152 T.C. No. 11
UNITED STATES TAX COURT
MARIA IVON MOYA, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13343-15. Filed April 17, 2019.
P assigned no error to R's adjustments underlying his determinations of deficiencies in P's income tax. Rather, P challenges R's determinations on the grounds that, in examining her tax returns, R violated certain rights accorded P by the Taxpayer Bill of Rights adopted by the IRS in 2014.
Held: P, having failed to assign error to R's adjustments or to present any evidence at trial with respect to the adjustments, is deemed to concede them.
Held, further, a proceeding to redetermine a deficiency in tax involves a trial de novo, and P has not persuaded us to deviate from the principle articulated in Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324 (1974), and look behind the notice of deficiency.
Held, further, deficiencies in tax sustained. -2-
Maria Ivon Moya, pro se.
Wesley J. Wong, Andrew J. Davis, Adam W. Dayton, and Thomas R.
Mackinson, for respondent.
OPINION
HALPERN, Judge: By notice of deficiency dated February 23, 2015
(notice), respondent determined deficiencies in petitioner's Federal income tax for
her 2011, 2012, and 2013 taxable years (examination years) of $5,796, $8,707, and
$12,329, respectively, and accuracy-related penalties for those years of $1,159,
$1,741, and $2,466, respectively. Respondent, however, now concedes (and we
accept) that petitioner is not liable for the accuracy-related penalties. The
deficiencies in income tax that respondent determined result principally from his
disallowance of deductions that petitioner claimed in connection with a Schedule
C business of hers and from her failure for one year to include in gross income the
taxable portion of her Social Security benefits. Petitioner assigns no error to
respondent's adjustments to her income. Rather, she challenges respondent's
determinations on the ground that, in conducting his examination of her returns, he
deprived her of rights guaranteed to all taxpayers by the "Tax Payer's Bill of -3-
Rights". Respondent answers that petitioner is impermissibly looking behind the
notice and prays that we deny her relief and sustain his determinations. We agree
with respondent and, except for the accuracy-related penalties, will do as he
requests.
Unless otherwise stated, all section references are to the Internal Revenue
Code of 1986, as amended and in force at all relevant times, and all Rule
references are to the Tax Court Rules of Practice and Procedure. All dollar
amounts have been rounded to the nearest dollar. Petitioner bears the burden of
proof. See Rule 142(a).1
Background
The parties have stipulated certain facts and the authenticity of certain
documents. The facts stipulated are so found, and documents stipulated are
accepted as authentic.
Petitioner resided in Santa Cruz, California, when she filed the petition.
1 Petitioner has not raised the applicability of sec. 7491(a), which shifts the burden of proof to the Commissioner in certain situations. We conclude that, in any event, sec. 7491(a) does not apply here because petitioner has not produced any evidence that she has satisfied the preconditions for its application. -4-
Trial of the Case
This case was called for trial on December 4, 2017, in Las Vegas, Nevada.
The parties appeared and were heard. At the start of the trial, we reiterated for
petitioner what we had told her during a telephone conference a week earlier, that
respondent had determined deficiencies in her income tax for the examination
years and it was her burden to prove error in those determinations. We explained
to her that the notice described the adjustments respondent had made to her
reported income, and we offered her the opportunity to call witnesses, to present
documents, or to testify herself with respect to respondent's adjustments. She
declined our offer. She called no witnesses and offered no documents other than
those stipulated. She explained that she believed that the notice should not have
been issued because her rights had been violated. The Court received as her
testimony two exhibits that had been stipulated, one a time line related to
respondent's examination of her returns and the other a statement of her position,
that the notice was invalid because respondent had deprived her of rights accorded
to her by the taxpayer bill of rights (TBOR).2 Respondent called no witnesses and
offered no documents other than those stipulated. At the conclusion of the trial,
2 We use the acronym "TBOR" to refer to the term "taxpayer bill of rights" generically and not to refer to any particular legislative or administrative enactment or pronouncement. -5-
recognizing that there were likely no disputed issues of fact, we allowed the
parties to file posttrial legal memoranda addressing petitioner's argument that the
notice was invalid because of violations of the TBOR and respondent's response
that our report in Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324 (1974),
foreclosed us from looking behind the notice to consider the objections to it raised
by petitioner.
To decide this case, we rely on the pleadings, those facts stipulated or
readily drawn from the stipulated documents, and the posttrial legal memoranda
filed by the parties. The following are the material facts.
Petitioner's Returns
For each of the examination years, petitioner filed a Form 1040, U.S.
Individual Income Tax Return. During those years, petitioner was a professor at
the College of Southern Nevada. For each year, she reported wages received from
the college. She also included with each return a Schedule C, Profit or Loss From
Business, for a business she identified as "IAM Enterprises". On the 2011 and
2012 Schedules C, she described IAM Enterprises as being in the business of
"Workforce Training/manual development/translation". On the 2013 Schedule C,
she described its business as "Workforce Training/manual development/
translation/bilingual training advisement/consultation." -6-
On the IAM Enterprises Schedules C, she reported expenses in excess of
gross income, which resulted in net losses as follows.
