Choong H. Koh v. Commissioner

2020 T.C. Memo. 77

• Court: United States Tax Court
• Decided: June 4, 2020
• Docket: 9033-19
• Status: Unpublished

Opinion

T.C. Memo. 2020-77

UNITED STATES TAX COURT

CHOONG H. KOH, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 9033-19. Filed June 4, 2020.

Frank Agostino, for petitioner.

Thomas A. Deamus, for respondent.

MEMORANDUM OPINION

GREAVES, Judge: This matter is before the Court on petitioner’s motion

for judgment on the pleadings under Rule 120(a)1 (motion). Petitioner seeks

1 Unless otherwise noted, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect at all relevant times. -2-

[*2] judgment on the pleadings with respect to “the penalties asserted in paragraph

8 of respondent’s answer.” The Court’s Rules do not provide specifically for

motions for partial judgment on the pleadings; however, the Court has exercised

its discretion to allow a party to move for a judgment on the pleadings as to fewer

than all the issues in a case. See Nis Family Tr. v. Commissioner, 115 T.C. 523,

539 (2000); Brock v. Commissioner, 92 T.C. 1127, 1133 (1989). We deem that

appropriate here, and we will treat the motion as a motion for partial judgment on

the pleadings.

Section 6751(b)(1) provides that the “initial determination” of a penalty

assessment must receive supervisory approval. Petitioner contends that

respondent’s counsel may not make the “initial determination” of a penalty and

that therefore respondent cannot satisfy section 6751(b)(1) with respect to

penalties asserted in an answer. The Court concludes that petitioner’s argument is

without merit. Accordingly, we will deny the motion.

Background

The facts for deciding the motion are straightforward and undisputed in the

pleadings. Petitioner resided in New Jersey at the time he filed the petition.

Respondent sent petitioner and his wife a statutory notice of deficiency

(deficiency notice), which determined the following: -3-

[*3] Penalty Year Deficiency sec. 6662(j) 2012 $25,099.00 $9,760.00 2013 18,301.75 7,182.80

Thereafter, petitioner filed a timely petition in this Court seeking

redetermination of the deficiencies and penalties.2 Respondent filed an answer,

which generally denied petitioner’s assertions. In paragraph 8 of the answer,

respondent’s counsel asserted that, in the alternative to the section 6662(j)

penalties determined in the deficiency notice, petitioner is liable for accuracy-

related penalties under section 6662(b)(1) or (2) for the 2012 and 2013 tax years.

Respondent’s counsel and Associate Area Counsel Brian Bilheimer signed the

answer.

Petitioner filed a reply to the answer wherein he denied the assertions in

paragraph 8 of the answer and contended that respondent’s counsel’s authority to

make an initial determination on penalties in the answer is a question of law.

Thereafter, petitioner filed the motion that is now before the Court.

2 Petitioner’s wife did not join petitioner in filing the petition. -4-

[*4] Discussion

Rule 120 provides that after the pleadings in a case are closed but within

such time as not to delay the trial, a party may move for judgment on the

pleadings. The granting of a motion for judgment on the pleadings is proper only

where the pleadings do not raise a genuine issue of material fact and the moving

party is entitled to judgment as a matter of law. Abrams v. Commissioner, 82 T.C.

403, 408 (1984); Anthony v. Commissioner, 66 T.C. 367 (1976), aff’d without

published opinion, 566 F.2d 1168 (3d Cir. 1977). The sole question presented at

this stage of the proceedings is whether respondent’s counsel may make an initial

determination for purposes of satisfying section 6751(b)(1).3

Section 6751(b)(1) Requirement

Section 6751(b)(1) provides that no penalty shall be assessed unless “the

initial determination of such assessment” was “personally approved (in writing) by

3 In his reply to respondent’s answer, petitioner challenges not only respondent’s counsel’s authority to assert penalties, but also whether respondent’s counsel followed the proper procedure under sec. 6751(b)(1). This second issue may involve factual considerations, and therefore we do not decide it today. We note that the Court has found that an IRS Chief Counsel attorney satisfies the supervisory approval requirement under sec. 6751(b) where the attorney’s immediate supervisor personally approved in writing the assertion of a penalty that was first raised in the answer, as evidenced by the signature of respondent’s associate area counsel on the pleading. See Roth v. Commissioner, T.C. Memo. 2017-248, at *11, aff’d, 922 F.3d 1126 (10th Cir. 2019). -5-

[*5] the immediate supervisor of the individual making such determination.” The

parties do not dispute that respondent’s counsel made the initial section 6662(b)(1)

and (2) penalty determinations in the answer. Rather, the only dispute before us

now is whether respondent’s counsel was authorized to do so.

This is not the first time a taxpayer asked the Court to find that IRS Chief

Counsel attorneys lack the authority to assert penalties in an answer. The Court

rejected this same argument less than three years ago in Roth v. Commissioner,

T.C. Memo. 2017-248, at *10-*11, aff’d, 922 F.3d 1126 (10th Cir. 2019). The

authority of the Chief Counsel (or his delegate) to assert additional penalties in an

answer arises from his role as the IRS’ representative in this Court. Secs. 7803(b),

7452. It is well established that the Commissioner may assert penalties in an

answer. Sec. 6214(a); Chai v. Commissioner, 851 F.3d 190, 221 (2d Cir. 2017),

aff’g in part, rev’g in part T.C. Memo. 2015-42; Graev v. Commissioner, 149 T.C.

485 (2017), supplementing and overruling in part 147 T.C. 460 (2016). It follows

that his representative in this Court also has this authority. Roth v. Commissioner,

at *11; see Rule 142(a); Graev v. Commissioner, 149 T.C. at 491-492, 498; Estate

of Jung v. Commissioner, 101 T.C. 412, 448 (1993). -6-

[*6] Conclusion

We conclude that respondent’s counsel may make an initial determination

for purposes of section 6751(b)(1) in an answer, and we therefore will deny

petitioner’s motion. We considered all of the arguments made by the parties and,

to the extent they are not addressed herein, we find them to be moot, irrelevant, or

without merit.

To reflect the foregoing,

An appropriate order will be issued.