Simone Joye, Petitioner

RECOFCED CAI FIT S T.C. Memo. 2002-14 UNITÈD STATES TAX COURT SIMONE JOYE, Petitioner y. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 10338-00L.

Filed January 14, 2002.

Simone Joye, pro se.

Gerard Mackey, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge:

The petition in this case was filed in response to a "NOTICE OF DETERMINATION CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330" (notice of determina- tion).

The issues remaining for decision are:

(1) Did respondent correctly determine in the notice of

SERVED JAN 1 4 2002

for petitioner's taxable year 1987:

Tax of $1,492; additions to tax under section 6651(a)(1) for failure to file timely and section 6651(a)(2) for failure to pay timely of $119.48 and $71.68, respectively; and interest of $176, all of which respon- dent reflected in Form 4340, CERTIFICATE OF ASSESSMENTS, PAY- MENTS, AND OTHER SPECIFIED MATTERS (Form 4340).

On June 18, 1990, respondent sent petitioner a delinquency notice with respect to her unpaid liability for 1987 of $531 in tax and $191.16 in additions to tax, plus interest as provided by law on those amounts.² (For convenience, we shall refer to petitioner's liability for unpaid tax, unpaid additions to tax, and interest as provided by law on such unpaid tax and such additions to tax as petitioner's unpaid liability.)

As of the date of trial in this case, petitioner had not paid any portion of petitioner's unpaid liability for 1987.

Petitioner filed a return for her taxable year 1988 on May 18, 1990.

In that return, petitioner showed $1,676 as tax for 1988.

As of April 15, 1989, petitioner had a withholding credit of $186 with respect to that tax.

On June 18, 1990, respondent timely assessed the following for petitioner's taxable year 1988:

Tax of $1,676; additions to tax under section 6651(a)(1) for failure to file timely and section 6651(a)(2) for failure to pay 2Respondent had previously sent petitioner delinquency notices with respect Sept. 25, 1989, Feb. 5, 1990, and Mar. 19, 1990.

to her taxable year 1987 on July 31, 1989, letter (petitioner's June 19, 1990 letter) with respect to her unpaid liability for each of the years 1987, 1988, and 1989:

Re:

1040A Year Year 1040 Year 1040 1987 1988 1989 Total:

$ 898.16 $2,198.45 $ 181.53 $3,278.14 Dear Sir/Madam:

I have recently received notices outlining the above taxes that I apparently owe.

From June of 1987 until December of 1989, tered as a full-time student taxes were paid were either when I was only registered part-time or on a summer break).

(the periods where some I was regis- When I filled out my W-4 forms I filed for the exempt status because that for full-time students.

is highlighted on the form is what Imagine my surprise and dismay when I was notified by your office that I would have to file taxes for the above-reference years. received notices stating that I owe $3,278.14, $1,087.14 being interest and penalties (copies en- closed).

I had the taxes filed and As a current student with a part-time job, paying for my own education and living on my own, have that type of money available nor did I ever real- ize that I would be so severly penalized for something in which I believed to be correct.

I do not readily Please advise me of my current options in terms of appealing this, paying for this debt (Application for Assistance Order to Relieve Hardship), or any other means available.

through Form 911 Also, please send to me the rules and regulations governing the status of full-time students and with- holding provisions.

[Reproduced literally.]

On June 29, 1990, respondent sent petitioner a letter in taxes in full. Therefore, you must complete the en- closed Form 433F, Collection Information Statement.

* * * * * * * If you do not return the above documents within 7 days from the date of this letter, we will begin en- forcement actions. possible at We expect you to pay as much as * the time you send in your statements.

* * Respondent has no record of having received Form 433-F, Collec- ticn Information ·Statement (Form 433-F), from petitioner.

On December 15, 1995, respondent filed a notice of Federal tax lien against petitioner with respect to her unpaid liability for each of the years 1987, 1988, and 1989.

On December 26, 1995, respondent classified petitioner's unpaid liability for each of the years 1987, 1988, and 1989 as "currently not collect- ible" because respondent was unable to locate petitioner.

On May 18, 1998, respondent sent petitioner a separate no:ice of balance due with respect to petitioner's unpaid liabil- ity for each of the years 1987, 1988, and 1989.

