In Uncategorized on 07/14/2014 at 16:38

No, not another “thing of beauty”, unlike my blogpost “A Thing of Beauty – Accept No Substitutes”, 1/28/13. This time it’s an accountant trying to use a Form 1045 refund request in place of a petition, and it doesn’t work.

STJ Daniel A. (“Yuda”) Guy has the bad news for James William Harrison, 2014 T. C. Sum. Op. 69, filed 7/14/14.

J.W. claims his restaurant, A Little Asia, yielded not-so-little losses that would have resulted in no tax due, and not the $4200 that the SNOD says he owes.

But he never petitioned the SNOD. Instead, his accountant sent in the Form 1045 and asked TAS to expedite it. So J.W. petitioned the NOD he got from Appeals.

He gave the Account Appeals Resolution Specialist some info, so she put him into CNC (currently not collectible) status.

But J.W.’s claim that IRS should have dealt with his Form 1045 before Appeals goes nowhere.

Judge Yuda: “Petitioner asserts that the IRS should not be permitted to proceed with collection without first processing the Form 1045 or the amended tax return that he submitted for 2009. Petitioner’s argument amounts to a back door challenge to the existence or amount of his underlying tax liability for 2009 within the meaning of section 6330(c)(2)(B). However, as discussed above, petitioner admits that he received the notice of deficiency for 2009 but decided not to file a petition for redetermination with the Court. Consistent with section 6330(c)(2)(B), the Appeals Office correctly determined that petitioner is not permitted to challenge the existence or amount of his underlying tax liability for 2009 in this action. See Sego v. Commissioner, 114 T.C. at 611.

“Even assuming for the sake of argument that we could consider petitioner’s complaint that the IRS failed to process his Form 1045 and related amended returns, we would not overturn the Appeals Office determination in this case. In short, petitioner’s submission of Form 1045 to the IRS claiming a tentative refund for 2009 did not preclude respondent from issuing a notice of deficiency to him for that year. See Zarnow v. Commissioner, 48 T.C. 213, 215 (1967) (failure to act on a Form 1045 within the 90-day period prescribed in section 6411(b) does not prevent the Commissioner from determining a deficiency for that year).” 2014 T. C. Sum. Op. 69, at pp. 8-9.

And the AARS took J.W.’s story at face value, and put him in CNC. No abuse of discretion here.

Takeaway- Nothing substitutes for a petition, even if it’s just a letter, or even a check (see my blogpost “Show Me The Money”, 11/13/13).

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