Opinion
17992-19P
10-12-2022
ZOLA JANE PUGH, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Elizabeth A. Copeland Judge.
Currently pending before the Court is Respondent's Motion for Summary Judgment, filed on January 19, 2021. In an order dated February 12, 2021, we ordered Petitioner, Zola Jane Pugh, to file a response to Respondent's motion by March 15, 2021. To date, Ms. Pugh has not filed a response.
Summary judgment expedites litigation and avoids costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). In cases that are subject to a de novo scope of review, we may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), aff'd, 17 F.3d 965 (7th Cir. 1994). In cases that are decided on the administrative record (record rule cases), we decide the issues raised by the parties by reviewing the administrative record using a summary adjudication procedure. See Van Bemmelen v. Commissioner, 155 T.C. 64, 78-79 (2020) (discussing the relationship between scope and standard of review and the standard of summary adjudication). The moving party (Respondent here) bears the burden of proving that he is entitled to judgment as a matter of law. See Sundstrand Corp., 98 T.C. at 520 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). In deciding whether to grant summary judgment, we view the factual materials and inferences drawn from them in the light most favorable to the nonmoving party (Ms. Pugh in this case). Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)).
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
For Respondent to show entitlement to summary judgment in passport cases, he must show that his certification was not erroneous, i.e., that Ms. Pugh fits squarely within the definition, and outside the exceptions, set forth in section 7345(b) for a taxpayer owing a "seriously delinquent tax debt." See, e.g., Rowen v. Commissioner, 156 T.C at 117-18; Ezekwo v. Commissioner, T.C. Memo. 2022-54, at *5-6 (looking at the supporting materials Respondent attached to his motions for summary judgment for support that the specific requirements of section 7345(b) have been met).
A "seriously delinquent tax debt" is a federal tax liability that: (1) has been assessed; (2) exceeds $51,000; (3) is unpaid and legally enforceable; and (4) is the subject of a filed lien notice or a completed levy. I.R.C. § 7345(b)(1), (f).
Section 7345(b)(1)(B) requires the liability to be greater than $50,000, which must be adjusted for inflation beginning in tax years 2016. I.R.C. § 7345(f). The adjusted amount for 2018 was $51,000. Rev. Proc. 2017-58, § 3.53, 2017-45 I.R.B. 489, 499.
In this case, Ms. Pugh did not file an income tax return for tax years 2010 and 2011. Respondent prepared substitute for returns pursuant to section 6020(b) for both tax years. He attached three exhibits in support of his motion: (1) Exhibit A is Ms. Pugh's Account Transcript for tax year 2010; (2) Exhibit B is Ms. Pugh's Account Transcript for tax year 2011; and (3) Exhibit C is a copy of a District Court order for an unrelated taxpayer. We note that none of these documents were accompanied by any form of certification of official records nor declaration regarding same.
Of particular relevance here are the account transcripts, which raise more questions than answers. For instance, Respondent alleges that he prepared substitutes for return pursuant to section 6020(b) for tax years 2010 and 2011 on July 8, 2013, and September 2, 2014, respectively, and that he issued notices of deficiency for those tax years on the same dates. The account transcripts, however, do not uphold those allegations. The entries on the account transcripts for tax year 2010 state that on October 4, 2012, an examination began; on October 15, 2012, a substitute for return was prepared by the Internal Revenue Service; and on February 10, 2014, the examination was closed with additional tax, a "penalty for not prepaying tax," a "penalty for filing a return after the due date," a "penalty for late payment of tax," and interest assessed. Similarly for tax year 2011, the entries are that on December 13, 2013, an examination began; on December 30, 2013, a substitute for return was prepared; and on December 29, 2014, the examination was closed with additional tax, a "penalty for not pre-paying tax," a "penalty for filing a return after the due date," a "penalty for late payment of tax," and interest assessed. Neither transcript has any entry suggesting that a notice of deficiency was ever issued for either tax year. See Spurlock v. Commissioner, 118 T.C. 155, 161 (2002) (holding that Respondent must follow the deficiency procedures prior to assessing an income tax liability stated on a section 6020(b) return). Next, both transcripts indicate that collection activity began by sending "Collection due process Notice[s] of Intent to Levy."
Given that a basic component to our verification that the debt is legally enforceable has not been provided (namely copies of the notices of deficiency with proof that they were mailed to Ms. Pugh's last known address) we are unable to verify whether Ms. Pugh has a "seriously delinquent tax debt," as defined in section 7345(b). Thus, we will deny Respondent's Motion for Summary Judgment, without prejudice. If Respondent wishes to refile his Motion for Summary Judgment, the Court would appreciate the following lodged with such motion:
• A copy of the notice of deficiency allegedly issued to Ms. Pugh for each tax year at issue with proof of mailing to Ms. Pugh's last known address; and
• A copy of the notice of intent to levy (or, if applicable, any notice federal tax lien filing) allegedly issued to Ms. Pugh for each tax year at issue; and
• Forms 4340, Certificate of Assessments, Payments, and Other Specified Matters, for each tax year at issue, with an accompanying Certificate of Official Record, if respondent wishes to rely on internal records and account transcripts.
After due consideration, and for cause, it is
ORDERED that Respondent's Motion for Summary Judgment, filed on January 19, 2021, is denied without prejudice to refile.