§6672 — Failure to collect and pay over tax, or attempt to evade or defeat tax

- 13 - (2017), supplementing and overruling in part 147 T.C.

20, 2017), supplementing and overruling in part 147 T.C.

find that he has overpaid that penalty liability, and then to order the IRS to apply the overpayment to his 2008 income tax (or, more precisely, asks us to hold that it would be an abuse of discretion for the IRS to do anything other than to apply it to his 2008 income tax -32 - liability), and to overrule Appeals's determination to proceed with a levy.

The Appeals team manager, however, disagreed with SO Hernandez's conclusions and ultimately overruled her.7 Thus, IRS Appeals ultimately determined that: ( ) The TFRP assessments were valid and (2) failure to issue timely notice and demand did not invalidate the NFTL filing or the proposed levy.

Unlike Siquieros--but like the Baltics--petitionerhad an opportunity before his CDP hearing to challenge his responsibility for TFRPs in that, as discussed, he received a Letter 1153 for the later four quarters. And in fact petitioner took advantage ofhis prior opportunity to dispute responsibility--the Appeals Office held an in-person hearing at which he unsuccessfully contested the TFRPs. For these reasons the issue ofpetitioner's responsibilityunder section 6672 was not properly at issue in t

§ 6672. Babcock, No. CV 08-08467 t 12-13. Second, the IRS contends that Rev. Proc. 2002-26, supra, does not govern the application ofthe deposits because, it says, Rev.

MEMORANDUM FINDINGS OF FACT AND OPINION CARLUZZO, Chief Special Trial Judge: In this section 6330(d)1 case petitioner challenges respondent’s determination to proceed with collection of an assessment made against him for a trust fund recovery penalty (TFRP)2 pursuant to section 6672.

ation by the Commissioner of the Internal Revenue Service (IRS or respondent) to certify to the Secretary of the Treasury that petitioner has a “seriously delinquent tax debt” related to income tax deficiencies for 2012, 2013, 2014, and 2015 (years at issue), and civil trust fund recovery penalties pursuant to section 6672 for periods ending 2011, 2012, 2013, 2014, 2015, and 2016 (periods at issue) (collectively, years and periods at issue).

For this reason, section 6672 provides a collection tool allowing the Commissioner to impose a TFRP on certain persons who fail to withhold and pay over trust fund taxes.

e Court to review an Internal Revenue Service (IRS) notice of determination sustaining the filing of a notice of Federal tax lien (NFTL) with respect to petitioner’s income tax liabilities for tax years 2013, 2014, 2015, and 2016 and trust fund recovery penalties (TFRPs) assessed against petitioner pursuant to section 6672 for the quarters ending March 31, June 30, September 30, and December 31, 2016.1 By order dated July 26, 2019, this Court granted respondent’s unopposed motion to dismiss on g

The issue for decision is whether petitioner is liable for TFRPs for the tax periods ending September 30, 2013, and March 31, 2014, and part of the tax period ending June 30, 2014 (periods at issue).2 For the reasons set forth below, we hold in favor of respondent.

21, 2020), we held that a TFRP assessed pursuant to section 6672(a) is a "penalty" imposed by the Code to which the requirements ofsection 6751(b)(1) are applicable.

-13- [*13] property held by a nominee ofthe taxpayer. IRM pt. 5.8.4.3.l(1) (Apr. 30, 2015).5 We generally find no abuse ofdiscretion when an Appeals officer rejects a taxpayer's OIC because it does not reflect the taxpayer's RCP, determined in accordance with the Commissioner's administrative guidance.

We hold that she did not abuse her discretion.

See (continued...) - 13 - [*13] Section 6672 provides a collection tool allowing the Commissioner to impose penalties on certain persons who fail to withhold and pay over trust fund taxes.

We hold that we sustain those determinations.

1979).2¹ Section 6672 provides a collection tool allowing the Commissioner to impose penalties on certain persons who fail to withhold and pay over trust fund taxes.

The NFTLs For the tax periods at issue respondent determined that petitioner was liable for trust fund penalty liabilities pursuant to section 6672 with respect to unpaid employment tax liabilities owed by several ofhis nursing homes.

