Opinion
CIVIL ACTION No. 03-2149-GTV
January 22, 2004
MEMORANDUM AND ORDER
This tax case arises from an assessment of trust fund recovery penalties pursuant to 26 § U.S.C. § 6672 against Plaintiff John A. P. Leiter. Plaintiff filed this action against the United States ("Defendant") to appeal the Internal Revenue Service's ("IRS") Notice of Determination concerning Plaintiff's tax liability. This action is now before the court on Defendant's motion for summary judgment (Doc. 6). For the reasons stated below, Defendant's motion is granted.
I. BACKGROUND
As a result of the failure of Oxygen Technologies Corporation ("OTC") to pay its employment taxes for the periods ending on September 30, 1994, the IRS determined that Plaintiff, former treasurer of OTC, was a responsible person liable for trust fund recovery penalties ("TFRP") under 26 U.S.C. § 6672.
IRS account records reflect that Plaintiff owes $22,575.71 as of July 21, 2003.
Prior to this assessment, Plaintiff filed a written protest and received a hearing with IRS Appeals regarding his proposed assessment. The IRS Appeals Office sustained the proposed assessment against Plaintiff and assessed the TFRP on December 28, 1998. On March 3, 1999 Plaintiff again contested the assessment by filing a Form 843, Claim for Refund. IRS Special Procedures reviewed the assessment and again denied Plaintiff's claim. On March 18, 2002 the IRS issued a Notice of Intent to Levy. In response, Plaintiff filed a request for a Collection Due Process ("CDP") Hearing on April 1, 2002 to challenge the proposed levy. Plaintiff's request stated that "Amount charged as tax is incorrect. Statutory addition amount is incorrect. Amount owed is disputed by taxpayer."
A hearing was held on December 3, 2002 before Officer Keith Cummings of the IRS Appeals Office. Officer Cummings issued a Notice of Determination on February 21, 2003, upholding the proposed levy. The Notice of Determination states Mark J. Eichholz, Plaintiff's counsel, raised the following issues on behalf of Plaintiff:
Mr. Leiter was not responsible for paying the trust fund taxes of Oxygen Technologies Corporation and should not have been assessed a penalty.
Could some of the interest charges be abated on the account due to the long appeals process the taxpayer has endured while disputing the penalty assessment?
Officer Cummings first concluded that Plaintiff's underlying liability would not be considered at the CDP hearing pursuant to 26 U.S.C. § 6330(c)(2)(B), which states that a taxpayer's underlying liability can be raised "only if he did not receive a statutory notice of deficiency regarding the liability, or did not otherwise have a previous opportunity to dispute the liability." 26 U.S.C. § 6330(c)(2)(B). Officer Cummings determined that Plaintiff had already received a hearing with IRS Appeals and a review by IRS Special Procedures concerning the proposed assessment. Second, Officer Cummings concluded that Plaintiff did not provide "reasonable grounds for the abatement of interest." Officer Cummings noted that Plaintiff could have stopped the interest from accruing by paying the TFRP. Additionally, Officer Cummings observed that before the assessment of the penalty and continuing with the IRS's notice and demand for payment after the assessment of the penalty, Plaintiff "was repeatedly warned that interest charges [would] accrue on the penalty as long as it remains unpaid." Finally, in response to Plaintiff's claim that the IRS charged an incorrect amount of tax, Officer Cummings determined "that the assessed and accrued amounts are correct."
Plaintiff now seeks judicial review of this Notice of Determination after timely filing his complaint on March 19, 2003.
II. STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Lack of a genuine issue of material fact means that the evidence is such that no reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law."Id. at 251-52.
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is a lack of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial.Anderson, 477 U.S. at 256. "[A] party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.Id. The court must consider the record in the light most favorable to the nonmoving party. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984).
III. JURISDICTION
This court has jurisdiction pursuant to 26 U.S.C. § 6330(d)(1) of the Internal Revenue Code "to review a notice of determination relating to trust fund recovery penalties; however, judicial review is limited to those issues properly raised during the collection due process hearing."Konkel v. Comm'r, No. 6:99-cv-1026-Orl-31C, 2000 WL 1819417, at *3 (M.D. Fla. Nov. 6, 2000) (citation omitted).
