SCOTUS Reports

Tag: Seriously Delinquent Tax Debt

  • Prince Amun-Ra Hotep Ankh Meduty v. Commissioner of Internal Revenue, 160 T.C. No. 13 (2023): Certification of Seriously Delinquent Tax Debt Under I.R.C. § 7345

    Prince Amun-Ra Hotep Ankh Meduty v. Commissioner of Internal Revenue, 160 T. C. No. 13 (U. S. Tax Ct. 2023)

    The U. S. Tax Court upheld the IRS’s certification of Prince Amun-Ra Hotep Ankh Meduty’s tax debt as ‘seriously delinquent’ under I. R. C. § 7345, affirming the IRS’s authority to notify the State Department for potential passport actions. The court clarified its limited jurisdiction, unable to review IRS notification procedures, emphasizing the statutory focus on the validity of the certification itself.

    Parties

    Prince Amun-Ra Hotep Ankh Meduty, Petitioner, pro se, v. Commissioner of Internal Revenue, Respondent, represented by Susan K. Bollman.

    Facts

    Prince Amun-Ra Hotep Ankh Meduty (formerly Steven Bell) failed to timely file federal income tax returns for the years 2003-2007, 2009, and 2012. The IRS prepared substitute returns for these years (except 2007) and assessed taxes, penalties, and interest. For 2007, Mr. Meduty filed a late return, and the IRS assessed the reported amount. Additionally, the IRS assessed frivolous return penalties for tax years 2005-2008. In attempts to collect these liabilities, the IRS levied against Mr. Meduty’s state income tax refunds. On July 3, 2018, the IRS sent a notice of intent to levy, and after receiving a signed return receipt, recorded initial levy transactions on August 31, 2018. On October 1, 2018, the IRS certified Mr. Meduty’s debt as ‘seriously delinquent’ under I. R. C. § 7345 and notified him accordingly. Mr. Meduty’s assessed liabilities totaled $106,346 at the time of certification.

    Procedural History

    Mr. Meduty petitioned the U. S. Tax Court to review the certification under I. R. C. § 7345(e)(1). The Commissioner filed a motion for summary judgment, asserting that the certification was proper and that he was entitled to judgment as a matter of law. The court considered the administrative record and the parties’ pleadings, applying the summary judgment standard under Rule 121 of the Tax Court Rules of Practice and Procedure.

    Issue(s)

    Whether the IRS’s certification of Prince Amun-Ra Hotep Ankh Meduty’s tax debt as ‘seriously delinquent’ under I. R. C. § 7345 was erroneous?

    Whether the Tax Court has jurisdiction under I. R. C. § 7345(e) to review challenges to the IRS’s compliance with the notification requirement set forth in I. R. C. § 7345(d)?

    Rule(s) of Law

    I. R. C. § 7345(a) authorizes the Commissioner to certify a ‘seriously delinquent tax debt’ to the Secretary of State for potential passport actions. I. R. C. § 7345(b)(1) defines a ‘seriously delinquent tax debt’ as an assessed federal tax liability exceeding $50,000 (adjusted for inflation), unpaid, and legally enforceable, where either a notice of lien has been filed or a levy has been made. I. R. C. § 7345(e)(1) allows taxpayers to petition the Tax Court to determine whether the certification was erroneous or whether the IRS failed to reverse the certification. I. R. C. § 7345(d) mandates the IRS to notify the taxpayer of the certification.

    Holding

    The IRS’s certification of Mr. Meduty’s tax debt as ‘seriously delinquent’ under I. R. C. § 7345 was not erroneous. The Tax Court lacks jurisdiction under I. R. C. § 7345(e) to review challenges to the IRS’s compliance with the notification requirement set forth in I. R. C. § 7345(d).