Therefore, neither petitioner nor Amber Rebar, without permission from the bankruptcy court, wouldhave the right to allocate the payments between Amber Rebar's tax liability and any residual liability she had individually for the trust fund recovery penalty.5 Consequently, we hold that respondent had authority 5See Dixon v.

The section 6672(b) notice, which was in the form ofstandard Letter 1153, Trust Funds Recovery Penalty Letter, notified petitioner ofrespondent's intent to assess TFRPs pursuant to section 6672 relating to the trust fund portion ofChunel's employment taxes for the taxable periods in issue.

Trust Fund Recovery Penalty Section 6672 provides in part as follows: SEC.

The Internal Revenue Service (IRS) Office ofAppeals (Appeals Office) issued to petitioner a notice ofdetermination sustaining a proposed levy to collect penalties assessed against him pursuant to section 6672 for the taxable periods ending June 30, 2009, September 30, 2009, and September 30, 2012 (periods at issue).

We hold that he did not receive the letter.

SERVED May 02 2013 - 2 - [*2] review the determination ofthe IRS' Appeals Office to proceed with collection actions with respect to petitioner's tax liabilities pursuant to section 6672 for the tax periods ending on the following dates: December 31, 2004; March 31, June 30, September 30, and December 31, 2005; March 31, June 30, September 30, and December 31, 2006; March 31, June 30, September 30, and December 31, 2007; March 31, June 30, September 30, and December 31, 2008; and M

On March 10, 2010, respondent mailed a Letter 1153 to petitioner's last known address, notifying her ofrespondent's intent to assess trust fund recovery penalties (TFRPs) pursuant to section 6672 for the periods in issue.

CDP Period Section 6672 Penalties On January 7, 2008, respondent assessed trust fund recovery penalties pursuant to section 6672 against petitioner for employment tax liabilities owed by Compliance Innovations, Inc., of$45,615.67, $23,091.60, $37,269.90, and $45,217.77 for the periods ending December 31, 2004, June 30 and September 30, 2005, and June 30, 2007.2 We will refer to these tax penalties as petitioner's CDP period

GALE, Judge: Pursuantto section 6330(d),i Norman Hinerfeld (petitioner) seeks review ofrespondent's determination to proceed with a levy to collect petitioner's unpaid trust fund recovery penalties (trust fund penalties), assessed pursuant to section 6672, for the quarterly periods ended September 30 and December 31, 200$, March 31, September 30, and December 31, 2003, and June 30, 2004.

We must decide whether respondent's Appeals Office abused its discretion when it upheld respondent's notice ofintent to levy with respect to trust fund recovery penalties pursuant to section 6672 for unpaid balances due from Tomasello Limousine, Inc.

o the Internal Revenue Code of 1986, as amended, and Rule references are to the Tax Court Rulès of (continued...) VÈD MAR 2 6 20l2 - 2 - Appeals Office abused its discretion when it upheld respondent's notice ofintent to levy with respect to petitioner's liability for trust fund recovery penalties pursuant to section 6672 for the quarterly periods ending December 31, 2006, through March 31, 2009.

The IRS assessed a trust fund r covery penalty agains petitioner for 2002 pursuant to section 6672.

The Appeals officer determined that petitioner was liable for the TFRPs, sent petitioner a determination letter to that effect, and assessed the TFRPs pursuant to section 6672.

In addition, a trust fund recovery penalty (TFRP) was assessed against petitioner pursuant to section 6672 for the period ending December 31, 1999, with respect to unpaid liabilities of Larry Delano Coleman, PC, petitioner's former legal practice .

SERVED May 06 2010 filing of notices of Federal tax lien relating to trust fund recovery penalties assessed against petitioners pursuant to section 6672 .as responsible persons for the payment of quarterl y employment taxes for the periods ending December 31, 1999, through December 31, 2002, and.

- 7 - Also because of Global Horizons' allegedly unpaid Form 943 liability for the 2005 tax year, Letter 1153, Notice of Proposed Assessment (proposed assessment), of the -100-percent responsible person penalty, pursuant to section 6672, was sent to Mr.