Schedule C Tax year Gross income Total expenses net loss 2011 $5,021 $32,022 $27,001 2012 5,890 41,124 35,234 2013 5,944 36,888 30,944
Respondent's Examination and the Notice
Respondent began his examination for the years in 2012, beginning with an
examination for 2011. Apparently, by early February 2014, respondent's
examination was being conducted from his Las Vegas, Nevada, office. On
February 18, 2014, petitioner wrote to "Wanda Jackson, Examining Officer", at
the Las Vegas Internal Revenue Service (IRS) office, asking that the examination
be transferred to Santa Cruz, California, where petitioner had moved. On March
14, 2014, petitioner again wrote Ms. Jackson, reiterating her request and stating
that she had received no reply to her earlier letter. By letter dated July 2, 2014,
respondent's Denver, Colorado, office informed petitioner that her "Form 1040"
had been sent to respondent's Santa Cruz, California, office. On November 25,
2014, petitioner wrote to "Stanellen Larsen, Examining Officer", also at the Las
Vegas IRS office, acknowledging a letter from Ms. Larsen dated November 17, -7-
2014 (apparently scheduling a hearing in Las Vegas on November 25, 2014), and
reiterating petitioner's request for a hearing in Santa Cruz. As stated, on February
23, 2015, respondent mailed petitioner the notice.
Almost all of the adjustments respondent made to petitioner's reported
income for the examination years relate to his disallowance of deductions that she
had claimed on the IAM Enterprises' Schedules C for items such as advertising,
rent, office expense, and utilities. In the notice, respondent explained those
adjustments in common terms: "Since you did not establish that the business
expense shown on your tax return was paid or incurred during the taxable year and
that the expense was ordinary and necessary to your business, we have disallowed
the amount shown." Respondent also increased petitioner's income for 2013 for
taxable Social Security benefits that she had failed to report, and he determined
penalties.
Petition
Petitioner timely filed the petition and avers the following reasons for
disagreeing with the deficiencies in tax and penalties determined by respondent:
Although she requested that the examination of her returns be set near her home,
in Santa Cruz, it was set in Las Vegas; her phone calls to the IRS went unreturned;
she received contradictory information as to where the examination of her returns -8-
would take place; and she received inconsistent requests for information.
Petitioner supports those claims with a two-page attachment to the petition entitled
"Facts", which chronicles her various interactions with the IRS. Petitioner poses
four questions in the body of the petition:
Why did the Las Vegas IRS office continue to work my file when I was told by the Denver IRS office that my file had been transferred to California?
Why did the Las Vegas IRS office continue to insist[] that I come to [an] examination meeting there when I was told I would have a meeting close to my home?
Why did the Las Vegas IRS office file a deficiency when my file was transferred to California and before I had an examination meeting close to my home?
Why was it that my queries received no response? I did not get one question answered, or one point clarified by the Las Vegas IRS office.
She adds that it is her understanding from the "Tax Payer's Bill of Rights"
that she had the right to have her questions answered and the right to meet with an
IRS representative at a time and place convenient to her, neither of which rights
she was accorded.
Answer
Answering the petition, respondent neither admits or denies petitioner's
substantive averments "on the ground that the allegations impermissibly attempt to -9-
look behind the notice of deficiency in violation of the principle enunciated by the
Tax Court in Greenberg's Express, Inc. v. Commissioner, 62 T.C. 324 (1974)." He
alleges that petitioner will have the opportunity to resolve this case with the IRS
Office of Appeals. As stated, he prays that the relief petitioner seeks be denied
and that his determinations in all respects be approved.
Discussion
I. Petitioner's Concession of Respondent's Adjustments
Rule 34(b) specifies the content of the petition in a deficiency case. In
pertinent part, Rule 34(b)(4) requires a petitioner to make clear and concise
assignments of each and every error that the petitioner alleges the Commissioner
to have committed in the determination of the deficiency. The Rule cautions:
"Any issue not raised in the assignments of error shall be deemed to be conceded."
Rule 41(b)(1) provides, however: "When issues not raised by the pleadings are
tried by express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings." Because petitioner failed to
assign error to respondent's adjustments disallowing her Schedule C deductions or
including in her 2013 gross income Social Security benefits, and because
petitioner refused our entreaties to raise those issues a trial, we treat petitioner as -10-
having conceded that there were no errors in those adjustments.3 See Raifman v.
Commissioner, T.C. Memo. 2018-101, at *3 n.3. However, we must still consider
her TBOR-based challenge to the notice.
