Clifford W. Miller v. Commissioner , 115 T.C. No. 40 ( 2000 )

115 T.C. No. 40
UNITED STATES TAX COURT
CLIFFORD W. MILLER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10563-99L. Filed December 21, 2000.
Held: Sec. 6015, I.R.C., has no application to,
and does not govern, (1) the request of P’s former
spouse for relief from joint and several liability
under sec. 6013(e), I.R.C. (former sec. 6013(e)), which
was repealed effective July 22, 1998, and (2) the
administrative proceedings conducted by R that ulti-
mately resulted in R’s granting that relief to her
prior to July 22, 1998. Held, further, P did not have
the right to be notified of or to participate in the
administrative proceedings relating to the request of
P’s former spouse for relief from joint and several
liability under former sec. 6013(e). Held, further, P
lacks standing to challenge respondent’s determination
to grant P’s former spouse relief from joint and sev-
eral liability under former sec. 6013(e). Held, fur-
ther, respondent did not abuse respondent’s discretion
with respect to any of the determinations in the notice
of determination concerning collection action under
sec. 6320 and/or 6330, I.R.C.
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Clifford W. Miller, pro se.
William L. Blagg, for respondent.
OPINION
CHIECHI, Judge: This case is before the Court on respon-
dent’s motion for judgment on the pleadings which was filed on
June 12, 2000, and which, pursuant to Rule 120(b),1 the Court
shall treat as respondent's motion for summary judgment under
Rule 121 (respondent’s motion). On July 10, 2000, petitioner
filed a response to respondent’s motion, and on August 1, 2000,
respondent filed a reply to petitioner’s response. On September
11, 2000, the Court held a hearing on respondent’s motion. As
directed by the Court, respondent filed a supplement to respon-
dent’s motion on October 2, 2000, in which respondent provided
additional information regarding that motion. On October 24,
2000, petitioner filed a response to respondent’s supplement.
Background
In the various filings by the parties with respect to
respondent’s motion, the parties do not dispute the following
facts.
1
All Rule references are to the Tax Court Rules of Practice
and Procedure. All section references are to the Internal
Revenue Code (Code) in effect at the times indicated.
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Petitioner resided in Arden, North Carolina, at the time the
petition was filed.
Sometime in January 1990, petitioner withdrew $37,095.52
from an annuity contract that he had with Metropolitan Life
Insurance Company (1990 annuity withdrawal). The joint Federal
income tax (tax) return for 1990 (1990 joint return) filed by
petitioner and his then spouse, who is now known as Florencie G.
Bacon (Ms. Bacon), failed to include as income $14,758 of the
1990 annuity withdrawal.
Petitioner and Ms. Bacon divorced sometime after they filed
the 1990 joint return. On January 8, 1992, in connection with
their divorce, petitioner and Ms. Bacon executed an agreement in
which they agreed, inter alia, to be jointly responsible for any
additional taxes determined by respondent to be due for 1990 with
respect to any annuity contracts held by petitioner.
At a time not disclosed by the record, respondent determined
a deficiency of $5,691 for taxable year 1990 (1990 tax defi-
ciency) against petitioner and Ms. Bacon. The 1990 tax defi-
ciency was attributable solely to the failure of the 1990 joint
return to include as income $14,758 of the 1990 annuity with-
drawal. Respondent did not determine any penalties against
petitioner and Ms. Bacon for 1990.
Sometime prior to October 1993, Ms. Bacon requested respon-
dent to grant her relief from joint and several liability (relief
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from joint and several liability) with respect to the 1990 tax
deficiency. Around October 1993, respondent informed Ms. Bacon
that respondent had decided to grant that relief to her. None-
theless, on March 7, 1994, respondent assessed the 1990 tax
deficiency (assessed 1990 tax deficiency) against petitioner and
Ms. Bacon.