IV. STANDARD OF REVIEW
"[W]here the validity of the underlying tax liability is properly at issue, the Court will review the matter on a de novo basis. However, where the validity of the underlying tax liability is not properly at issue, the Court will review the Commissioner's administrative determination for abuse of discretion." Sego v. Comm'r, 114 T.C. 604, 610 (2000). Pursuant to 26 U.S.C. § 6330(c)(2)(B), Officer Cummings found that Plaintiff could not contest his underlying liability for the TFRP because he had an earlier opportunity to dispute his tax liability. Accordingly, the court will review the IRS's decision for abuse of discretion.
V. DISCUSSION
Plaintiff claims that the IRS's TFRP assessment is erroneous in four respects: (1) the amount of tax owed is incorrect because Defendant has not accounted for or refused to apply several payments; (2) the amount of accrued interest should be abated because Defendant unreasonably delayed in acting on Plaintiff's claim; (3) Defendant failed to collect from other responsible persons; and (4) Plaintiff and Defendant's representatives entered into an agreement so that interest would not accrue during the pendency of this action. The court will address each argument in turn.
A. The Amount of Tax Owed is Incorrect
Plaintiff first claims that the Notice of Determination was in error because substantial payments were made on the TFRP account, but the IRS "failed and/or refused to account for" those payments. Plaintiff specifically disputes that certain payments made by another responsible person liable for the TFRP, Nelda Wing, were not properly credited towards Plaintiff's account.
As will be discussed later in this opinion, although liability for the TFRP is joint and several, and a responsible person is potentially liable for the entire tax owed, the IRS's policy is to not collect more than one-hundred percent of the tax owed. A payment made by one responsible person toward the debt is therefore credited to the accounts of the remaining responsible persons.
First, Plaintiff contends that the IRS failed to credit Plaintiff's account for a payment of $6,563.00 that Ms. Wing tendered on June 13, 2002. The Notice of Determination indicates that Plaintiff's representative at the CDP hearing, Mark Eichholz, maintained that payments had been made on the TFRP account that were not reflected by the IRS records. Officer Cummings provided Mr. Eichholz with a current transcript of Plaintiff's account during the CDP proceeding, and because Mr. Eichholz did not proffer any evidence explaining why the account records were incorrect, Officer Cummings asked Mr. Eichholz to send him copies of the cancelled checks. On December 16, 2002, Mr. Eichholz sent Officer Cummings a letter stating that Ms. Wing's payment of $6,563.00 should have been received by the IRS in June 2002. Mr. Eichholz sent Officer Cummings a copy of the cancelled check on December 30, 2002, asking Officer Cummings to advise him why the check had not been credited to Plaintiff's account.
The February 21, 2003 Notice of Determination explained why Ms. Wing's payments had not been applied to Plaintiff's TFRP account. Officer Cummings's research discovered that the $6,563.00 payment was a deposit made with Ms. Wing's offer in compromise. At the time of the CDP proceeding, the IRS had not accepted the offer in compromise. If the IRS decided to reject Ms. Wing's offer, the payment could be returned to her, and thus, the payment could not be posted to Ms. Wing's account, nor to Plaintiff's account. As a result, Officer Cummings stated in his Notice of Determination that "the assessed and accrued amounts are correct."
Defendant now asserts that Plaintiff's claim as to Ms. Wing's $6,530.00 payment is moot. In support of its motion, Defendant provided the declaration of Officer Cummings and a current transcript of Plaintiff's account. Officer Cummings states that the IRS accepted Ms. Wing's offer in compromise and the payment was posted to her account during the week of May 4, 2003. Furthermore, Officer Cummings states, and Plaintiff's account records reflect, that the IRS credited Ms. Wing's payment to Plaintiff's account on July 7, 2003. Accordingly, the court determines that Plaintiff's claim that Ms. Wing's $6,530.00 payment should be credited to his account is moot.