II. Petitioner's TBOR-Based Challenge to the Notice
A. Petitioner's Arguments
Petitioner's premises are straightforward. There are no deficiencies in tax
for any of the examination years because the notice was unlawfully issued. The
notice was unlawfully issued because, in conducting his examination for the
examination years, respondent deprived her of rights guaranteed to all taxpayers
by the TBOR.
Petitioner refers us to a TBOR announced by the IRS on June 10, 2014 (IRS
TBOR). See I.R.S. News Release IR-2014-72, 2014 WL 2590817 (June 10,
2014).4 The news release states that the IRS TBOR will "provide * * * taxpayers
with a better understanding of their rights", by taking "the multiple existing rights
3 In any event, the parties have stipulated that petitioner received $18,084 in Social Security benefits during 2013. 4 Petitioner makes no reference to sec. 7803(a)(3), which now requires the Commissioner to ensure that IRS employees are familiar with and act in accord with taxpayer rights afforded by other provisions of the Internal Revenue Code, including, specifically, the rights enumerated in the IRS TBOR. As discussed infra section III, that requirement became effective after the notice was issued. -11-
embedded in the tax code" and grouping them "into 10 broad categories," which
will make them "more visible and easier for taxpayers to find" on the IRS website.
Id.5 Along with announcing its TBOR, the IRS updated its "Publication 1: Your
Rights as a Taxpayer" (Rev. 12-2014) (Publication 1) to feature the IRS TBOR on
page 1. See https://www.irs.gov/pub/irs-prior/p1--2014.pdf.
For the first right--"The Right to Be Informed"--Publication 1 states:
Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.
Petitioner claims that she received from respondent "procedures, forms, and
notices" with respect to which she requested, but never received, clarification.
She also claims that, on several occasions, she requested, but never had, an in-
person interview at respondent's Las Vegas office. Finally, she claims that she
received misleading information with respect to the IRS office charged with
examining her returns. In particular, she claims that, after having been told that
5 The 10 rights are: (1) "the right to be informed", (2) "the right to quality service", (3) "the right to pay no more than the correct amount of tax", (4) "the right to challenge the IRS's position and be heard", (5) "the right to appeal an IRS decision in an independent forum", (6) "the right to finality", (7) "the right to privacy", (8) "the right to confidentiality", (9) "the right to retain representation", and (10) "the right to a fair and just tax system". (Capitalization removed.) -12-
the examination would be transferred to Santa Cruz, she was not told that the
examination had been refused by that office and had been returned to Las Vegas.
Petitioner characterizes all of those events as violating her right to be informed.
For the fourth right--"The Right to Challenge the IRS's Position and Be
Heard"--Publication 1 states:
Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.
In her posttrial legal memorandum, petitioner claims that, when she brought
up the violation of her rights with respondent's attorneys during preparation for
trial, they dismissed her concerns. She claims that, for instance, Mr. Wong,
respondent's trial counsel, told her "'mistakes[] were made, yes mistakes were
made'" but that, "even though mistakes had been made * * * the court would not
deal with that."
For the 10th right--"The Right to a Fair and Just Tax System"--Publication 1
states:
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not -13-
resolved their tax issues properly and timely through its normal channels.
In her posttrial legal memorandum, petitioner refers to her request in
February 2015, after her receipt of the notice, for assistance from the IRS
Taxpayer Advocate Service (TAS). She claims that the TAS was unable to assist
her because "there was absolutely nothing in my file. Nothing . . . no documents,
no letters, no notices, no forms . . . nothing." Petitioner argues that the TAS
failure to assist her violated her right to a fair and just tax system, as described in
Publication 1.
With respect to taxpayer interviews, Publication 1 states: "If we notify you
that we will conduct your examination through a personal interview, or you
request such an interview, you have the right to ask that the examination take
place at a reasonable time and place that is convenient for both you and the IRS."
Petitioner claims that her rights were violated because she was not afforded an
interview near her home in California before respondent issued the notice.
Petitioner concludes her posttrial legal memorandum by saying: "My rights
as a taxpayer were violated on several counts by the IRS. * * * Title 26 of the
U.S. Code (Tax Code) contains the protection of taxpayer rights including the
right to have a fair hearing on the violation of those rights." -14-
B. Respondent's Arguments
Respondent also makes straightforward arguments. Section 6212 authorizes
the Secretary when he determines that there is a deficiency in respect to certain
taxes, including the income tax, to send a notice of deficiency to the taxpayer.
Upon a petition timely filed, the Tax Court has jurisdiction to redetermine the
correct amount of the deficiency. See sec. 6214(a). Because a proceeding before
the Tax Court to redetermine a deficiency is a proceeding de novo, the Tax Court
generally will not look behind a notice of deficiency to examine the
Commissioner's policy or procedure involved in making his determinations. See
Greenberg's Express, Inc. v. Commissioner, 62 T.C. at 327; Smith v.
Commissioner, T.C. Memo. 2018-170, at *20. In Greenberg's Express, Inc. v.
