Joseph P. Freije v. Commissioner

131 T.C. No. 1

• Court: United States Tax Court
• Decided: July 7, 2008
• Docket: 17294-07L
• Status: Unknown

Opinion

131 T.C. No. 1

UNITED STATES TAX COURT

JOSEPH P. FREIJE, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 17294-07L. Filed July 7, 2008.

The issue is whether R’s determination upholding the notice of Federal tax lien (NFTL) issued to P, which was based upon P’s income tax liability for 1999, was an abuse of discretion. P argues we do not have jurisdiction because the 1999 tax year was before the Court in an earlier case. See Freije v. Commissioner, 125 T.C. 14 (2005) (Freije I). P also takes the position that no tax is due for 1999. R counters that Freije I did not reach the assessment in this case, that the assessment in this case was not decided in Freije I, and that the underlying tax liability cannot be before this Court because P failed to petition the Court after receiving the notice of deficiency for 1999.

Held: Freije I addressed an assessment for 1999 made without the issuance of a notice of deficiency, and the assessment based upon the notice of deficiency - 2 -

for 1999 was not addressed in Freije I. The second assessment created a distinct right of hearing subject to a separate review by this Court.

Held, further, the second notice of determination issued regarding 1999 is a valid basis for our jurisdiction and Freije I does not foreclose the collection action for 1999 addressed in the present case.

Held, further, R’s determination to proceed with the NFTL to collect P’s tax liability for 1999 was not an abuse of discretion.

Joseph P. Freije, pro se.

Diane L. Worland, for respondent.

GOEKE, Judge: This matter is before the Court on (1)

petitioner’s motion for summary judgment, (2) respondent’s cross-

motion for summary judgment, pursuant to Rule 121,1 and (3)

petitioner’s motion to dismiss for lack of jurisdiction, as

supplemented. The issue involves respondent’s determination

upholding the notice of Federal tax lien (NFTL) arising from

petitioner’s income tax liability for 1999. For the reasons

explained herein, we shall grant respondent’s motion for summary

1 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 amended. - 3 -

judgment, deny petitioner’s motion for summary judgment, and deny

supplemented.

FINDINGS OF FACT

At the time the petition was filed, petitioner resided in

Indiana.

Petitioner was involved in a prior case before this Court,

Freije v. Commissioner, 125 T.C. 14 (2005) (Freije I). The

resolution of that case has some bearing on the pending motions

in this case. In Freije I the Court found that respondent could

not proceed with a proposed levy with respect to petitioner’s

1997, 1998, and 1999 tax years as set forth in the notice of

determination issued November 26, 2001. In addition in Freije I,

the Court directed respondent to proceed with a series of account

transfers and payment postings.

Subsequently, in an order dated May 9, 2007, the Court

determined that it did not have jurisdiction in Freije I to

address respondent’s collection activity related to the NFTL

which is the subject of the case at hand.

The relationship between Freije I and this case has

confused petitioner primarily because he failed to accept the May

9, 2007, order. The resolution in Freije I did not address the

Federal income tax liability which is the subject of the present

case. The liability in Freije I arose from the disallowance of - 4 -

claimed estimated tax payments and the disallowance of certain

itemized deductions. Certain of the disallowed deductions should

not have been the basis for assessment before the issuance of a

notice of deficiency. The liability in this case arose after the

issuance of a notice of deficiency dated March 11, 2002 (the

notice of deficiency). In the notice of deficiency respondent

disallowed certain costs reflected on Schedule C, Profit or Loss

From Business, filed as part of petitioner’s 1999 tax return,

adjustments respondent had not previously made. No petition was

filed in response to the notice of deficiency, and on February 3,

2003, respondent assessed the deficiency of $27,457 for 1999.

The disputed notice of determination in Freije I was issued on

November 26, 2001, and did not include the assessment on February

3, 2003.

The present case involves respondent’s efforts to collect

the balance of the assessment of February 3, 2003. On January

25, 2007, respondent filed an NFTL at the County Recorder’s

Office, Johnson County, Franklin, Indiana, with the taxpayers

listed as petitioner and his spouse and reflecting the liability

as an unpaid balance of $27,331.16 for 1999.

