T .C . Memo . 2010-46

T .C . Memo . 2010-46

UNITED STATES TAX COUR T

ALVIN S . KANOFSKY, Petitioner v .

COMMISSIONER OF INTERNAL REVENUE , Responden t

Docket No . 24784-08L .

Filed

March

11,

2010 .

Alvin S . Kanofsky , pro se . .

Alex Shlivko , for respondent .

MEMORANDUM OPINION

LARO,

Judge : Petitioner petitioned the Court under section

6330(d) to review a determination of respondent's Office of

Appeals (Appeals) sustaining a proposed levy upon petitioner's

property .' In Kanofsky v . Commissioner , T .C . Memo . 2006-7 9

'Unless otherwise indicated, section references are to the

(continued . . . )

SERVED MAR 11 2010

v

-2(Kanofsky I), affd . 271 Fed . Appx . 146 (3d Cit . 2008), we

disallowed a portion of petitioner's claimed trade or business

expenses for 1996 through 2000 on the grounds that the disallowed

expenses were unrelated to petitioner's business activities and

upheld a portion of respondent's determination of a section 6662

negligence penalty against petitioner . Following our decision in

Kanofsky I, respondent sought to levy on petitioner's property to

collect approximately $56,270 in Federal income taxes for 1996

through 2000 (subject years) •2 We decide whether Appeals abused

its discretion in sustaining the proposed levy . We hold it . did

not .

Background

The parties' stipulation of facts and the accompanyin g

exhibits are incorporated herein by this reference and are so

found .

I .

Petitione r

Petitioner has been a full-time professor of physics at

Lehigh University since approximately 1967 . He resided in

Bethlehem, Pennsylvania, when his petition was filed .

( . . .continued)

applicable version of the Internal Revenue Code .

2We use the word "approximately" as these amounts were

computed before .this proceedring and have since increased on

account of interest .

-3II .

Deficiency Litigatio n

A.

Overvie w

For each subject year, petitioner filed .a Federal income tax

return on which he reported on a Schedule'C, Profit or Loss From

Business', expense deductions which offset any tax liability for

the year . Respondent issued to'petitioner a notice of deficiency

which : (i) Disallowed most of petitioner's claimed Schedule C

expense deductions ; . and' (ii) determined a negligence penalty for

1997 under section 6662(a) .

B .

Court's Decision and Subsequent Appeal s

On July 16, 2004, petitioner petitioned the Court to

redetermine the disallowed trade or business expense deductions

and the negligence penalty . In Kanofsky I, we found mostly for

respondent, and in doing so, disallowed a portion of petitioner's

claimed trade or business expenses and found petitioner liable

for the negligence penalty . We entered our decision on November

17`, 2006, and-on December 20, 2006, denied a motion by petitioner

to vacate or revise the decision .

.

Petitioner appealed our decision to the U .S . Court of

Appeals for the Third Circuit without filing a bond under section

7485 to stay assessment and collection . The Court of Appeals

affirmed our decision on April 1, 2008 .

Kanofsky v . ,

Commissioner , 271 Fed . Appx . 146 (3d Cir . 2008) . On May 16,

2008, petitioner again sought relief from the Court of Appeals by

19

-4filing a "Petition for Rehearing on Decision of April 1, 2008, ;

Affirming U .S . Tax Court Decision" . On June 4, 2008, the Court

of Appeals denied the petition for rehearing .

Petitioner subsequently filed a petition for writ of

certiorari with the Supreme Court of the United States to review

the Court of Appeal's judgment . Certiorari was denied on .

December 8, 2008, . Kanofsky v . Commissioner , 129 S . Ct . 741

(2008),, and petitioner's petition for rehearing with the Supreme

Court was denied on February 23, 2009,

Kanofsky v . Commissioner,

129 S . Ct . 1406 (2009) .

III .

