed for
1993, 1994, and 1995.
OPINION
This Court is a court of limited jurisdiction, and we may
exercise judgment only to the extent authorized by Congress.
Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Section 6321 provides that all property and rights to
property of a taxpayer become subject to a lien when demand for
payment of taxes has been made and the taxpayer fails to pay
those taxes. Section 6320(a) provides that the Secretary shall
furnish the taxpayer with a written notice within 5 business days
after the NFTL is filed. This written notice informs the
taxpayer of the right to request an administrative hearing on the
matter. The taxpayer then may seek judicial review of the
determination made after the hearing. See Davis v. Commissioner,
115 T.C. 35, 37 (2000); Goza v. Commissioner, 114 T.C. 176, 179
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(2000). Upon the Appeals Office’s issuance of a determination
letter, the taxpayer who seeks judicial review may appeal to this
Court within 30 days of the determination. Section 6320(c)
requires that the administrative hearing be conducted pursuant to
section 6330(c), (d) (other than paragraph (2)(b) thereof), and
(e). In order to invoke judicial review of a section 6320
determination, a taxpayer must be the person liable for the tax
under section 6321 and must have received from the IRS a valid
notice of determination based on a section 6320 hearing. See
Offiler v. Commissioner, 114 T.C. 492, 498 (2000); see also Rule
330(b).
Regulations promulgated under section 6320 state that known
nominees of, or persons holding property of, the taxpayer are not
entitled to a collection due process or equivalent hearing. Sec.
301.6320-1(b)(2), Q&A-B5, Proced. & Admin. Regs. Individuals not
entitled to a section 6320 review are entitled to other forms of
review, including reconsideration by the IRS office collecting
the tax, assistance from the National Taxpayer Advocate, or an
administrative hearing before the Appeals Office under the
Collection Appeals Program. Id. Any determination resulting
from these reviews, however, is not subject to judicial review.
Id. The taxpayer for whom a nominee, transferee, or alter ego is
holding property is entitled to a hearing under section 6320.
Sec. 301.6320-1(b)(3), Example (2), Proced. & Admin. Regs.
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Failure to provide a taxpayer with notice of the filing of an
NFTL will serve as a basis for dismissal. Kennedy v.
Commissioner, T.C. Memo. 2008-33.
Respondent argues that petitioner is a nominee, transferee,
and/or alter ego of Margarette McMahan and has not received a
determination sufficient to invoke this Court’s jurisdiction.
Petitioner argues that under State law both petitioner and
Ms. McMahan are one and the same and that if we treat petitioner
and Ms. McMahan as one under State law, then there is no alter
ego or nominee, and Ms. McMahan as the taxpayer liable for the
tax due is entitled to a section 6320 hearing.
Neither petitioner nor respondent has stated whether a
notice was sent to Ms. McMahan as the individual liable for the
taxes that gave rise to the NFTL. Although a dismissal for lack
of jurisdiction may be based on failure to provide notice of the
filing of an NFTL, Kennedy v. Commissioner, supra, we decline to
address petitioner’s arguments. The issue of whether Ms. McMahan
is entitled to a section 6320 hearing is not properly before this
Court, as it is not relevant to the issue of whether we have
jurisdiction to hear petitioner’s appeal of the Collection
Appeals Program’s closing letter.
We lack jurisdiction to review the filing of the NFTL
because petitioner, as Ms. McMahan’s nominee, transferee, and/or
alter ego, has not received a determination based on a section
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6320 hearing sufficient to invoke judicial review. See Orum v.
Commissioner, 123 T.C. 1 (2004), affd. 412 F.3d 819 (7th Cir.
2005); Sarrell v. Commissioner, 117 T.C. 122, 125 (2001); Offiler
v. Commissioner, supra.
Accordingly, we will deny petitioner’s motion to vacate our
order of dismissal for lack of jurisdiction.
To reflect the foregoing,
An appropriate order will
be issued.