On June 22, 1998, respondent sent petitioner a separate notice of intent to levy with respect to each of those unpaid liabilities.

On July 8, 1998, petitioner sent respondent a letter in response to the three notices of balance due that respondent sent tc petitioner on May 18, 1998.

In that letter, petitioner stated:

On June 19, 1990 I sent a letter to the IRS regarding taxes for 1987, 1988, and 1989 (copy enclosed). clearly stated on the W-4 form if you were a full-time student you were instructed to write in EXEMPT from It was On June 11, 1999, respondent received petitioner's request for an Appeals Office hearing with respect to her unpaid liabil- ity for each of the years 1987, 1988, 1989, and 1990.

In that request, petitioner stated:

I do not agree with the Notice of Levy/Seizure because of the circumstances in which were done to determine the tax liability. and telephoned the IRS to try to set up a meeting to try and remedy this situation, For several years, I have written to no avail.

the W-4 form according to the instruc- The taxes incurred are when I was a full-time student and I filled out tions listed under number 7 which states "I claim exemption from withholding for...and I certify that I meet BOTH of tion:..." Since that but when I filled them out for the years of collection one of student.

the conditions were if you were a full-time the following conditions for exemp- time the form has been changed, through investigation, I now know, that if a person made over a certain income they could not be exempt. However, at employer or on the W-4 form. up for students and I truly do not held.liable for the amount of $8,718.39 that stated I owe.

the time this was not made clear by my It was almost feel I should be is being like a set- to me for a very long I would be willing to pay the assessed balance just so that I may get this behind me. I do not seem it just nor proper to charge me Because this has been a detriment time, charges, ever, with Statutory Additions or to penalize me by seizing any property of mines which would not equal owed. be a severe hardship for me.

the amount I am a single mother and any penalization would How- .

I welcome- an opportunity to finally review this with an IRS representative in person at time to set-up a payment plan.

the earliest possible [Reproduced literally.]

.

On October 5, 1999, Appeals Officer Martin D. Fried sent petitioner a letter indicating that he had received petitioner's that were contained in that form provided:

Step 2--Are you Exempt From Withholding?--You are exempt from withholding ONLY if:

1.

2.

Last year you did not have any Federal liability; AND income tax This year you expect liability.

to have no Federal income tax Important Change in the Law.--If you can be claim- ed as a dependent on another person's tax return (for example, on your parent's return), you may not be You cannot claim exempt status if you have any exempt. nonwage income, such as interest on savings, and expect your wages plus this nonwage income to add up to more than $500.

If you are exempt, go to line 6 of Form W-4 and remain in effect until February 15 of complete the appropriate boxes. Your exempt status the next will year. year, complete and file a new form by that date.

If you still qualify for exempt status next On June 28, 2000, Mr. Lawrence received a letter from petitioner in response to Mr. Lawrence's June 20, 2000 letter.³ In that letter, petitioner stated:

First let me say thank you for your assistance in my I have received your letter of June 20, 2000. case.

I have found a copy of Fortunately, and it is not you will see, letter c it states, "If you entered "EXEMPT" on line 6b, are you a full-time stu- dent?"

the same as 1988 as you had assumed. in Line 6, the 1987 W-4 Form As Additionally, I held the same job in 1987 and for at 3The letter that respondent received from petitioner on June 28, 2000, showed a date of June 16, 2000. However, we are convinced from that after June 20 and before June 28, 2000, and (2) mistakenly dated that letter June 16, 2000.

letter (1) that petitioner wrote it on a date that petitioner 1988, 1989, 1990, and 1997], since the Form W-4 did not properly explain that if a full a certain amount of from withholdings taxes from wages. interest and the penalties to be abated based on un- clear written instructions From the IRS.

income he/she could not be exempt time student made over She wants the * * * * * * * IRC § 6601(a) provides, imposed by this title is not paid on or before the last date prescribed for payment, interest on the underpay- ment rate established under section 6621 shall be paid for the period from such last date to the date paid.

that if any amount of the tax IRC § 6404(e)(1) provides for abatement of attributable to unreasonable error and delays by Inter- nal Revenue Service in performing a ministerial or management act. However, interest cannot be abated for any period if a significant aspect o the error or delay can be attributable to the taxpayer within the meaning of section 267(b) or 707(b) of the code.

interest In the present case, IRC § 6404(e)(1) does not apply, because the evidence in this case shows that error or delay was attributable to taxpayer's Failure to file timely tax returns and to pay the taxes due on those returns. it appears that Rules and Regulations. Accordingly, due and payable.