Respondent's Collection Actio n

Respondent pursued collection against petitioner during

petitioner's various appeals . On December 22, 2007, respondent

issued to petitioner a Final Notice of Intent to Levy and Notic e

i

of Your Right to a Hearing (final levy notice) . with respect to

the collection of petitioner's outstanding income tax liabilities

for the subject years . The final levy notice provided petitioner

with an opportunity to request a collection due process hearing

(hearing) with Appeals, which petitioner requested on Januaryd119,

2008, by filing Form 12153, Request for a Collection Due Process

or Equivalent Hearing . On the Form 12153 petitioner reported~s

that he disagreed with respondent's proposed levy because his

case was "UNDER APPEAL WITH UNITED STATES COURT OF APPEALS FOR

p%

-5THE THIRD CIRCUIT ." Petitioner did not propose any collection .

alternatives on that form .

IV .

Hearing and Subsequent Correspondenc e

On July 11, .2008, Appeals mailed to petitioner a letter

which scheduled a telephone conference on August 11, 2008 . That

letter,• among other things, i nformed petitioner that if he

desired Appeals to consider collection alternatives, then

petitioner needed to provide respondent with a completed Form

433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals, with supporting documentation and to

file Federal income tax returns for 2006 .and 2007 . That letter

also advised petitioner that he should be prepared to discuss

collection alternatives . Petitioner subsequently requested a

correspondence hearing, and Appeals granted petitioner's request .

On July 28, 2008, Appeals mailed to petitioner a letter

which again directed petitioner, to the extent he desired to

propose a collection alternative to the levy action, to submit

supporting documentation within 14 days . That letter recognized

that petitioner had appealed this Court's decision to the Cour t

of Appeals for the Third Circuit and advised petitioner that

Appeals does not consider "irrelevant issues, . such as moral,

religious, political, constitutional, conscientious, or similar

grounds ." Petitioner did not submit any documents . supporting his

-6position within the specified 14-day period, nor did he propose

any collection alternatives during .that time .

On August 28, 2008, petitioner sent to respondent via

.facsimile, a three-page letter stating that petitioner was unable

to provide "detailed comments" in response to the July 28, 2008,

letter . Petitioner did . not propose any collection alternatives,

nor did he file the requested financial forms and missing tax

returns .

On September 8, 2008, respondent denied petitioner's request

for relief from the proposed levy action by issuing to petitioner

a Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330 (notice of determination), with

attachment . The attachment stated that the proposed levy was' ,

sustained because petitioner did not present any information to

dispute the appropriateness of the collection actions, nor did

petitioner submit a collection alternative . Appeals' cas e

activity report, which is a written record of Appeals' actions

during the hearing,- .references the purported claims of fraud and

corruption which petitioner asserted, and deems them irrelevant,

to the hearing .

V.

Current Cas e

On October 14, 2008, petitioner petitioned the Court to

determine whether Appeals abused its discretion in sustaining the

proposed levy on petitioner's property . The Court held a hearing

-7on October 19, 2009, ' during which petitioner was the only witness

called by either party .

Discussio n

I .

Overvie w

Where, as here, the underlying tax liability is not at

issue, we review an Appeals determination solely for abuse of

discretion . `See Sego v . Commissioner , 114 T .C . 604, 610 (2000) .

Abuse of discretion exists : where Appeals acts . arbitrarily,

capriciously, or without a sound . basis in law or fact . :: Woodral

v . Commissioner , 112 T .-C . 19, 23 (1999) . Petitioner advances two

theories to . support his argument that Appeals abused its

discretion : First, that respondent's levy should have been

stayed because of petitioner's appeals to the Court of Appeals

and the Supreme Court ; .and second, that Appeals should have been

more "cooperative" in its collection methods .3 We are not

persuaded by either argument .

