Zero Income Filer Fails To Fly Through CDP

[The Observer]

WILLIAM R. GRANGER,
Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent

Release Date: NOVEMBER 10, 2009


UNITED STATES TAX COURT

Filed November 10, 2009

William R. Granger, pro se.

Aaron D. Gregory, for respondent.

MEMORANDUM OPINION

PARIS, Judge: On January 15, 2008, respondent mailed to petitioner a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330 1 (notice of determination) for tax years 2002 and 2003. In response to that notice and pursuant to section 6330(d), petitioner timely petitioned this Court for review of respondent's determination that petitioner was not entitled to a face-to-face collection due process (CDP) hearing.

The issue for decision is whether the Appeals Office abused its discretion in failing to grant petitioner a face-to-face CDP hearing.

BACKGROUND

On October 26, 2005, respondent mailed to petitioner a notice of deficiency setting forth respondent's determination of petitioner's income tax deficiency for tax year 2003. Petitioner failed to petition the Tax Court with respect to the determined deficiency within the 90-day period prescribed under section 6213. As such, respondent assessed the tax liability on April 24, 2006. Respondent also assessed a section 6702 civil penalty against petitioner for tax year 2002 on December 12, 2005.

On April 28, 2007, respondent sent to petitioner a Notice of Intent to Levy and Notice of Your Right to a Hearing advising petitioner that respondent intended to levy on petitioner's assets to collect the unpaid liability for tax year 2003 along with the section 6702 penalty for tax year 2002. The notice also advised that petitioner could request a hearing with respondent's Office of Appeals. On May 24, 2007, petitioner timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing, in which he requested a face-to-face CDP hearing.

Respondent sent petitioner a letter dated June 23, 2007, acknowledging respondent's receipt of petitioner's request for a CDP hearing. In addition, respondent's Office of Appeals sent two letters to petitioner, each dated July 23, 2007, acknowledging that Appeals had received the CDP case regarding each tax year's liability for consideration.

On September 24, 2007, Settlement Officer Minnie Banks (Settlement Officer Banks) sent petitioner a letter notifying him that she had scheduled a telephone conference for October 23, 2007, to allow petitioner to discuss with her any relevant challenges to the proposed levy action. This letter, in part, also explained to petitioner that he was not entitled to a face-to-face CDP hearing because he was not in income tax return filing compliance for tax year 2004. As such, the letter requested that petitioner provide Settlement Officer Banks with a signed tax return for 2004 along with a Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, on or before October 16, 2007. The letter further explained that collection alternatives could not be considered without all requested information.

Petitioner sent Settlement Officer Banks a letter dated October 12, 2007, along with attachments including a signed copy of a Form 1040, U.S. Individual Income Tax Return, for tax year 2004. However, the letter did not include a completed Form 433 A. During tax year 2004 petitioner worked for an entity known as Titan Corporation. Although reflecting income tax withholdings of $ 6,392.48, the signed copy of the 2004 Form 1040 reported zero wages earned and zero adjusted gross income.

On October 23, 2007, Settlement Officer Banks sent petitioner a letter indicating that petitioner had failed to call her at the scheduled time for the telephone CDP hearing as requested in her prior letter. 2 This letter also explained that the previously requested Form 433-A financial information was not provided and that petitioner should provide any and all financial information to Settlement Officer Banks for consideration on or before November 6, 2007.

On November 1, 2007, petitioner sent Settlement Officer Banks a fax transmission where he, in part, restated his demand for a face-to-face hearing. On December 9, 2007, petitioner sent Settlement Officer Banks two separate fax transmissions with attached documents including both a copy of the letter he previously sent on November 1, 2007, along with the signed Form 1040 for 2004 he previously provided. Petitioner never provided the Form 433-A.

On January 15, 2008, respondent's Office of Appeals issued to petitioner a notice of determination notifying petitioner that the proposed levy action was sustained. On February 19, 2008, petitioner, then residing in the Commonwealth of Virginia, filed his petition with this Court.

DISCUSSION

Jurisdiction To Review Frivolous Return Penalties

The Pension Protection Act of 2006 (PPA), Pub. L. 109-280, sec. 855(a), 120 Stat. 1019, amended section 6330(d)(1), which provides the Tax Court's jurisdiction to review notices of determination issued pursuant to section 6330, and gave the Tax Court jurisdiction to review notices of determination issued under section 6330 where the underlying tax liability consists of section 6702 frivolous return penalties. 3 Previously this jurisdiction lay exclusively with the U.S. District Courts. See, e.g., Johnson v. Commissioner, 117 T.C. 204, 208 (2001). The PPA is effective for all determinations made after October 16, 2006. PPA sec. 855, 120 Stat. 1019. Even though a civil penalty for tax year 2002 was first assessed on December 12, 2005, respondent's Office of Appeals issued to petitioner a final notice of determination that included the penalty on January 15, 2008; thus, this Court has jurisdiction to review respondent's determination on the section 6702 penalty.