Commissioner, 62 T.C. at 328, the Tax Court explained that, because a trial before
the Court is a proceeding de novo, the Court's "determination as to a petitioner's
tax liability must be based on the merits of the case and not any previous record
developed at the administrative level." The principle articulated in Greenberg's
Express--that the Court will not generally look behind a notice of deficiency--has
been repeatedly upheld by courts, including the U.S. Court of Appeals for the
Ninth Circuit. See Pasternak v. Commissioner, 990 F.2d 893, 898 (6th Cir. 1993),
aff'g T.C. Memo. 1991-181; Ogiony v. Commissioner, 617 F.2d 14, 16-17 (2d Cir. -15-
1980), aff'g and remanding T.C. Memo. 1979-32; Doyal v. Commissioner, 616
F.2d 1191, 1192 n.3 (10th Cir. 1980), aff'g T.C. Memo. 1978-307; Crowther v.
Commissioner, 269 F.2d 292, 293 (9th Cir. 1959), aff'g on this issue 28 T.C. 1293
(1957).
Respondent acknowledges that we have considered the administrative
handling of a case when there is substantial evidence of unconstitutional conduct
by respondent. In Suarez v. Commissioner, 58 T.C. 792, 813-814 (1972), for
instance, where the deficiency notice was based exclusively on evidence obtained
in violation of the Fourth Amendment and, in order to provide a deterrent to such
unconstitutional action on the part of the Government, we excluded the "tainted"
evidence and imposed the burden of going forward with the evidence on the
Commissioner. Nevertheless, respondent points out, although unconstitutional
conduct is an exception to the principle that we will not look behind the notice of
deficiency, we have not declared a notice of deficiency void as a sanction for such
conduct. See, e.g., Riland v. Commissioner, 79 T.C. 185, 207 (1982); Greenberg's
Express, Inc. v. Commissioner, 62 T.C. at 328; Suarez v. Commissioner, 58 T.C.
at 814; Cristo v. Commissioner, T.C. Memo. 2017-239, at *7 n.7.
Near the conclusion of the trial in this case, the Court asked the parties
whether there is any caselaw addressing the application of the Greenberg's Express -16-
principle to rights enunciated in the TBOR. Respondent answers that, although
there is no caselaw specifically addressing the issue, the TBOR does not embody
constitutional rights, and consequently a violation of the TBOR does not provide
an exception to the principle expressed in Greenberg's Express.
Respondent sums up his argument as follows (citations of the record
omitted):
In this case, petitioner had a trial de novo before the Court on December 4, 2017. Despite the Court's recommendation that she address the underlying deficiencies, petitioner repeatedly declined to introduce any evidence to substantiate the disallowed Schedule C deductions or with respect to the taxability of her unreported Social Security benefits. Instead of introducing evidence relevant to the issues in this case, petitioner continued to rely upon her argument that the Court should look behind the notice of deficiency and find that the underlying notice of deficiency was void because of process by which the IRS made its determination. Under Greenberg's Express, petitioner's argument is not pertinent to the issues in this case and should be disregarded by the Court.
C. Discussion
1. Introduction
Neither party has presented us with a rigorous argument either way as to
whether the IRS TBOR accorded petitioner rights the violation of which would
give us reason to ignore the principle articulated in Greenberg's Express and look
behind the notice in order to remediate any violation. Petitioner has made no -17-
argument at all. Respondent's argument that rights found in the IRS TBOR are not
constitutional rights is perfunctory. Nevertheless, on our own examination of the
question, we conclude that, even if we were to credit petitioner's claims that, in
examining her returns, respondent violated her rights to be informed, to challenge
the IRS position and be heard, and to a fair and just tax system (all rights found in
the IRS TBOR) and, also, that he failed to afford her an interview near her home
in California before he issued the notice, we would neither invalidate the notice,
relieve petitioner of any portion of the burden of proof, nor take any other action
to remediate those violations or failure. The simple reasons are that (1) the IRS
TBOR did not add to petitioner's rights and (2) even if everything she says is true,
respondent's missteps that petitioner complains of would not in this de novo
proceeding cause us to either lift or lighten her burden of proving error in
respondent's determinations of deficiencies in her tax. See Greenberg's Express,
Inc. v. Commissioner, 62 T.C. at 327-328. Our analysis follows. -18-
2. The IRS TBOR Did Not Create or Confer Rights Not Otherwise Provided For in the Internal Revenue Code
a. Introduction
We think that the history of the IRS TBOR makes clear that it accords
taxpayers no rights they did not already possess.6
b. The National Taxpayer Advocate's 2007 Recommendation That Congress Enact a Statutory TBOR
The National Taxpayer Advocate (NTA), Nina E. Olson, is the voice of the
taxpayer within the IRS and before Congress. See TAS, About TAS, Our
Leadership, https://taxpayeradvocate.irs.gov/about/our-leadership. The NTA
reports annually to Congress. See sec. 7803(c)(2)(B)(ii); TAS, Reports to
Congress, https://taxpayeradvocate.irs.gov/reports. In her 2007 annual report, Ms.