Based on the evidence in the case file, the taxpayer willfully disregards IRS the interest is IRC § 6651(a)(1) file tax return, by the date prescribed, unless, shown that not due to willful neglect.

the failure is due to reasonable cause and imposes a penalty for the failure to it is IRC § 6651(a)(2) Likewise, penalty if the tax shown on the return, is not paid by the due date of that return, unless the failure to pay is due to reasonable cause and not due to willful neglect.

imposes a failure to pay The burden of proof reasonable cause for the abatement of The evidence in this case shows, the taxpayer was misled to believe that she was exempt from withholdings, as a result of is on the taxpayer to establish the penalties. that even though if the information she * * * * * * * IRC Section Petitioner strongly believes that 6404(e)(1) does apply in this case, because there is evidence in this case which shows that delays were not attributable to Petitioner "Failure to file timely tax returns" as Petitioner has been corresponding with the IRS regarding these tax years since 1988. Addition- ally, Petitioner is accused of raising at Conference a "W-4 argument raised to cloud the main issues in this case..." Petitioner has corresponded with the IRS regarding the W-4 form since 1988.

[Reproduced literally.]

[which] appears to have been the Appeals

OPINION

Petitioner does not dispute respondent's determinations in the notice of determination that respondent may proceed to collect tax of $531 for 1987, $1,490 for 1988, and $170 for 1989.

Petitioner disputes only respondent's determinations that respon- dent may proceed to collect additions to tax under section 6651(a)(1) and (2) and interest as provided by law for each of those years.⁴ 4With respect to the additions to tax under sec. 6651(a)(1) that respondent assessed for each of petitioner's taxable and (2) years 1987, 1988, and 1989, petitioner indicated at trial that she disputes that she is liable for those additions to tax. On brief, petitioner indicates that she seeks "abatement" of those additions to tax. to review (1) whether she is liable for the additions to tax under sec. 6651(a)(1) and (2) of her taxable years 1987, 1988, and 1989 and (2) whether if the respondent may proceed Ccurt were to find that she is so liable, tc collect such additions to tax.

We construe petitioner's position as a request that respondent assessed for each With respect to the interest as provided by law for each of petitioner's taxable years 1987, 1988, and 1989, petitioner indicated at trial and on brief that she seeks abatement of such interest during the period 1990 to the present.

We construe (continued...)

abuse of discretion respondent's determinations in the notice of determination not to abate interest under section 6404(e) for any of petitioner's taxable years 1987, 1988, and 1989.

De Novo Review It is respondent's position that respondent has the burden of production under section 7491(c) with respect to petitioner's liability for each of the years at issue for the additions to tax under section 6651(a)(1) and (2). Section 7491(c) provides:

SEC. 7491.

BURDEN OF PROOF.

(c) Penalties.--Notwithstanding any other provi- sion of this title, the Secretary shall have the burden of production in any court proceeding with respect the liability of any individual for any penalty, addi- tion to tax, or additional amount title.

imposed by this to Assuming, without deciding, that respondent has the burden of production with respect to petitioner's liability for each of the years at issue for the additions to tax under section 6651(a)(1) an (2), on the record before us, we find that respondent has met respondent's burden by coming forward with sufficient evidence indic.ating that it is appropriate to impose on petitioner such additions to tax for such years.s See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).

Section 6651(a)(1) imposes an addition to tax for failure to sThe parties stipulated that petitioner did not file timely least as her return for each of of the date of trial any portion of her unpaid liability for each of those years.

in this case, petitioner had not paid timely issue and that, at the years at ing for that year.⁶ On the record before us, we reject peti- tioner's position.