For reasons not disclosed by the record, respondent inadver-
tently and erroneously failed to adjust the joint account that
respondent maintained for petitioner and Ms. Bacon (joint ac-
count) in order to reflect the determination that respondent made
around October 1993 to grant Ms. Bacon relief from joint and
several liability. Respondent ultimately became aware of respon-
dent’s failure to adjust the joint account in order to reflect
that determination. On May 29, 1998, a so-called 2-Way Memo was
prepared in which respondent’s personnel responsible for making
changes to the joint account were instructed to transfer the
assessed 1990 tax deficiency and interest thereon from the joint
account to a nonmaster file (NMF) account to be established only
in petitioner’s name (petitioner’s NMF account). On June 18,
1998, the assessed 1990 tax deficiency and interest thereon
reflected in the joint account were transferred to petitioner’s
NMF account. At no time throughout the period during which
respondent was considering and taking action with respect to Ms.
Bacon’s request for relief from joint and several liability was
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petitioner notified of that request and respondent’s
consideration thereof or given an opportunity to participate in
any of the administrative proceedings relating thereto.
Sometime after January 19, 1999, respondent notified peti-
tioner of his right to a hearing (Appeals Office hearing) at
which he would be able to contest a proposed collection action
against him with respect to the unpaid portion of the assessed
1990 tax deficiency.
On May 24, 1999, after the North-South Carolina Appeals
Office of the Internal Revenue Service (Appeals Office) held the
Appeals Office hearing that petitioner had requested, the Appeals
Office issued to petitioner a “NOTICE OF DETERMINATION CONCERNING
COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330" (notice of
determination). The notice of determination contained the
following summary of the matters that were considered at peti-
tioner’s Appeals Office hearing:
Matters Considered
The requirements of law and administrative procedures:
whether the Service met its statutory and administra-
tive requirements prior to levy.
The relevant issues: whether Mr. Miller’s claim for
“innocent spouse” relief could now be considered.
The intrusiveness of the collection action or the
proposed collection action: whether Mr. Miller’s situa-
tion warranted forbearance of the collection action
until his claim could be considered.
The matter considered by the Appeals Office relating to “Mr.
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Miller’s claim for ‘innocent spouse’ relief” included peti-
tioner’s claim that respondent erroneously granted relief from
joint and several liability to Ms. Bacon with respect to the
assessed 1990 tax deficiency and that he should have received
notice of and an opportunity to contest Ms. Bacon’s application
for such relief. The notice of determination contained the
following summary of the determinations that were made by the
Appeals Office with respect to the matters that were considered
at petitioner’s Appeals Office hearing:
Summary of Determination:
The statutory and procedural notice requirements prior
to levy were met by the Service. Therefore, levy is
permissible. Further, under Mr. Miller’s circum-
stances, the proposed levy balances the need to collect
the revenue with the intrusiveness of the proposed
action.
No collection alternatives were offered because Mr.
Miller challenged the liability.
Mr. Miller’s claim for innocent spouse relief was
considered and found to be meritless.
In the amended petition for lien or levy action under
section 6320(c) or 6330(d), petitioner alleged the following
errors of the Appeals Office in making the determinations summa-
rized in the notice of determination:
5. Alleged errors in determination:
1. Innocent spouse relief granted to my ex-
wife without me being notified.
2. Ex-wife signed divorce decree acknowledg-
ing her tax responsibilities for tax years ‘89 &
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‘90 concerning annuities.
3. I.R.S. granted ex-wife inn. spouse relief
on or about 9-28-93. I.R.S. Rep. wrote me on
2-14-95 informing me they were still trying
to collect from ex, when this was not true.
IRS verbally informed me of granting inn.
spouse relief to my ex in Dec. ‘98. This was
the first I was notified of this.
4. The annuity in question was cashed in in
early 1990 & benifited ex-spouse.
5. 1990 return was a joint return & ex is
equally liable.
6. Clifford W Miller has paid $1683.00 to
date on this 1990 return.
6. In the event the court does not rule favorably on
the petitioner’s request, petitioner prayerfully
requests that his liability be limited to the
unpaid portion of the $2691.00 original tax with
no penalties or fines included. [Reproduced lit-
erally.]