    Reasoning

    The court found that Mr. Meduty’s liabilities met the statutory definition of ‘seriously delinquent tax debt’ under I. R. C. § 7345(b)(1). The IRS had assessed and recorded the liabilities, and the total exceeded the inflation-adjusted threshold of $51,000 for 2018. The court also found that the IRS had made a levy pursuant to I. R. C. § 6331, as evidenced by the Forms 4340 and the declaration of a senior program analyst regarding the Integrated Data Retrieval System (IDRS) transcripts. The court dismissed Mr. Meduty’s arguments regarding the validity of the underlying liabilities and the necessity of implementing regulations for I. R. C. § 7345, citing established precedents. The court also rejected the argument that levies under I. R. C. § 6331 were limited to certain individuals, and dismissed the claim that Mr. Meduty had satisfied his debt with a ‘bonded promissory note’. On the issue of jurisdiction, the court interpreted I. R. C. § 7345(e) to focus solely on the validity of the certification, not on the IRS’s compliance with notification requirements under I. R. C. § 7345(d). The court found that a lack of proper notification did not prejudice Mr. Meduty’s ability to challenge the certification under I. R. C. § 7345(e).

    Disposition

    The court granted the Commissioner’s motion for summary judgment, affirming the certification of Mr. Meduty’s tax debt as ‘seriously delinquent’ under I. R. C. § 7345.

    Significance/Impact

    This case clarifies the scope of the Tax Court’s jurisdiction under I. R. C. § 7345(e), limiting it to reviewing the validity of the certification of a ‘seriously delinquent tax debt’ and not extending to the IRS’s compliance with notification requirements. It reinforces the IRS’s authority to certify tax debts as ‘seriously delinquent’ and underscores the importance of timely compliance with tax obligations to avoid potential passport restrictions. The decision also reflects the court’s stance on rejecting frivolous tax protester arguments, emphasizing the enforceability of tax liabilities and the IRS’s collection powers.

  • Blake M. Adams v. Commissioner of Internal Revenue, 160 T.C. No. 1 (2023): Judicial Review of Certification of Seriously Delinquent Tax Debt Under I.R.C. § 7345

    Blake M. Adams v. Commissioner of Internal Revenue, 160 T. C. No. 1 (2023)

    The U. S. Tax Court ruled that it lacks jurisdiction to review underlying tax liabilities certified as seriously delinquent under I. R. C. § 7345. The court upheld the Commissioner’s certification against Blake Adams, who owed over $1. 2 million in unpaid federal income taxes. The decision clarifies the court’s limited role to assessing the certification’s validity, not the underlying tax liabilities, and reinforces the statutory framework for tax debt enforcement.

    Parties

    Blake M. Adams, the petitioner, filed pro se against the Commissioner of Internal Revenue, the respondent, in the U. S. Tax Court, docket number 1527-21P.

    Facts

    Blake M. Adams had unpaid federal income tax liabilities exceeding $1. 2 million for the tax years 2007, 2009, 2010, 2011, 2012, 2013, 2014, and 2015. Adams failed to file federal income tax returns for these years, prompting the Commissioner to prepare substitutes for returns under I. R. C. § 6020(b). The Commissioner assessed the taxes, penalties, and interest based on these substitutes. Efforts to collect these debts were largely unsuccessful. Consequently, the Commissioner certified Adams as having a “seriously delinquent tax debt” to the Secretary of State under I. R. C. § 7345(b), triggering potential passport-related actions. Adams petitioned the Tax Court to challenge the certification’s validity.

    Procedural History

    Adams filed a petition in the U. S. Tax Court to challenge the certification under I. R. C. § 7345(e)(1). Both parties filed motions for summary judgment. The Commissioner argued that Adams had a seriously delinquent tax debt at the time of certification, while Adams contended that the certification was erroneous due to improper assessment and unconstitutional denial of his right to international travel. The Tax Court reviewed the case based on the administrative record and applicable law, ultimately granting the Commissioner’s motion for summary judgment and denying Adams’s motion.

    Issue(s)

    Whether the U. S. Tax Court has jurisdiction to review the underlying tax liabilities certified as seriously delinquent under I. R. C. § 7345?
    Whether the certification of Blake M. Adams as having a seriously delinquent tax debt was erroneous because the underlying liabilities were not properly assessed?
    Whether the Tax Court has jurisdiction to review the constitutionality of passport-related actions taken by the Secretary of State under the Fixing America’s Surface Transportation Act?