Second, Plaintiff asserts that the IRS failed to credit Plaintiff's account for a payment of $603.24 that Ms. Wing tendered on February 19, 1999. In response, Defendant argues that: (1) Plaintiff's claim is not properly before the court because Plaintiff did not question this payment during the CDP proceeding; and (2) the issue is moot because the February 1999 payment has been credited to Plaintiff's account.
The court notes that Plaintiff was justified in not questioning Ms. Wing's February 1999 payment during the CDP hearing because, at that time, the payment had been properly credited to his account. A copy of Plaintiff's account records as of December 3, 2002, the date of the CDP hearing, reflects that the IRS credited Ms. Wing's payment to Plaintiff's account on February 26, 1999. A copy of Plaintiff's account records dated on July 21, 2003, however, indicates that a penalty of $603.24 was added to Plaintiff's account balance. It is, therefore, understandable that Plaintiff first raised this particular payment in response to Defendant's motion for summary judgment. Although Defendant's reply brief argues that the issue is moot because the payment had been credited to Plaintiff's account at the time of the CDP hearing, Defendant also admits in a footnote that the IRS later made an error. Specifically, Defendant's brief stated that `It should be noted that subsequently the IRS incorrectly deleted that credit but are presently in the process of correcting the error."
The court determines that based on Defendant's statement that the IRS is correcting this error, Defendant is entitled to summary judgment on this claim.
B. The Accrued Interest Should be Abated
Second, Plaintiff asserts that the accrued interest should be abated because "Defendant unreasonably delayed in acting in this matter and continuously charged Plaintiff interest on amounts owed" during the long appeals process. Defendant argues that it is entitled to summary judgment because: (1) this court lacks jurisdiction to review this issue because the United States Tax Court is the proper court to review a denial of an interest abatement request; and (2) Plaintiff failed to cite a ministerial act attributable to an error or delay by an IRS representative that would entitle Plaintiff's accrued interest to abate. The court concludes that it has jurisdiction to review Plaintiff's claim. The court also concludes that Defendant did not abuse its discretion when it denied Plaintiff's request for an abatement of interest.
Section 6404(e)(1) of the Internal Revenue Code governs the issue of when the IRS may abate the interest on a taxpayer's claim. The current version of section 6404(e)(1) states, in relevant part:
(1) In general. In the case of any assessment of interest on —
(A) any deficiency attributable in whole or in part to any unreasonable error or delay by an officer or employee of the Internal Revenue Service (acting in his official capacity) in performing a ministerial or managerial act, . . . .
the Secretary may abate the assessment of all or any part of such interest for any period. For purposes of the preceding sentence, an error or delay shall be taken into account only if no significant aspect of such error or delay can be attributed to the taxpayer involved, and after the Internal Revenue Service has contacted the taxpayer in writing with respect to such deficiency or payment.26 U.S.C. § 6404(e)(1). In 1996, Congress amended section 6404(e) as part of the Taxpayer Bill of Rights II, adding the word "unreasonable" to modify "error or delay," and enlarging the scope of the law to include "managerial" as well as "ministerial" acts. See Kraemer v. United States, No. H-00-2948, 2002 WL 575791, at *4 n. 8 (S.D. Tex. Feb. 13, 2002). Congress also added a provision to 26 U.S.C. § 6404 addressing a taxpayer's right to have the IRS's denial of abatement reviewed. Section 6404(h) provides, in part:
(1) In general. The Tax Court shall have jurisdiction over any action brought by a taxpayer . . . to determine whether the Secretary's failure to abate interest under this section was an abuse of discretion, and may order an abatement, if such action is brought within 180 days after the date of the mailing of the Secretary's final determination not to abate such interest.
The issue facing this court is whether Congress, in enacting section 6404(h), intended to give the United States Tax Court exclusive jurisdiction to review interest abatement decisions of the IRS. To that end, it is necessary to review the state of the law before the 1996 amendments.
Prior to 1996, several circuit courts held that interest abatement decisions under section 6404(e) were within the sole discretion of the IRS and beyond judicial review. See Argabright v. United States, 35 F.3d 472, 476 (9th Cir. 1994); Selman v. United States, 941 F.2d 1060, 1064 (10th Cir. 1991); Horton Homes, Inc. v. United States, 936 F.2d 548, 554 (11th Cir. 1991). The Tenth Circuit's decision in Selman provides guidance to understanding the reasoning behind these cases.