Olson recommended that Congress enact a statutory bill of taxpayer rights and
obligations articulating the social contract between the Government and its
taxpayers--"taxpayers agree to report and pay the taxes they owe and the
government agrees to provide the service and oversight to ensure that taxpayers
6 We must give credit to the U.S. District Court for the Northern District of California for discussing the history of the IRS TBOR in Facebook, Inc. v. IRS, Case No. 17-cv-06490-LB (N.D. Cal. May 14, 2018), 2018 WL 2215743, at *3- *9. We cite the source documents constituting that history without further, particular citation of the order of the District Court. -19-
can and will do so." See TAS, NTA 2007 Annual Report to Congress 478 (2007)
(NTA 2007 report), available at https://www.irs.gov/advocate/national-
taxpayer-advocates-2007-annual-report-to-congress. She envisioned the
enactment not as establishing new rights and obligations but as articulating "rights
and obligations * * * generally derived from provisions that
* * * [were] already part of the tax laws or procedures." Id. She explained:
The Internal Revenue Code does not currently contain a concise and explicit list of taxpayer rights and obligations. * * *
* * * * * * *
While the Internal Revenue Code contains significant rights, protections, and expectations of taxpayers, these provisions are scattered throughout the Code and the IRM. They are not easily accessible to taxpayers, nor are they written in language that is readily understandable by many taxpayers.
The National Taxpayer Advocate believes that taxpayers will be reassured in the essential fairness of the tax system and more disposed to voluntarily comply with the tax laws if they can see and understand a clear declaration of their rights as taxpayers. As taxpayers understand that specific statutory protections flow from these rights, they will be able to better avail themselves of these protections. IRS employees, in turn, will better understand why these specific protections exist. Moreover, a clear linkage between taxpayer rights and responsibilities will establish expectations of taxpayer behavior that are easily understandable and fulfilled. -20-
Establishing a statutory Taxpayer Bill of Rights will reassure taxpayers that the tax system is essentially fair and just, and inform taxpayers of the treatment they can expect from their government as well as of the behavior the government expects of them. Revising Publication 1 so that it sets forth the Taxpayer Bill of Rights in its entirety and then relates specific statutory protections and obligations to those rights will enable taxpayers to avail themselves of those rights and conform their behavior accordingly.
Id. at 481, 485.
Ms. Olson recommended a bill of 10 taxpayer rights: (1) "the right to be
informed," (2) "the right to be assisted," (3) "the right to be heard," (4) "the right
to pay no more than the correct amount of tax," (5) "the right of appeal," (6) "the
right to certainty," (7) "the right to privacy," (8) "the right to confidentiality," (9)
"the right to representation," and (10) "the right to a fair and just tax system." Id.
at 486-488 (capitalization removed).7
c. Legislative Proposals for a TBOR Between 2009 and 2013
Between 2009 and 2013 several members of Congress, notably
Representative Xavier Becerra and Senator Jeff Bingaman, proposed legislation
that would require the Department of the Treasury in consultation with the NTA to
7 Her bill of taxpayer rights would have included five taxpayer obligations: "to be honest", "to be cooperative", "to provide accurate information and documents on time", "to keep records", and "to pay taxes on time". NTA 2007 report at 488-489. -21-
publish a TBOR along the lines proposed by Ms. Olson. H.R. 5716, 110th Cong.,
sec. 2 (2008); H.R. 5047, 111th Cong., sec. 101 (2010); S. 3215, 111th Cong., sec.
101 (2010); H.R. 6050, 112th Cong., sec. 101 (2012); S. 3355, 112th Cong., sec.
101 (2012). Each of those bills stated that the proposed TBOR would "not create
or confer any rights or obligations not otherwise provided for under this title" (i.e.,
title 26, the Internal Revenue Code). See, e.g., H.R. 5716, sec. 2. Instead, the
purpose of the proposed TBOR legislation was to provide taxpayers with an easy-
to-understand list of the rights and obligations established in other sections of the
Internal Revenue Code. See 156 Cong. Rec. E559 (daily ed. Apr. 15, 2010)
(statement by Rep. Becerra) ("[T]his legislation would require Treasury to publish
an easy-to-understand Taxpayer Bill of Rights that would enumerate all taxpayers'
rights and obligations, as well as their location in the tax code. Currently, these
rights and obligations are scattered throughout the tax code and Internal Revenue
Manual, making them neither accessible nor written in plain language that most
taxpayers can understand."). None of those bills was enacted.