In the answer to the amended petition, respondent alleged,
inter alia, that “on or about May 29, 1998, respondent determined
that Ms. Bacon qualified as an innocent spouse, under the provi-
sions of I.R.C. § 6013(e), with respect to the 1990 income tax
deficiency”.
Discussion
A summary adjudication may be made that disposes of all of
the issues in controversy if, inter alia, it is shown that there
is no genuine issue as to any material fact with respect to those
issues. See Rule 121(b). We conclude that there is no genuine
issue as to any material fact regarding the issues raised with
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respect to respondent’s motion.
The validity of the underlying tax liability for 1990 is not
at issue here. Consequently, we shall review the determinations
set forth in the notice of determination under an abuse-of-
discretion standard. See Sego v. Commissioner, 114 T.C. 604, 610
(2000).
In support of his position that the Appeals Office erred in
determining that respondent may proceed to collect from him the
unpaid portion of the assessed 1990 tax deficiency, petitioner
argues that respondent should have given him notice of and an
opportunity to participate in the administrative proceedings
regarding Ms. Bacon’s application for relief from joint and
several liability with respect to that deficiency and that
respondent should not have granted such relief to Ms. Bacon.
In respondent’s motion, respondent counters:
7. Petitioner does not have standing to challenge
respondent’s determination that his former wife is an
innocent spouse. See Estate of Ravetti v. United
States, 37 F.3d 1393 (9th Cir. 1994) and Garvey v.
Commissioner, T.C. Memo. * * * [1993-354].
* * * * * * *
10. In the instant case, * * * the Commissioner
granted innocent spouse relief to petitioner’s former
wife before the enactment of the Internal Revenue
Restructuring and Reform Act of 1998. Thus, peti-
tioner’s former wife never made an election under
I.R.C. § 6015(b) or (c), section 6015(e)(4) does not
apply to this case, and the pre-1998 Act precedent of
Estate of Ravetti and Garvey, supra, forecloses peti-
tioner’s challenge to his former wife’s innocent spouse
status.
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* * * * * * *
16. In addition, respondent is not bound by any
provisions relating to the 1990 tax liability contained
in petitioner’s divorce decree. See Pesch v. Commis-
sioner, 78 T.C. 100, 128-29 (1982) (respondent not
bound by agreement to which he is not a party).
The parties do not dispute that respondent granted Ms. Bacon
relief from joint and several liability with respect to the
assessed 1990 tax deficiency prior to July 22, 1998, the date on
which Congress (1) repealed section 6013(e) that was in effect
before that date (former section 6013(e)) and (2) enacted section
6015 relating to relief from joint and several liability. See
Internal Revenue Service Restructuring and Reform Act of 1998
(RRA 1998), Pub. L. 105-206, sec. 3201(a), (e)(1), (g)(1), 112
Stat. 685, 734, 740. Section 6015 generally applies to any
liability for tax arising after July 22, 1998, and any liability
for tax arising on or before such date but remaining unpaid as of
such date. See id. sec. 3201(g)(1). Read in the context of
section 6015, the liability for tax referred to in the foregoing
effective-date provision refers to the liability for tax of the
taxpayer claiming relief from joint and several liability.
Respondent alleges in the answer, and we find, (1) that
respondent must have granted Ms. Bacon relief from joint and
several liability pursuant to former section 6013(e) which was in
effect prior to July 22, 1998, when respondent granted Ms. Bacon
that relief, and (2) that respondent did not grant such relief
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pursuant to section 6015 which was not in effect until July 22,
1998. At no time on or after July 22, 1998, was Ms. Bacon
claiming, or will she be claiming, relief from joint and several
liability under section 6015 either in an administrative proceed-
ing before respondent or in a judicial proceeding before us.