Collection Due Process Hearings

Under section 6331(a), if a person liable for a tax fails to pay it within 10 days after notice and demand, it is lawful for the Secretary to collect such tax * * * by levy upon all property and rights to property * * * belonging to such person. A taxpayer may appeal the filing of a notice of tax levy to the Internal Revenue Service under section 6330 by requesting an administrative hearing. The taxpayer is additionally afforded the opportunity for judicial review of a determination sustaining the notice of intent to levy in the Tax Court pursuant to section 6330(d). Petitioner seeks judicial review of respondent's determination.

Petitioner never raised any issue regarding his underlying tax liability during the Appeals process either for his 2002 or 2003 tax years, nor was there any evidence that petitioner questioned the civil penalty assessed under section 6702 for tax year 2002; thus, the Court may only review the determination to see whether there has been an abuse of discretion by respondent's Appeals Office in the determination. 4 See Lunsford v. Commissioner, 117 T.C. 183, 185 (2001) (citing Nicklaus v. Commissioner, 117 T.C. 117, 120 (2001)). The Court has described the standard by which respondent's determinations are reviewed as an abuse of discretion, meaning arbitrary, capricious, clearly unlawful, or without sound basis in fact or law. Ewing v. Commissioner, 122 T.C. 32, 39 (2004), revd. on other grounds 439 F.3d 1009 (9th Cir. 2006); see also Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

Petitioner contends that respondent erred in refusing to grant him a ??face-to-face??? CDP hearing. However, under section 301.6330-1(d)(2), A-D6, Proced. & Admin. Regs., CDP hearings are informal in nature and do not require the Appeals officer or employee and the taxpayer, or the taxpayer's representative, to hold a face-to-face meeting. A CDP hearing may, but is not required to, consist of a face-to-face meeting. Courts that have considered the issue have found that a taxpayer does not have a right to a face-to-face hearing. See O'Meara v. Waters, 464 F. Supp. 2d 474, 479-480 (D. Md. 2006) (holding that taxpayer had received due process because he was given the opportunity to participate in a telephone conference in which he discussed the substance of his case with an Appeals officer); Turner v. United States, 372 F. Supp. 2d 1053, 1058 (S.D. Ohio 2005) (holding that the Appeals Office did not violate the taxpayer's right to a fair hearing when it declined the taxpayer's request for a face-to-face hearing because it offered him a telephone conference or the opportunity to submit his arguments in writing).

Furthermore, respondent's Appeals Office adequately explained to petitioner that his request for a face-to-face hearing was denied as a result of his not being in compliance with his 2004 income tax return filing requirements. Section 301.6330-1(d)(2), A-D8, Proced. & Admin. Regs., states that

a face-to-face CDP conference concerning a collection
alternative * * * will not be granted unless other
taxpayers would be eligible for the alternative in
similar circumstances. For example, because the IRS
does not consider offers to compromise from taxpayers
who have not filed required returns * * * no face-to-face
conference will be granted to a taxpayer who wishes
to make an offer to compromise but has not fulfilled
[this obligation].* * *

Despite showing employment by an entity known as Titan Corp. and Federal withholdings of $ 6,392.48, petitioner's 2004 tax return reported zero wages and zero adjusted gross income. It is settled law that any document which purports to be a federal income-tax return * * * and which attempts to reduce one's tax-liability by excluding wages or salary from taxable-income * * * is frivolous within the meaning of * * * [section] 6702(a). Beckelhimer v. United States, 623 F. Supp. 115, 116 (M.D. Tenn. 1985); see also Cabirac v. Commissioner, 120 T.C. 163, 169 (2003) (noting that the majority of courts, including this Court, have held that, generally, a return that contains only zeros is not a valid return).

Using the aforementioned standard of review, this Court does not find that respondent's Appeals Office abused its discretion. Respondent fully complied with the requirements of section 6330 by offering petitioner a telephone CDP hearing. Furthermore, petitioner failed to produce the requested documents necessary for respondent to consider collection alternatives in a face-to-face CDP hearing.