In 2013, Representative Peter Roskam introduced new proposed TBOR
legislation. See H.R. 2768, 113 Cong., sec. 2 (2013). Whereas the prior bills had
required the Department of the Treasury to publish a TBOR, Representative
Roskam's version proposed amending the Internal Revenue Code "to clarify that a -22-
duty of the Commissioner of Internal Revenue is to ensure that Internal Revenue
Service employees are familiar with and act in accord with certain taxpayer
rights." Id. Representative Roskam acknowledged that the 10 rights in his bill
were all preexisting rights under then-current law but stated that he was
introducing this proposed legislation to establish unambiguously the
Commissioner's duty as described. 159 Cong. Rec. H5211 (daily ed. July 31,
2013). Representative Roskam's bill passed the House and was transmitted to the
Senate with the explanation that it was a bill "to clarify that a duty of the
Commissioner of Internal Revenue is to ensure that Internal Revenue Service
employees are familiar with and act in accord with certain taxpayer rights." 159
Cong. Rec. S6198 (daily ed. Aug. 1, 2013). The bill was not enacted.
d. The NTA's 2013 Recommendations That the IRS Adopt a TBOR
In November 2013, Ms. Olson issued a report entitled "Toward a More
Perfect Tax System: A Taxpayer Bill of Rights as a Framework for Effective Tax
Administration" (2013 NTA report), available at http://taxpayeradvocate.irs.
gov/2013-Annual-Report/downloads/Toward-a-More-Perfect-Tax-System-A-
Taxpayer-Bill-of-Rights-as-a-Framework-for-Effective-Tax-Administration.pdf.
Recognizing that formally codifying a TBOR would require congressional action -23-
(theretofore unobtainable), the 2013 NTA report recommends to the
Commissioner that he adopt a bill of 10 fundamental taxpayer rights and 5
taxpayer responsibilities. Id. at 5-6, 12. The 10 rights--similar to the rights
included in Ms. Olson's 2007 recommendation that Congress enact a TBOR--were
as follows: (1) "the right to be informed," (2) "the right to quality service," (3)
"the right to pay no more than the correct amount of tax," (4) "the right to
challenge the IRS position and be heard," (5) "the right to appeal an IRS decision
in an independent forum," (6) "the right to finality," (7) "the right to privacy," (8)
"the right to confidentiality," (9) "the right to retain representation," and (10) "the
right to a fair and just tax system, including access to the Taxpayer Advocate
Service." Id. at 2-3 (capitalization removed). Ms. Olson provided a compendium
of the statutory and other sources of the 10 articulated rights. See id., App. C., at
52-55.
The 2013 NTA report states that its recommended TBOR "does not aim to
create new rights or remedies, only to group existing rights into categories that are
easier for taxpayers and IRS employees to understand and remember. * * * Thus,
a TBOR does not create new rights, but provides organizing principles--a
framework--for statutory rights." Id. at 4, 6 (emphasis added). -24-
In her December 2013 Annual Report to Congress, Ms. Olson largely
repeats her recommendations from the 2013 NTA report that the Commissioner
and the IRS adopt a TBOR. NTA 2013 Annual Report to Congress 5-19 (2013),
available at https://taxpayeradvocate.irs.gov/2013-Annual-Report/downloads/
Volume-1.pdf.
e. The IRS 2014 Adoption of a TBOR
As reported supra, on June 10, 2014, the IRS announced its adoption of the
IRS TBOR. The 10 fundamental rights enumerated in I.R.S. News Release
IR-2014-72 are almost identical to the rights enumerated in the 2013 NTA report
(omitting only from the 10th right, "the right to a fair and just tax system", the
final words: "including access to the Taxpayer Advocate Service"). The news
release describes the TBOR as encompassing "multiple existing rights embedded
in the tax code" and quotes IRS Commissioner John A. Koskinen as saying:
"While these rights have always been there for taxpayers, we think the time is
right to highlight and showcase these rights for people to plainly see." IR-2014-
72, 2014 WL 2590817.
f. Conclusion
We think there is ample evidence in the history recited to conclude that, in
adopting a TBOR in 2014, the Commissioner had no more in mind than -25-
consolidating and articulating in 10 easily understood expressions rights enjoyed
by taxpayers and found in the Internal Revenue Code and in other IRS guidance.
Certainly, the Commissioner had no power to legislate any new rights. Cf.
Gamman v. Commissioner, 46 T.C. 1, 6 (1966) ("[T]he power of the
Commissioner to prescribe regulations for the administration of the Federal tax
laws is not the power to make law[.]"). By the Commissioner's own statement,
"these rights have always been there for taxpayers". IR-2014-72, 2014 WL
2590817. Moreover, Ms. Olson could not have been more clear in the 2013 NTA
report that, Congress having failed to enact a statutory TBOR, the Commissioner
should adopt a TBOR "because it does not aim to create new rights or remedies".