On August 11.and ,September 29, 1997, the Internal Revenue Service (IRS) recorded assessments against petitioners for trust fund recovery penalties pursuant to section 6672 with respect to employment taxes ;of petitioners',corporations for the June 30 and September 30, 1996, tax periods, respectively.

Respondent sent each petitioner a Letter 1153, notice of proposed trust fund recovery penalty assessment pursuant to section 6672 (trust fund recovery penalty), dated October 23, 2002, with respect to the quarterly periods ending June 30, September 30, and December 31, 2001, and March 31, 2002, based upon section 6020(b) substitute returns .

On December 8, 1999, while petitioner's bankruptcy case was still pending, respondent sent petitioner by certified mail a Letter 1153, Trust Funds Recovery Penalty Letter, proposing to assess against petitioner the TFRP of $45,9592 attributable to unpaid liabilities pursuant to section 6672 for the tax period s 2Total amount rounded up .

Petitioner's Liability for Trust Fund Recovery Penaltie s On October 4, 2005, respondent sent petitioner by certified mail a Letter 1153, Trust Funds Recovery Penalty Letter, proposing to assess against petitioner trust fund penalties of $15,129 pursuant to section 6672 for the relevant periods , 2Although an attachment to respondent's notice of determination refers to June 30, 2006, the notice itself and all other relevant documents refer to June 30, 2003 .

United States , supra at 771, that the parties are "jointly and severally liable for the one hundred percent penalty sought by the government pursuant to § 6672(a)", requires the Commissioner to treat all three parties identically .

The levy is intended to collect so-called "trust .fund recovery penalties " assessed pursuant to section 6672 for various.

On August 11 and September 29, 1997, the Internal Revenue Service (IRS) recorded assessments against petitioners for trust fund recovery penalties pursuant to section 6672 with respect to employment taxes of Challenger Construction Corp .

Petitioner's contest was unsuccessful, and on January 1, 2002, the IRS assessed a liability pursuant to section 6672 for the third quarter of 1999 .

Respondent subsequently determined that petitioner was liable for a penalty pursuant to section 6672 equal to the unpaid taxes.1 Respondent subsequently initiated a collection action against petitioner.

Just as in Moore, in which we held that we did not have jurisdiction to redetermine Federal trust fund taxes, we hold that we do not, in the instant case, have jurisdiction to redetermine the frivolous return penalties assessed pursuant to section 6702.

18] Petitioner cites Romano-Murphyv. Commissioner, 152 T.C. 278 (2019), supplementing T.C. Memo. 2012-330, in support ofhis contention that all 34 penalties should be abated. That was a CDP case involving trust fund recovery penalties (TFRPs) under section 6672. We held that the IRS erred in assessing the TFRPs before the taxpayerhad completed his administrative appeal and received a "final administrative determination" concerning his penalty liability. IA at 305. Because the SO had improperly v

-33- In 1996, Congress amended section 6672 to add section 6672(b). Taxpayer Bill ofRights 2, Pub. L. No. 104-168, sec. 901(a), 110 Stat. at 1465-1466 (1996).9 After another amendment in 1998,¹° section 6672(b) provides: SEC. 6672(b). Preliminary Notice Requirement.-- (1) In general.--No penalty shall be imposed under subsection (a) unless the Secretary [ofTreasury] notifies the taxpayerUU in writing by mail to an address as determined 9The legislative history ofthe enactment ofsec. 6672(b) in 1

Petitioner's circumstances are therefore distinguishable from those of the taxpayers in McClure v . Commissioner, T ..C . Memo . 2008-136, and Pelliccio v. United States , 253 F . Supp .. 2d 258 (D. Conn . 2003) . The taxpayer in McClure received a Letter 1153 and contested his liability in response . . This Court held that that was his opportunity to dispute the trust fund penalty assessment . Likewise, in Pelliccio the taxpayer received a Letter 1153 before each assessment, and the District Co

RO Davis prepared a Letter 1153, Trust Funds Recovery Penalty Letter, proposing assessment of section 6672 trust fund penalties against petitioner as a person required to collect, account for, and pay over withheld taxes of the business for the unpaid liabilities.