In Selman, taxpayers appealed the lower court's ruling that: (1) it lacked subject matter jurisdiction to review interest abatement issues; and (2) that "even if it had jurisdiction, the abatement of interest was committed solely to the discretion of the IRS and not subject to judicial review." Selman, 941 F.2d at 1060. The Tenth Circuit affirmed the district court's ruling on the second basis, holding "that the IRS's refusal to abate interest is not subject to judicial review."Id.
First, the court ruled that the district court did have subject matter jurisdiction to review the taxpayer's case. Id. at 1062. Specifically, the court concluded that a challenge to the IRS's refusal to abate interest under section 6404(e)(1) fell "within the district court's jurisdiction to decide cases regarding `any sum alleged to have been excessive . . . under the internal-revenue laws,' 28 U.S.C. § 1346(a)(1). . . ." Id. Second, the court determined that although 28 U.S.C. § 1346(a)(1) conferred jurisdiction, that jurisdiction was subject to the Administrative Procedure Act ("APA") and its provisions governing when a court may review agency decisions. The court ruled that the APA's provisions for judicial review of agency actions did not apply because interest abatement decisions were "committed to agency discretion by law." Id. at 1063;see 5 U.S.C. § 701(a)(2). The court noted that section 6404(e)(1) failed "to provide . . . any substantive standards by which to review the agency's action" and that the statute's "language, structure and legislative history . . . indicate[d] that Congress meant to the commit the abatement of interest to the Secretary's discretion. . . ." Id. at 1063-64.
28 U.S.C. § 1346(a)(1) (2003) states that:
(a) The district courts shall have original jurisdiction . . . of:
(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.
Several federal district courts have analyzed the 1996 amendments to section 6404 and discussed their impact on the Selman line of cases prohibiting federal district court review of interest abatement issues. These district courts have all concluded that Congress intended to provide exclusive jurisdiction to the United States Tax Court over interest abatement decisions by the IRS. See Weiner v. United States, 255 F. Supp.2d 624 (S.D. Tex. 2002); Kraemer v. United States, 2002 WL 575791; Dogwood Forest Rest Home, Inc. v. United States, 181 F. Supp.2d 554 (M.D. N.C. 2001); Davies v. United States, 124 F. Supp.2d 717 (D. ME 2000); Henderson v. United States, 95 F. Supp.2d 995 (E.D. Wis. 2000). The primary basis for these decisions was based on the House Report explaining the 1996 amendments:
Present Law
Federal courts generally do not have the jurisdiction to review the IRS's failure to abate interest.
Reasons for Change
The Committee believes that it is appropriate for the Tax Court to have jurisdiction to review IRS's failure to abate interest with respect to certain taxpayers.
Explanation of provision
The bill grants the Tax Court jurisdiction to determine whether the IRS's failure to abate interest for an eligible taxpayer was an abuse of discretion. The Tax Court may order an abatement of interest. The action must be brought within 180 days after the date of mailing of the Secretary's final determination not to abate interest. An eligible taxpayer must meet the net worth and size requirements imposed with respect to awards of attorney's fees. No inference is intended as to whether under present law any court has jurisdiction to review IRS's failure to abate interest.Davies, 124 F. Supp.2d at 720 (quoting H.R. Rep. No. 104-506, at 28 (1996)).
Based on this legislative history, these district courts determined that Congress recognized the limitation on judicial review imposed by theSelman line of cases and intended to remedy the situation by providing judicial review in the Tax Court. These courts further determined, however, that Congress did not extend judicial review to the district courts. See Kraemer, 2002 WL 575791, at *6 ("In enacting [the 1996 amendments], Congress first acknowledged the district courts' powerlessness to review abatement decisions and then granted the Tax Court, alone, that jurisdictional power. This is the only plausible reading of 26 U.S.C. § 6404[h]."); Davies, 124 F. Supp.2d at 721 ("While it is true that Congress, in enacting section 6404(i), made abatement decisions reviewable by the Tax Court pursuant to an abuse-of-discretion standard, there is no indication that Congress intended that this standard be exported to the district courts.").