2013 NTA report, at 4. Likewise, the various legislative proposals made between
2009 and 2013 for the Secretary in consultation with the NTA to publish a TBOR
along the lines proposed by the NTA were clear in stating that the proposed
legislation would not create or confer rights not otherwise provided for in the
Internal Revenue Code. See supra sec. II.C.2.c. Similarly, Representative
Roskam, in proposing legislation imposing a duty on the Commissioner to ensure
that his employees were familiar with and acted in accordance with preexisting
taxpayer rights, did not contemplate creating any new taxpayer rights. See id. -26-
We conclude that, in adopting its TBOR in 2014, the IRS did not create for
taxpayers any rights or remedies that they did not theretofore enjoy.
3. Respondent's Conduct of the Examination
Notwithstanding that the IRS TBOR created no new rights, we still must
consider whether the missteps that petitioner describes respondent as having made
in the examination of her returns give us cause to deviate from the principle
expressed in Greenberg's Express that generally we do not look behind a notice of
deficiency. Principally, petitioner complains that respondent deprived her of the
opportunity adequately, if at all, to present her case before he issued the notice and
that, in particular, he deprived her of an interview near her home in California.8
In Human Eng'g Inst. v. Commissioner, 61 T.C. 61, 62 (1973), the taxpayers
complained that jeopardy assessments and deficiency notices were the result of the
Commissioner's arbitrary and capricious action in failing to give them adequate
notice and a hearing and in failing to conduct a proper investigation of the basis
for asserting the tax claimed to be due. We answered: "[I]t is * * * well
8 Petitioner describes for the first time in her posttrial legal memorandum her unsatisfactory interaction with respondent's counsel during preparation of this case for trial and of her inability to get help from TAS. Generally, we do not consider facts stated for the first time on brief and not stipulated. Tolins v. Commissioner, T.C. Memo. 1963-34, T.C.M. (P-H) para. 63,034, at 63-158. Here, however, even were we to credit petitioner's claims, we would not reach a different result. -27-
established that the courts will generally not look behind such a notice to
determine whether respondent's agents followed the established administrative
procedures in respect of investigation and according the petitioners a hearing." Id.
at 66; see also, e.g., Riland v. Commissioner, 79 T.C. at 200-201 (rejecting the
claim that the IRS, as an agency, is bound by the procedures it adopts and its
failure to follow its own procedures, as set out in the Internal Revenue Manual, is
a per se violation of due process).
Both Human Eng'g Inst. and Riland concern claims that the IRS did not
follow its own administrative procedures, while petitioner's complaint is not that
the IRS failed to follow its own administrative procedures but that, in examining
her returns, it "violated * * * rights" for "the protection of taxpayer[s]" contained
in the "Tax Code".
Except in extraordinary circumstances not here pertinent, taxpayers have the
statutory right to a hearing in this Court before the Secretary may assess a
deficiency in income tax. See sec. 6213(a). Section 6214(a) establishes our
jurisdiction to redetermine (i.e., determine de novo) deficiencies determined by the
Secretary. In general, the taxpayer bears the burden of proving error in the
Secretary's determinations. See Rule 142(a); see also Welch v. Helvering, 290
U.S. 111, 115 (1933). Petitioner points to no provision of the Internal Revenue -28-
Code that would relieve her of that burden. Petitioner has used the opportunity
that Congress gave her to show error in the Secretary's determinations not by
showing error in the IRS adjustments to her income but by challenging the
Secretary's right to make those determinations because of his alleged violations of
her unspecified statutory rights. Whatever missteps respondent may have taken in
examining petitioner's returns, he has not deprived her of the right to challenge his
deficiency determinations before this Court. Petitioner has given us no ground to
deviate from the principle expressed in Greenberg's Express and invalidate the
notice or impose on respondent some sanction for his missteps. To the extent that,
on account of his violation of rights guaranteed to petitioner under the IRS TBOR,
respondent in the notice overstated the deficiencies in petitioner's tax, her remedy
was not to be excused from liabilities imposed by the Internal Revenue Code but
to take the opportunity afforded by the Code to prove the correct liabilities before
this Court.
D. Conclusion
Petitioner's TBOR-based challenge to the notice fails, and she has not
shown error in respondent's determinations of deficiencies in tax for the
examination years. Accordingly, we will sustain those determinations. -29-
III. Postscript--Enactment of a Statutory TBOR
In February 2015, Representative Roskam reintroduced his proposed
legislation to enact a statutory TBOR. H.R. 1058, 114th Cong. (2015). The bill
was referred to the Committee on Ways and Means, which revised Representative
Roskam's bill so that the 10 rights listed in the proposed statutory TBOR tracked
the terms of the IRS TBOR. Compare H.R. 1058, 114th Cong., sec. 2 (2015) with
IR-2014-72, 2014 WL 2590817, at *1. The Committee reported the reason that
the proposed legislation was needed:
The Committee has found examples of IRS employees showing disregard for the rights and protections afforded taxpayers under the Code, and that such disregard may be a result of lack of emphasis on the importance of such rights. Any public perception that such disregard is common and not taken seriously by upper management at the IRS undermines trust in the integrity of the IRS. The Committee believes that the public trust that the top management of the IRS is committed to ensuring such rights is imperative to good tax administration. Although the IRS has recently published a Taxpayer Bill of Rights, such publication does not itself carry force of law or impose any obligations on the management or employees of the IRS. Accordingly, codifying the requirement that the Commissioner assume responsibility to implement the bill of rights is warranted to ensure public trust.