    Rule(s) of Law

    I. R. C. § 7345(b) defines a “seriously delinquent tax debt” as an unpaid, legally enforceable federal tax liability of an individual that has been assessed, exceeds $50,000 (adjusted for inflation), and for which a notice of lien has been filed or a levy made. I. R. C. § 7345(e)(1) grants the Tax Court jurisdiction to determine whether the certification was erroneous or whether the Commissioner failed to reverse the certification. The court does not have jurisdiction to review the underlying tax liabilities. The Fixing America’s Surface Transportation Act, Pub. L. No. 114-94, § 32101, authorizes the Secretary of State to take passport-related actions upon certification of a seriously delinquent tax debt.

    Holding

    The U. S. Tax Court lacks jurisdiction to review the underlying tax liabilities certified as seriously delinquent under I. R. C. § 7345. The certification of Blake M. Adams was not erroneous because the underlying liabilities were assessed, satisfying I. R. C. § 7345(b)(1)(A). The court also lacks jurisdiction to review the constitutionality of passport-related actions taken by the Secretary of State under the Fixing America’s Surface Transportation Act.

    Reasoning

    The Tax Court’s reasoning is based on statutory interpretation and the legislative framework of I. R. C. § 7345. The court emphasized that its jurisdiction under § 7345(e)(1) is limited to reviewing the certification’s validity, not the underlying tax liabilities. The court relied on the plain text of § 7345(b)(1)(A), which requires only that the tax liability “has been assessed,” not that it was “properly assessed. ” This interpretation was supported by the absence of “pursuant to” language in § 7345(b)(1)(A), unlike in § 7345(b)(1)(C), which specifies that liens and levies must be pursuant to certain Code sections. The court also considered the overall structure of the tax code, noting that Adams had multiple prior opportunities to challenge the assessments through deficiency notices and collection due process proceedings. Regarding the constitutional challenge, the court held that it lacks jurisdiction to review the Secretary of State’s actions under the FAST Act, as § 7345(e) does not authorize such review. The court’s decision reaffirmed its role in reviewing only the certification process, not the substantive tax liabilities or passport actions, and highlighted the statutory separation of responsibilities between the Commissioner and the Secretary of State.

    Disposition

    The Tax Court granted the Commissioner’s motion for summary judgment, denied Adams’s motion for summary judgment, and sustained the certification of Adams as having a seriously delinquent tax debt.

    Significance/Impact

    This case clarifies the Tax Court’s limited jurisdiction under I. R. C. § 7345, emphasizing that it cannot review the underlying tax liabilities certified as seriously delinquent. It reinforces the statutory framework for enforcing tax debts through certification to the Secretary of State and potential passport actions. The decision may impact taxpayers seeking to challenge such certifications by limiting their avenues for judicial review. It also underscores the separation of powers between the Commissioner, responsible for certification, and the Secretary of State, responsible for passport actions, under the FAST Act. Subsequent courts have generally followed this interpretation, affirming the Tax Court’s role in reviewing only the certification process.

  • Robert Rowen v. Commissioner of Internal Revenue, 156 T.C. No. 8 (2021): Certification of Seriously Delinquent Tax Debt Under I.R.C. § 7345

    Robert Rowen v. Commissioner of Internal Revenue, 156 T. C. No. 8 (2021)

    In Robert Rowen v. Commissioner of Internal Revenue, the U. S. Tax Court upheld the Commissioner’s certification of a seriously delinquent tax debt under I. R. C. § 7345, rejecting claims that the statute violated constitutional rights or international human rights. The court clarified that § 7345 only authorizes certification, not passport revocation, thus not infringing on the right to travel. This ruling reaffirms the IRS’s authority to certify tax debts over $51,000 as a tool for encouraging tax compliance.

    Parties

    Robert Rowen, the petitioner, challenged the certification of his tax debt as seriously delinquent by the Commissioner of Internal Revenue, the respondent, in the U. S. Tax Court. Throughout the litigation, Rowen was designated as the petitioner and the Commissioner as the respondent.