Petitioner timely requested a hearing upon receiving notice

of the NFTL filing. The declaration of the settlement officer

assigned to petitioner’s case indicates that petitioner did not

submit a proposed installment agreement, an offer-in-compromise, - 5 -

any claim for spousal defenses, nor any collection alternatives

to the NFTL. The declaration further indicates that the

settlement officer verified that the procedural requirements of

assessment were met and that the required notification to

petitioner was timely. Petitioner has not offered any argument

or assertion that is inconsistent with these declarations.

Petitioner’s request for an administrative hearing demonstrates

that petitioner simply maintained that on the basis of Freije I

no collections could be made for 1999.

On July 12, 2007, respondent sent petitioner a notice of

determination sustaining the NFTL filed on January 25, 2007. On

July 30, 2007, petitioner timely petitioned this Court.

On September 26, 2007, petitioner filed a motion for summary

judgment. Respondent filed a response to petitioner’s motion for

summary judgment on October 19, 2007, and simultaneously filed a

motion for summary judgment. On November 16, 2007, petitioner

filed his response to respondent’s motion for summary judgment.

On January 22, 2008, petitioner filed a motion to dismiss for

lack of jurisdiction, as supplemented on February 20, 2008.

On February 11, 2008, this case was called for hearing on

the parties’ pending motions. Petitioner appeared and was heard.

At the conclusion, the Court took all pending motions under

advisement for disposition. - 6 -

OPINION

Jurisdiction and Res Judicata

Section 6320(c) incorporates the procedures of section

6330(d) in proceedings where the Commissioner has filed an NFTL.

Section 6330(d) provides that this Court has jurisdiction to

review a timely filed petition after the issuance of a notice of

determination. Respondent issued a notice of determination on

July 12, 2007, regarding the NFTL filed. This determination did

not concern the same assessment involved in Freije I. Petitioner

timely filed a petition with this Court.

Despite these facts supporting our jurisdiction, petitioner

maintains that we do not have jurisdiction because Freije I

should have addressed all collection issues regarding 1999.

Petitioner fails to recognize that Freije I involved respondent’s

efforts to collect via a levy, and the present case involves a

lien action. Separate hearings are permitted for lien and levy

collection actions. Secs. 6320(b)(2), 6330(b)(2). Petitioner’s

argument also raises a question which goes beyond jurisdiction--

whether the outcome in Freije I bars any further collection

action for 1999 as a matter of res judicata.

Freije I did not address the second assessment for 1999, as

the Court explained in its order of May 9, 2007. We recognized

that it was not necessary or appropriate, for the Court lacked

jurisdiction to address the subsequent assessment for 1999; that - 7 -

petitioner would be provided an opportunity for a new collection

review hearing for the second assessment; and that Freije I

related only to the first assessment.

In deficiency cases it has long been recognized that “the

Tax Court’s jurisdiction, once it attaches, extends to the entire

subject of the correct tax for the particular year.” Erickson v.

United States, 159 Ct. Cl. 202, 309 F.2d 760, 767 (1962). “As a

general rule, * * * where the Tax Court has entered a decision

for a taxable year, both the taxpayer and the Commissioner (with

certain exceptions) are barred from reopening that year.”

Hemmings v. Commissioner, 104 T.C. 221, 233 (1995). Petitioner

in effect argues for the imposition of this rule in the context

of our jurisdiction under sections 6320 and 6330. For the

reasons set forth below, petitioner’s position is incorrect.

Section 6320(b)(2) provides that “A person shall be entitled

to only one hearing under this section with respect to the

taxable period to which the unpaid tax specified in subsection

(a)(3)(A) relates.” The Secretary promulgated section 301.6320-

1(d)(2), Q&A-D1, Proced. & Admin. Regs., which provides:

(2) Questions and answers.--The questions and answers illustrate the provisions of this paragraph (d) as follows:

Q-D1. Under what circumstances can a taxpayer receive more than one CDP hearing under section 6320 with respect to a tax period?