3Petitioner also advances numerous assertions and arguments

regarding fraud and corruption within the Pennsylvania

legislature and judiciary that, he states, impacted his ability

to be fairly treated . Those assertions and arguments relate to

the determination of petitioner's underlying tax liabilities, an

issue which was the subject of Kanofsky I . Therefore, even if we

were to assume that these assertions are true, such arguments

relate to the determination of petitioner's tax liabilities,

which the Court may not consider at this proceeding . See

Giamelli v . Commissioner , 129 .T .C . 107, 114-115 (2007) . Of

course, res judicata would otherwise appear to bar us from

considering the tax liability .

-8II .

Stay of Collection Action on Account of Appea l

The first issue petitioner raised concerns th e

appropriateness of a collection action where the underlying tax

liability is the subject of a pending appeal . Petitioner argue s

that Appeals abused its discretion by pursuing collection while

his appeal of Kanofsky I was still pending . We disagree .

Section 6213 ( a) bars the Commissioner from assessing a tax

liability until our decision becomes final ,

and section 7481 a

makes our decisions final when opportunities for appeal have been

exhausted . Section 7485 ( a)(1), however ,

supersedes section

6213(a) by providing that assessment shall not be stayed during

an appeal unless a taxpayer such as petitioner files a bond wit h

the Tax Court on or before the time his notice of appeal is

filed . See Burke v . Commissioner , 124 T .C . 189, 191 n .4 (2005) ;

Kovacevich v . Commissioner , T .C . Memo . 2009-160 n .4 ; see also

Home Group, Inc . v . Commissioner , 92 T .C . 940, 945-946 (1989),;

(discussing the reasons behind enactment of section 7485) . The

record does not indicate that petitioner posted bond before hi s

notice of appeal was filed or at any time . Accordingly,

petitioner is subject to immediate collection action on the

deficiency determined in Kanofsky I . See

Inverworld, Ltd . v .

Commissioner , 979 .F .2d 868, 872 (D .C . Cir . 1992), affg . 98 T .C .

70 (1992) ;

Schroeder v . Commissioner , T .C . Memo . 2005-48 ;

v . Commissioner , T .C . Memo . 2003-107 .

Hromiko

-9III .

Appeals' Cooperative Efforts in Installment Payment Progra m

Petitioner also contends that .Appeals abused its discretion

in failing to be more "cooperative" in the collection of the

amounts to be levied . We,disagree .

Before a taxpayer's property may be levied upon, section

6330 requires the Commissioner to give the taxpayer notice of his

intent to levy and notice of the right to a fair-hearing before

an impartial officer of Appeals . Secs . 6330(a) and (b), 6331(d) .

At the hearing a taxpayer may challenge the appropriateness of

collection actions and offer collection alternatives . Sec .

6330(c)(2)(A)(ii) and (iii) . At the hearing Appeals must .

generally consider the above-stated issues raised . by the

taxpayer, verify that the requirements of applicable law and

administrative procedure have been met, and consider whether "any

proposed collection action balances the need for the efficient

collection of taxes with the legitimate concern of th e

[taxpayer] that any collection action be no more intrusive than

necessary ." Sec . 6330(c)(3) .

We find that Appeals fully complied with its obligations to

petitioner under section 6330 . Appeals verified that respondent

met the requirements of applicable law and administrative

procedure in assessing and demanding payment for the tax

liabilities petitioner owed, in issuing the final levy notice,

and in providing him .with the hearing . Appeals was unable to

-10consider any collection alternative because petitioner did not

make an offer or comply with its requests to provide the

financial information required to support-any collection

alternative and to file delinquent tax returns

.(Acordingly,pet rhas Appeals abuse d

. not shown that

its discretion in furthering its collection efforts by levying on

petitioner's property . ,

IV .

Conclusio n

We conclude that Appeals did not abuse its discretion in, ;,

sustaining the notice of intent to levy,,and we hold that

collection by levy may proceed . In so concluding, we have

considered all, arguments made, and, to the extent that we have

not specifically addressed them we conclude that it is

unnecessary to do so or that they are without merit . To reflec t

the foregoing,

Decision will be entere d

for respondent .