    Facts

    Robert Rowen, a U. S. citizen and licensed medical doctor, repeatedly failed to file Federal income tax returns for over two decades. Relevant to this case, Rowen first failed to file for tax year 1994. In 1997, he pleaded guilty to corruptly endeavoring to impede an IRS investigation and, as part of his plea agreement, filed delinquent returns for 1994 and 1996 and a timely return for 1997. Despite this, Rowen did not pay the assessed taxes for these years. The IRS issued notices of deficiency and intent to levy, but Rowen did not seek a hearing with the IRS Office of Appeals. Rowen filed for bankruptcy in 2001, seeking discharge of his tax liabilities for 1992 through 1997, which was denied due to willful failure to file and pay. Rowen again ceased filing returns starting in 2003, only submitting returns for 2003 through 2007 after IRS intervention. The IRS filed notices of Federal tax lien and notices of intent to levy for these years, and after Rowen’s request for a hearing, the IRS Appeals sustained the filings and proposed levies. Rowen petitioned the U. S. Tax Court, which upheld the IRS’s determinations. In 2018, the Commissioner certified Rowen as owing a seriously delinquent tax debt of at least $474,847 under I. R. C. § 7345 for tax years 1994, 1996, 1997, and 2003 through 2007.

    Procedural History

    Rowen filed a petition in the U. S. Tax Court under I. R. C. § 7345(e)(1) to challenge the Commissioner’s certification of his seriously delinquent tax debt. Both parties filed motions for summary judgment. The Tax Court reviewed the administrative record and the arguments presented, focusing on the constitutionality of § 7345 and the correctness of the certification. The court applied a summary adjudication procedure to decide the issues raised by the parties.

    Issue(s)

    Whether I. R. C. § 7345 violates the Due Process Clause of the Fifth Amendment by prohibiting international travel?

    Whether I. R. C. § 7345 violates the right to travel as expressed in the Universal Declaration of Human Rights (UDHR)?

    Whether the Commissioner erred in certifying Rowen’s tax debt as seriously delinquent under I. R. C. § 7345?

    Rule(s) of Law

    I. R. C. § 7345 authorizes the Commissioner to certify to the Secretary of the Treasury that an individual has a seriously delinquent tax debt, defined as an unpaid, legally enforceable Federal tax liability greater than $51,000 for which a notice of lien has been filed or levy has been made. The certification is transmitted to the Secretary of State for action with respect to denial, revocation, or limitation of a passport under FAST Act § 32101. The Tax Court has jurisdiction under I. R. C. § 7345(e)(1) to determine whether the certification was erroneous.

    Holding

    The Tax Court held that I. R. C. § 7345 does not violate the Due Process Clause of the Fifth Amendment or the UDHR because it does not restrict the right to international travel. The court further held that the Commissioner did not err in certifying Rowen’s tax debt as seriously delinquent under I. R. C. § 7345, as Rowen’s debt exceeded $51,000 and met the statutory criteria.

    Reasoning

    The court reasoned that I. R. C. § 7345 merely provides for the certification of tax-related facts and does not authorize any passport-related decisions, which are left to the discretion of the Secretary of State under FAST Act § 32101(e). Therefore, § 7345 cannot be considered to infringe on the right to international travel. The court also rejected Rowen’s UDHR argument, noting that the UDHR does not create enforceable rights in U. S. courts and, regardless, § 7345 does not restrict travel. The court further found that Rowen’s procedural due process and statute of limitations claims were abandoned as he did not pursue them in his motion for summary judgment. The court examined the administrative record, which included certified Forms 4340 showing Rowen’s outstanding tax liabilities and confirmed that the period of limitations on collection remained open for all relevant years. The court concluded that the Commissioner’s certification was proper and consistent with the requirements of I. R. C. § 7345.

    Disposition

    The Tax Court denied Rowen’s motion for summary judgment and granted the Commissioner’s cross-motion for summary judgment, sustaining the certification of Rowen’s seriously delinquent tax debt.

    Significance/Impact

    This case clarifies the scope of I. R. C. § 7345, affirming its constitutionality and the IRS’s authority to certify seriously delinquent tax debts as a means to encourage tax compliance. The ruling may impact taxpayers with significant tax debts by reinforcing the potential consequences of non-compliance, including the certification process that could lead to passport-related actions by the Secretary of State. The decision also highlights the limited nature of the Tax Court’s review under § 7345(e)(1), focusing solely on the correctness of the certification rather than broader constitutional challenges to the entire tax collection mechanism established by the FAST Act.