Defendant requests this court to follow the line of federal district court decisions holding that the United States Tax Court retains exclusive jurisdiction over interest abatement decisions. The court notes that at the time these federal district courts rendered their decisions, no court of appeals had confronted this issue. The court's research reveals, however, that the Fifth Circuit recently held "that the grant of jurisdiction to the Tax Court in section 6404(h)" does not "preclude the exercise of district court jurisdiction over interest abatement claims."Beall v. United States, 336 F.3d 419, 430 (5th Cir. 2003). The court therefore must decide whether to follow the prior federal district court decisions in light of the Fifth Circuit's decision inBeall.
In Beall, the Government argued that the district court could not review a decision denying a taxpayer's claim to abate interest because Congress's "grant of jurisdiction in section 6404(h) to the Tax court [was] exclusive. . . ." Id. at 427. Noting the prior district court decisions in Kraemer, Davies, andHenderson, the Fifth Circuit disagreed with the Government's argument. Id. at 427 n. 10.
First, the Beall court recognized that the Selman line of decisions denied judicial review "not because the district courts lacked subject matter jurisdiction . . ., but because the then extant version of section 6404(e)(1) committed the decision to abate interest to agency discretion." Id. at 428 (citations omitted). The court noted that district courts have always possessed jurisdiction to review section 6404(e) denials, but that taxpayers "had no substantive right whatever to a favorable exercise of the Secretary's discretion."Id. The court determined that "[i]n amending section 6404(e)(1) and in enacting section 6404(h), Congress . . . removed any impediment to district court review of section 6404(e)(1) claims." Id. at 428.
Although the Beall court concluded that judicial review of the decision to abate interest was no longer barred by section 701(a)(2) of the APA, in a footnote the court stated that its "discussion of § 701(a)(2) should not be read as sanctioning the use of the APA as a vehicle for bringing a challenge to a decision of the Secretary under § 6404(e)(1)." Id. at 427 n. 9.
Second, in reaching its conclusion, the Beall court relied on the legislative history of the Taxpayer Bill of Rights II. Specifically, the court noted Congress's statement that "[n]o inference is intended as to whether under present law any court has jurisdiction to review IRS's failure to abate interest." Id. at 428. The court believed that the natural reading of this sentence was "that Congress intended to make no statement regarding the existence of jurisdiction in the district courts." Id. at 428 n. 13. The court also mentioned that nowhere in the 1996 amendments did Congress say that "district courts did not have jurisdiction to review interest abatement claims." Id. at 428.
Third, the Beall court reasoned that granting jurisdiction to the Tax Court was not inconsistent with the availability of federal district court review and noted that any notion Congress intended to repeal a federal district court's jurisdiction by implication would be disfavored. Id. at 428-29. In fact, the court stated, "the more natural interpretation . . . is that Congress simply chose to extend concurrent jurisdiction to the Tax Court. . . ."Id. at 430. The court concluded that "[t]o read a grant of jurisdiction to the Tax Court to hear an interest abatement claim as exclusive would be to read too much into section 6404. . . ."Id.
Finally, the Beall court noted that to hold that the Tax Court had exclusive jurisdiction over interest abatement decisions would lead to two unusual results. First, because Congress's grant of jurisdiction to the Tax Court was limited to qualified small taxpayers that meet the net worth requirements listed in section 6404(h), larger taxpayers unable to meet the qualifications would be unable to seek judicial review in any court. Id. Second, noting that claim splitting is disfavored, the court stated that:
a plaintiff who chose to pay his tax liability first and sue in district court under 28 U.S.C. § 1346, would not be able to bring, at the same time, a challenge to the IRS's failure to abate interest already collected. Instead, that taxpayer would have to sever his interest abatement claim from his refund claim and pursue the abatement claim separately in the Tax Court.Id. The Beall court concluded that Congress could not have intended these results. Id.