CONCLUSION

Based on the record, the Court holds that the Appeals Office did not abuse its discretion in determining that petitioner was not entitled to a face-to-face CDP hearing.

Finally, in reaching the conclusions described herein, the Court has considered all arguments made, and to the extent not mentioned above, concludes they are moot, irrelevant, or without merit.

To reflect the foregoing,

Decision will be entered for respondent.

FOOTNOTES:


/1/ Section references are to the Internal Revenue Code of 1986, as amended.


/2/ Settlement Officer Banks further noted that petitioner had not called to indicate that the CDP hearing conference was scheduled at an inconvenient date or time.


/3/ The sec. 6702 frivolous return penalty is assessed without a notice of deficiency first being sent to the taxpayer, thus generally depriving this Court of jurisdiction over the penalty. Sec. 6703(b).


/4/ Under sec. 6330(c)(2)(B), a taxpayer may raise challenges to the existence or amount of the underlying tax liability only if the taxpayer did not receive any statutory notice of deficiency for the tax liability, or did not otherwise have an opportunity to dispute the tax liability. Petitioner did not challenge the existence or amount of either his 2002 or 2003 tax liabilities; therefore, the Court may only analyze whether the Appeals officer abused his discretion.

[LPC]

This seems to be latest "victory" of "Warrior Bill Granger."

The LH website includes (but is not limited to):

His 2001 tax refund (that was actually applied to his 2008 tax liability); and

Copies of correspondence regarding his failure to file for 2004 (and the frivolous return penalty that could be imposed for what he actually filed); and

Hendrickson gave him credit for insights into the meaning of "includes."

In each case, you'll have to search for "Granger" because these pages are long and incoherent.

[bmielke]

Another fine victory, many more like those and he won't have a home or two nickles to rub together.

[jkeeb]

Information available for "Titan Corporation" indicates that they are involved in some security sensitive areas.

[bmielke]

Titan also seems to have an interesting recent legal history.

From Wikipedia http://en.wikipedia.org/wiki/Titan_Corp.

As a public military contractor the company employed some of the personnel who were implicated in the prisoner abuse scandal at Abu Ghraib prison in 2004. Involving mostly Titan and CACI International employees, the U.S. Army "found that contractors were involved in 36 percent of the [Abu Ghraib] proven incidents and identified 6 employees as individually culpable",[2] although none have faced prosecution unlike US military personal.[2]

In May 2004, a civilian contractor and Titan employee Adel Nakhla, an Egyptian-born American citizen, was "terminated" from the job, after he admitted he held down inmates that were "nude, handcuffed to each other and placed in sexual positions." (as described by the Taguba Report)

The company was in the process of being acquired by the Lockheed Martin Corporation but the attempted merger fell through on June 26, 2004:

Lockheed Martin Corporation announced that it has terminated the merger agreement with The Titan Corporation because Titan did not satisfy all the closing conditions on or before June 25, 2004. Under the terms of the amended merger agreement, either party could terminate the merger agreement if Titan either (i) had not obtained written confirmation from the Department of Justice that the investigation of alleged Foreign Corrupt Practices Act (FCPA) violations was resolved as to Titan and the Department did not intend to pursue any claims against Titan; or (ii) Titan had not entered into a plea agreement on or prior to June 25, 2004, provided that the terminating party had not contributed to the failure to consummate the merger through a breach of its obligations in any material respect. Titan did not satisfy either requirement.

On March 2, 2005, the company admitted to illegally providing $2 million to the 2001 re-election campaign of President Mathieu Kérékou of Benin, and agreed to pay $28 million in penalties. Titan pled guilty and paid the largest penalty under the Foreign Corrupt Practices Act in history for bribery and filing false tax returns.[1]

Titan Corp briefly partnered with SkyWay Communications [2] and owned stock in several other corporations related to SkyWay, whose former DC9 aircraft, N900SA, was captured in April 2006 with 5.5 tons of cocaine on board. Investigation of the cocaine bust by Mad Cow Morning News [3] has led to the discovery that Titan had employed Makram Chams, a Lebanese national, who owned a Kwik-Check convenience store in Venice, Florida, where the biggest overseas money transfer to the terrorists, $70,000 from the UAE, was sent, according to the testimony of FBI agents during the 9/11 Commission hearings.

Bolding added.

[justdave]

Remember when Clinton got on TV and said something like "that depends of the definition of 'is' is." Generally when someone starts grasping at straws by nit piciking the definitions of individual words then probably the effort is futile.