Once respondent granted Ms. Bacon relief from joint and several
liability pursuant to former section 6013(e) prior to July 22,
1998, she had no liability for the assessed 1990 tax deficiency
on any date thereafter, including July 22, 1998. Ms. Bacon did
not have, and could not have had, any liability for the assessed
1990 tax deficiency which arose on or before July 22, 1998, when
Congress enacted section 6015, and which remained unpaid as of
that date. See id.
We conclude that section 6015 has no application to, and
does not govern, Ms. Bacon’s request for relief from joint and
several liability under former section 6013(e) and the adminis-
trative proceedings conducted by respondent that ultimately
resulted in respondent’s granting that relief to her prior to
July 22, 1998. Cf. King v Commissioner, 115 T.C. 118 (2000)
(section 6015 applies where spouse had a liability for tax
arising on or before July 22, 1998, which remained unpaid as of
that date and claimed relief from joint and several liability
under that section); Corson v. Commissioner, 114 T.C. 354 (2000)
(same). We further conclude (1) that petitioner did not have the
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right to be notified of or to participate in the administrative
proceedings relating to Ms. Bacon’s application for relief from
joint and several liability under former section 6013(e) and
(2) that petitioner lacks standing to challenge respondent’s
determination to grant Ms. Bacon such relief under former section
6013(e). See 26 U.S.C. sec. 6013(e) (1994); Estate of Ravetti v.
United States, 37 F.3d 1393, 1395-1396 (9th Cir. 1994).
Petitioner requests in the alternative that the Court waive
any (1) interest imposed by section 6601 on the assessed 1990 tax
deficiency during the period February 14, 1995, through December
31, 1998, and (2) penalties assessed by respondent with respect
to the assessed 1990 tax deficiency.
With respect to petitioner’s alternative request that the
Court waive any interest with respect to the assessed 1990 tax
deficiency imposed by section 6601 that respondent assessed
against him, the record does not establish whether petitioner
raised at his Appeals Office hearing that interest should not
have accrued on the assessed 1990 tax deficiency during the
period February 14, 1995, through December 31, 1998. Assuming
arguendo (1) that the record before us had established that
petitioner raised at his Appeals Office hearing that interest
should not have accrued on the assessed 1990 tax deficiency
during that period, (2) that we considered petitioner’s alterna-
tive request regarding interest to be a request for abatement of
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interest under section 6404, and (3) that we concluded that we
have jurisdiction under section 6404(i) to consider that request,
see Katz v. Commissioner, 115 T.C. , (2000) (slip op. at
20), on the record before us, we find that petitioner has not
established, or even alleged, a ministerial error within the
meaning of section 6404(e) requiring an abatement of such inter-
est. See Katz v. Commissioner, supra at __ (slip op. at 20-21).
With respect to petitioner’s alternative request that the
Court waive any penalties assessed against him for 1990, respon-
dent claims, and petitioner does not dispute, that no penalties
were assessed against petitioner for 1990. Consequently, that
request is moot.2
We hold that there is no basis in the record to conclude
that respondent abused respondent’s discretion with respect to
any of the determinations set forth in the notice of determina-
tion.
To reflect the foregoing,
2
Assuming arguendo that the record before us had established
that respondent assessed penalties against petitioner for 1990,
we would not consider petitioner’s alternative request that the
Court waive those penalties. That is because the record does not
establish that he raised that issue at his Appeals Office
hearing. See secs. 6320(c), 6330(d)(1); sec. 301.6320-1T(f)(2),
Q&A-F5, Temporary Proced. & Admin Regs., 64 Fed. Reg. 3398, 3404
(Jan. 22, 1999); sec. 301.6330-1T(f)(2), Q&A-F5, Temporary
Proced. & Admin. Regs., 64 Fed. Reg. 3405, 3412 (Jan. 22, 1999).
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An order treating respondent’s
motion for judgment on the
pleadings, as supplemented, as
respondent’s motion for summary
judgment and granting it, and
decision that respondent may
proceed with the collection action
as determined in the notice of
determination concerning the
collection action for the taxable
year 1990 upon which this case is
based, will be entered.