After reviewing the prior cases deciding this issue, as well as the relevant legislative history, the court is persuaded by the 5th Circuit's rationale in Beall. Accordingly, the court concludes that it has jurisdiction to review the IRS's denial of Plaintiff's request to abate interest. The court now turns to the merits of Plaintiff's claim, and determines that it fails. Officer Cummings's Notice of Determination states that Plaintiff requested that "some of the interest charges be abated on the account due to the long appeals process the taxpayer has endured while disputing the penalty assessment." In rejecting Plaintiff's request, Officer Cummings observed that Plaintiff was "repeatedly warned" that interest would accrue on the TFRP as long as the penalty remained unpaid, and that it was Plaintiff's decision not to pay the charges. He further noted that Plaintiff did not provide any reasonable grounds for the abatement of interest.
The court acknowledges that jurisdiction to hear tax cases under 28 U.S.C. § 1346(a)(1) is subject to the full prepayment rule which "requires the taxpayer to first pay the full amount of an income tax deficiency assessed by the IRS before he/she may challenge the assessment . . . under § 1346(a)(1)." Ardalan v. United States, 748 F.2d 1411, 1413 (10th Cir. 1984). Although Plaintiff has not paid the TFRP in full, he falls under the "divisible" tax exception to this rule. Id. at 1414 (citing Fidelity Bank. N.A. v. United States, 616 F.2d 1181, 1182 n.l (10th Cir. 1980)). This action involves "a suit challenging a 100% penalty pursuant to 26 U.S.C. § 6672 for failure to withhold and pay over employment taxes."Id. (citing Church of Scientology of Colo. v. United States, 499 F. Supp. 1085, 1087 (D. Colo. 1980)).
The IRS may abate interest "attributable . . . to any unreasonable error or delay by an officer or employee of the Internal Revenue Service . . . in performing a ministerial or managerial act. . . ." 26 U.S.C. § 6404(e)(1). Plaintiff's response to Defendant's motion for summary judgment fails to mention any ministerial or managerial acts entitling Plaintiff to receive an abatement of interest. Plaintiff's complaint in this action, however, states:
Defendant has unreasonably delayed acting on this matter and as the result of the same has continuously charged Plaintiff for interest on any alleged amounts owed. By way of example, Defendant issued a Notice of Intent to Levy on March 18, 2002. Plaintiff filed his Request for a Collection Due Process Hearing on April 1, 2002, over two weeks prior to the deadline imposed. It was not until December 3, 2002 that a hearing was held on the matter, and not until February 21, 2003 until the Notice of Determination was filed and mailed.
As Defendant correctly points out, "[t]he mere passage of time . . . does not establish error or delay in performing a ministerial act." Hanks v. Comm'r, 82 T.C.M. (CCH) 1003 (2001) (citations omitted). The record does not show, and Plaintiff does not identify, any specific acts attributable to the IRS that would constitute ministerial or managerial acts entitling him to an abatement of interest. The court concludes that Officer Cummings's decision denying Plaintiff's request to abate interest was not an abuse of discretion.
C. Collection from Other Responsible Persons
Third, Plaintiff maintains that "Defendant failed to collect from other individuals who would be equally or more responsible for payment of the alleged underlying obligation." In response, Defendant argues that it is entitled to summary judgment because: (1) Plaintiff failed to raise this issue at the Collection Due Process hearing and is thus barred from raising the issue before this court; and (2) the fact that other responsible persons exist is not a valid defense because the TFRP is subject to joint and several liability.
Plaintiff disputes Defendant's contention that collection efforts against other responsible officers was not discussed at the CDP hearing. In support of his position, Plaintiff provided a declaration from his attorney, Mark J. Eichholz, stating that the collection efforts against two other responsible persons were discussed at the hearing. Officer Cummings's affidavit states that "Plaintiff did not raise the issue of collecting or assessing other responsible persons in the CDP proceeding other than his request for the names of the other persons assessed the TFRP. . . ." Officer Cummings further asserts that pursuant to 26 U.S.C. § 6103(e)(9), he directed Plaintiff to submit a request for the names of the other persons the IRS determined to be liable for the TFRP, but that he never received a written request from Plaintiff. Section 6103(e)(9) states:
If the Secretary determines that a person is liable for a penalty under section 6672(a) with respect to any failure, upon request in writing of such person, the Secretary shall disclose in writing to such person —
(A) the name of any other person whom the Secretary has determined to be liable for such penalty with respect to such failure, and
(B) whether the Secretary has attempted to collect such penalty from such other person, the general nature of such collection activities, and the amount collected.26 U.S.C. § 6103(e)(9) (2003).