H.R. Rept. No. 114-70, at 4 (2015), available at https://www.congress.gov/114/
crpt/hrpt70/CRPT-114hrpt70.pdf. The Committee reported that the proposed
legislation "adds to the Commissioner's duties the requirement to ensure that -30-
employees of the IRS are familiar with and act in accordance with taxpayer rights
as afforded by other provisions of the Internal Revenue Code." Id. The House of
Representatives passed the bill in April 2015 by voice vote and transmitted it to
the Senate.9
H.R. 1058 was not enacted as a stand-alone law. But the TBOR section
from H.R. 1058 was added--unchanged from the version that the House Ways and
Means Committee reported on and that the House passed in April 2015 and
transmitted to the Senate--to the Protecting Americans from Tax Hikes Act of
2015 (PATH Act), which the House added to the Senate's version of the
Consolidated Appropriations Act, 2016. See H.R. 2029, div. Q, tit. IV, subtit. A,
sec. 401, 114th Cong. (engrossed House amendment Dec. 18, 2015). The
Consolidated Appropriations Act, 2016, which included the PATH Act and its
TBOR, was enacted on December 18, 2015. Pub. L. No. 114-113, 129 Stat. 2242
(2015). PATH Act sec. 401(a), 129 Stat. at 3117, amended section 7803(a)(3) to
impose on the Commissioner the duty to ensure that IRS employees are familiar
with and act in accord with taxpayer rights afforded by other provisions of the
Internal Revenue Code, including, specifically, the rights enumerated in the IRS
9 Several other bills with similarly worded proposed TBORs also were introduced in 2015. See, e.g., S. 943, 114th Cong. (introduced Apr. 15, 2015); S. 951, 114th Cong. (introduced Apr. 15, 2015). -31-
TBOR.10 The PATH Act amendments to section 7803(a)(3) took effect on
December 18, 2015. See PATH Act sec. 401(b), 129 Stat. at 3117.
10 As amended by PATH Act sec. 401(a), 129 Stat. at 3117, sec. 7803(a)(3) now provides:
(3) Execution of duties in accord with taxpayer rights.--In discharging his duties, the Commissioner shall ensure that employees of the Internal Revenue Service are familiar with and act in accord with taxpayer rights as afforded by other provisions of this title, including--
(A) the right to be informed,
(B) the right to quality service,
(C) the right to pay no more than the correct amount of tax,
(D) the right to challenge the position of the Internal Revenue Service and be heard,
(E) the right to appeal a decision of the Internal Revenue Service in an independent forum,
(F) the right to finality,
(G) the right to privacy,
(H) the right to confidentiality,
(I) the right to retain representation, and
(J) the right to a fair and just tax system. -32-
Because the notice was issued on February 23, 2015, almost 10 months
earlier, we need not today concern ourselves with either the statutory TBOR or the
duties imposed on the Commissioner by amended section 7803(a)(3).
Nevertheless, we note in passing the thorough discussion of those subjects by the
U.S. District Court for the Northern District of California in Facebook, Inc. v. IRS,
(Facebook), Case No. 17-cv-06490-LB (N.D. Cal. May 14, 2018), 2018 WL
2215743. Facebook involved a proceeding ancillary to a proceeding in this Court,
Facebook, Inc. v. Commissioner, T.C. dkt. No. 21959-16 (filed Oct. 11, 2016) (a
deficiency proceeding). Facebook brought the ancillary proceeding before the
District Court seeking an order compelling the IRS attorneys litigating its case
before the Tax Court to refer the case to the IRS Office of Appeals for alternative
dispute resolution. Facebook argued that one of the rights in the statutory TBOR--
"the right to appeal a decision of the Internal Revenue Service in an independent
forum", sec. 7803(a)(3)(E) (as amended)--gives it an enforceable right to take its
case to IRS Appeals in lieu of litigating before the Tax Court. Facebook, 2018
WL 2215743, at *1. The District Court said no, broadly holding that the TBOR
enacted as part of the PATH Act did not grant new enforceable rights. Id. at *13.
The District Court's consideration may prove useful when, inevitably, we come to -33-
consider the statutory TBOR and the duties imposed on the Commissioner by
amended section 7803(a)(3).
Decision will be entered for
respondent sustaining the deficiencies in
tax.