Assuming arguendo that Form W-4 for 1987 had indicated that full-time students were exempt from withholding for that year and that petitioner was exempt from withholding for each of her taxable years 1987, 1988, and 1989, on the record before us, we find that petitioner was required to file timely a return for each of those years and to pay timely the tax shown in each such return.

See sec. 6012(a)(1)(A).

On the record before us, we find that petitioner has failed to show that her failure to file timely her return for each of her taxable years 1987, 1988, and 1989 and her failure to pay tinely the tax shown in each such return was due to reasonable cause and not to willful neglect.

On that record, we find that peritioner has failed to show that she is not liable for the additions to tax under section 6651(a)(1) and (2) that respondent assessed for each of those years.

6Although petitioner claims that, pursuant to Form W-4 for tax was withheld from her wages during from withholding for each of her taxable On the instant record, we find incredible petitioner's 1987, she was exempt years 1987, 1988, and 1989 because she was a full-time student during each such year, each of those years, and petitioner was aware of such withhold- ing. claimed belief that she was exempt petitioner had erroneously believed that she was exempt withholding for each of the years 1987, 1988, and 1989, her mistake as to, or ignorance of, the law does not constitute reasonable cause under sec. 6651(a)(1) and (2). sioner, 25 T.C. 13, 15 (1955).

from withholding.

Even if from Joyce v. Commis- tioner filed her return for 1989, and on May 18, 1990, she filed her return for each of the years 1987 and 1988.

In June 1990, respondent timely assessed petitioner for her unpaid liability for each of the years 1987, 1988, and 1989.

In petitioner's June 19, 1990 letter and again sometime thereafter, petitioner in- formed respondent that she was unable to pay in full her unpaid liability for each of those years, which prompted respondent to send petitioner Form 433-F on July 29, 1991.8 Although prior to trial petitioner claimed that she completed Form 433-F that respondent sent to her, respondent has no record of having received that form.

In December 1995, respondent filed a notice of Federal tax lien against petitioner with respect to her unpaid liability for each of the years 1987, 1988, and 1989 and classi- fied each such liability as "currently not collectible" because respondent was unable to locate petitioner.

In May and June 1998, respectively, respondent sent petitioner notices of balance due and notices of intent to levy with respect to her unpaid liability for each of the years 1987, 1988, and 1989, to which 7(...continued) 1990 and (2) separate notices of balance due with respect unpaid liability for 1988 and 1989 in June 1990 as well as in July 1990.

to her "Although petitioner claimed in certain letters that she sent to respondent that she was unable to pay in full her unpaid liability for each of the years 1987, 1988, and 1989, petitioner did not contend in her petition, at trial, or on brief that she was not able to pay that liability for each such year.

garding my case under the law.

* * * * * * * * * * Respondent has delayed my tax situation and did not allow me due process or accurate information until I sought relief from the Court. This was an abuse of their discretion.

* * * Section 6404(e) provides in pertinent part:

SEC. 6404.

ABATEMENTS.

.

(e) Assessments of Interest Attributable to Errors and Delays by Internal Revenue Service.-- (1) ment of In general.--In the case of any assess- interest on-- * * * * .

* * * (B) any payment of any tax described in to the extent that any error section 6212(a) or delay in such payment such officer or employee [of Revenue Service] being erroneous or dilatory in performing a ministerial act, is attributable to the Internal the preceding sentence, an error or the Secretary may abate the assessment of all or any part of such interest for any period. purposes of delay shall be taken into account only if no sig- nificant aspect of such error or delay can be attributed to the taxpayer involved, and after the Internal Revenue Service has contacted the tax- payer in writing with respect to such * ment . f¹¹ * pay- For * 1Sec. 6404(e) was amended by Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 301, 110 Stat. 1452, 1457 (1996), interest with respect to an "unreasonable" error or delay resulting from "managerial" and ministerial acts. This amendment applies to interest accruing with respect to deficiencies or payments for taxable years beginning after July 30, 1996; v. Commissioner, 115 T. C. 329, 341 n.¹⁸ (2000) .

therefore, it does not apply to the instant case.

to permit the Secretary to abate ]La_tt_z Petitioner does not point to any ministerial act performed by respondent or otherwise advance any arguments or contentions