Even assuming Plaintiff questioned the IRS's pursuits of other individuals potentially liable for the TFRP at the hearing, whether or not the IRS pursues other responsible persons is irrelevant to this action. "[L]iability under section 6672 is joint and several among responsible persons, and `each responsible person can be held for the total amount of withholding not paid.'" United States v. Mitchell, No. 00-45, 2002 U.S. Dist. Lexis 11948, at *31 (D. N.J. June 28, 2002) (citations omitted). "That another person also may be liable under Section 6672 does not affect the liability of the person presently subject to suit." Quattrone Accountants v. IRS, 895 F.2d 921, 926 (3d Cir. 1990) (citing Commonwealth Nat'l Bank of Dallas v. United States, 665 F.2d 729, 732 (6th Cir. 1981)). Plaintiff's liability for the TFRP is separate and distinct and he is potentially liable for the entire amount. Accordingly, the court concludes that Defendant's motion for summary judgment is granted as to this claim.
D. Alleged Agreement to Abate Interest During this Action
Finally, Plaintiff claims that he and Defendant's representatives entered into an agreement so that interest would not accrue on the TFRP during the pendency of this action. Specifically, Plaintiff asserts "that an understanding was present at the time he made a payment of $603.24 under protest on February 19, 1999, that interest would cease to accrue." Defendant argues that summary judgment should be granted in its favor because: (1) Plaintiff should be barred from maintaining this issue because he failed to raise this argument at the CDP hearing; and (2) even if this issue was properly raised, Plaintiff failed to produce any evidence of an alleged agreement with the IRS to prevent interest from accruing on the TFRP.
The parties dispute whether an alleged agreement regarding interest accrual was raised during the CDP hearing. Even assuming Plaintiff brought this issue to the attention of Officer Cummings at the CDP hearing, Plaintiff has not produced any sufficient evidence of an alleged agreement between Plaintiff and the IRS.
The only evidence Plaintiff has presented to support his position that an agreement existed is the declaration of his attorney, Mark Eichholz. Mr. Eichholz states "[f]hat when Plaintiff made the February 19, 1999 payment under protest, he believed that interest would not accrue." As an initial matter, the court questions the objective soundness of Plaintiff's belief. In a letter to Plaintiff on November 4, 1998, the IRS stated that it was sorry "a satisfactory agreement" could not be reached regarding the TFRP and advised Plaintiff to pay the full amount at once to reduce the interest charges. Additionally, on October 28, 2002, in a letter sent to Plaintiff from Officer Cummings, Officer Cummings reminded Plaintiff that "[s]ince statutory interest is accruing as required by law, at any time you may stop the running of accruals by making a payment." This same reminder appeared on another letter that was sent to Plaintiff's attorney on December 5, 2002. As Officer Cummings's Notice of Determination pointed out, "the taxpayer was repeatedly warned that interest charges will accrue on the penalty as long as it remains unpaid."
Second, any argument that a binding agreement was reached fails. As Defendant correctly points out, the exclusive procedure for compromising federal tax liabilities is through a final closing "agreement" under 26 U.S.C. § 7121 or a "compromise" under 26 U.S.C. § 7122. See Rogers v. United States, 76 F. Supp.2d 1159, 1169 (D. Kan. 1999). Plaintiff has not produced any evidence of an agreement that would meet the formal requirements of these sections. Plaintiff has not named an IRS representative that may have led Plaintiff to believe that his payment made in February 1999 would stop the interest from accruing on his TFRP. Accordingly, the court concludes that Defendant's motion for summary judgment is granted as to this claim.
IT IS, THEREFORE, BY THE COURT ORDERED that Defendant's motion for summary judgment (Doc. 6) is granted.
Copies of this order shall be transmitted to counsel of record.
The case is closed.
IT IS SO ORDERED.