A-D1. The taxpayer may receive more than one CDP hearing under section 6320 with respect to a tax period - 8 -

* * * where the same type of tax for the same period is involved, but where the amount of the unpaid tax has changed as a result of an additional assessment of tax (not including interest or penalties) for that period * * *

If a taxpayer was not permitted a second administrative hearing

as a result of an additional assessment, petitioner’s argument

that Freije I resolves this case would be more significant. If

that were the case, it might be expected that the Court would

have jurisdiction over all assessments for the year at issue in

order to ensure that the taxpayer was afforded judicial review of

all of the assessments. However, the regulation offers taxpayers

a separate review where, as in this case, there is a distinct

assessment.

Sections 6320 and 6330 address situations where the

Commissioner is attempting to collect tax that has been assessed.

Since in certain circumstances the Commissioner may assess tax

more than once for the same tax period, it is quite reasonable

that a taxpayer can have a separate opportunity for a hearing

regarding each of the distinct assessments. Respondent is

properly proceeding here under a new assessment which makes

different adjustments than were made under the prior assessment.

We held the first assessment to be procedurally flawed because it

included more than adjustments based on mathematical errors and

was made without issuance of a notice of deficiency. Before

making the second assessment, which was based on different - 9 -

adjustments from the first, respondent sent the notice of

deficiency. Therefore, Freije I does not control the outcome in

this case.

Summary Judgment

Summary judgment is intended to expedite litigation and

avoid unnecessary and expensive trials. Fla. Peach Corp. v.

Commissioner, 90 T.C. 678, 681 (1988). The Court may grant

summary judgment where there is no genuine issue of 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), affd. 17 F.3d 965 (7th Cir. 1994). The moving party

bears the burden of proving that there is no genuine issue of

material fact, and the Court will view any factual material and

inferences in the light most favorable to the nonmoving party.

Dahlstrom v. Commissioner, 85 T.C. 812, 821 (1985). Rule 121(d)

provides that where the moving party properly makes and supports

a motion for summary judgment, “an adverse party may not rest

upon the mere allegations or denials of such party’s pleading,”

but must set forth specific facts, by affidavits or otherwise,

“showing that there is a genuine issue for trial.”

Section 6320(b) provides that a taxpayer having received

notice from the Secretary of the filing of an NFTL under section

6323 shall have a right to a fair administrative hearing before

the Internal Revenue Service Office of Appeals. Section 6320(c) - 10 -

provides that an Appeals Office hearing generally shall be

conducted consistently with the procedures set forth in section

6330(c), (d), and (e).

This Court cannot consider the merits of the underlying tax

liability associated with the second assessment for 1999 because

this assessment was based upon the notice of deficiency, and

there is no assertion that petitioner did not receive the notice

of deficiency. To the contrary, respondent has produced a copy

of the notice of deficiency and a copy of U.S. Postal Service

Form 3877, Firm Mailing Book for Accountable Mail, which

demonstrates that the notice of deficiency was mailed to

petitioner at the mailing address shown on the petition and on

the notice of determination. That address is petitioner’s

address of record in this case. Accordingly, under section

6330(c)(2)(B) petitioner was not authorized to raise the

underlying liability at his Appeals Office hearing, and we may

not consider it. See Goza v. Commissioner, 114 T.C. 176 (2000).

Where the validity of the underlying tax liability is not

properly at issue, we will review the Commissioner’s

administrative determination for an abuse of discretion. Sego v.

Commissioner, 114 T.C. 604, 610 (2000). There is no basis for an

abuse of discretion argument because petitioner did not raise any

issues before the settlement officer other than the underlying

liability, which was barred by section 6330(c)(2)(B), as - 11 -

explained above, and the settlement officer properly weighed the

intrusiveness of the proposed collection action against the need

for the efficient collection of taxes.

Petitioner makes numerous other arguments about respondent’s

conduct and the actions of this Court. Petitioner also seeks

sanctions against respondent. None of these arguments has merit

because they are not relevant to the Court’s analysis of the

present controversy.

Accordingly, we are satisfied that no genuine issue of

material fact exists requiring trial and thus summary judgment is

appropriate, and that respondent’s determination to sustain the

lien filing was not an abuse of discretion. Thus, we will grant

respondent’s motion for summary judgment and deny petitioner’s

motion for summary judgment. Further, we find that this Court has

jurisdiction as to the 1999 tax year. Accordingly, we will deny

To reflect the foregoing,

An appropriate order and

decision will be entered.