Commissioner, supra, does not apply to situations involving C corporations, also argue that constructive dividends are analogous to section 6672 responsible person penalties.

On January 21, 2004, respondent’s Appeals Office issued a Notice of Determination Concerning Collection Action(s) Under Section 6320 and/or 6330, determining that a proposed levy to recover a section 6672 trust fund penalty liability with respect to petitioner’s 1997 tax year was appropriate.2 The first page of the notice of determination stated: If you want to dispute this determination in court, you must file a petition with the United States Tax Court for a redetermination within 30 days from

Crawford at his last known address satisfies the section 6672 notice requirement.

taxes. See sec. 3111(a) and (b). All these liabilities are reported on Form 941, Employer's Quarterly Federal Tax Return. Sec. 6672(a) imposes a penalty on persons, other than the employer, who are responsible for withholding taxes. Liability under sec. 6672 is different from the employer's liability for payment ofthe taxes required to be withheld. See Howardv. United States, 711 F.2d 729, 733 (5th Cir. 1983); United States v. Pomponio, 635 F.2d 293, 298 (4th Cir. 1980); Monday v. United States

Section 6672 Penalties Petitioner contends that he was entitled to contest his liability for the section 6672 trust fund recovery penalties during the section 6330 hearing because he never received the Letter 1153 that Revenue Officer Toms sent to him by certified mail on November 4, 2008.7 We have held that, unless the taxpayer deliberately refuses to accept its delivery, a Letter 1153 will be considered as having provided a prior opportunity to dispute liability for the underlying trust fund r

OURT SHANNON M. BLAND, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 28329-09L. Filed March 22, 2012. R's Appeals Office determined that R was warranted in filing a notice ofFederal tax lien against P with respect to assessed I.R.C. sec. 6672 responsible person penalties for certain quarterly periods during 2000-2003. P assigns error on the ground that the settlement officer improperly denied him the right, during his colleâtion due process hearing (lien hearing), to chal

Orian's section 6672 penalty resulting from Global Horizons, Inc.'s unpaid employment tax s with respect to Form 943, Employer' s Annual Federal Tax Return for Agricultural Employees, for all four quarters of the 2005 axable year. Review is also sought with respect to respondent's determination to proceed with a proposed levy against petit oner Global Hori

On April 18, 1995, respondent applied the claimed overpayment to an outstanding liability for a "responsible person" liability assessed against petitioner pursuant to section 6672 during 1989.

eral Tax Return) for the fourth quarter of 1983, the first and fourth quarters of 1984, and the first quarter of 1985. On July 14, 1986, the Commissioner assessed against petitioner the trust fund portions of those liabilities under the authority of section 6672. The assessed amount equaled $107,006. Eight months later, the Commissioner assessed against petitioner a trust fund recovery penalty under the authority of section 6672 with respect to payroll tax - 6 - liabilities of EMR for the fourth

Shaban has a “seriously delinquent tax debt” for unpaid section 6672 trust fund recovery penalty (TFRP) liabilities for the periods ending September 30, 2018, June 30, 2019, and December 31, 2019 (collectively, periods at issue).

There, the IRS proposed to assess a Trust Fund Recovery Penalty under section 6672 with respect to the taxpayer.

agree with [the Commissioner] that a deduction of the [trust fund recovery penalty under section 6672] as a loss under section 10 There are certain exceptions, not relevant here, such as for restitution payments and the like.

We there held that “trust fund recovery penalties” imposed under section 6672 are “penalties” requiring supervisory approval.

Following a brief trial the issues for decision are (1) whether petitioner is entitled to contest the section 6672 trust fund recovery penalty (TFRP) liabilities for the periods at issue and (2) whether Appeals’ decision upholding the IRS’s levy action and denying petitioner’s collection alternatives was an abuse of discretion.

Petitioner did not collect, account for, and pay over employment taxes reportable on Form 941, Employer’s Quarterly Federal Tax Return, for the second quarter of 2009 through the fourth quarter of 2012.3 The IRS assessed civil penalties against him under section 6672 (commonly called trust fund recovery penalties).

om its employees’ wages but did not pay those taxes over to the Government. R issued a Letter 1153, Notice of Trust Fund Recovery Penalty, informing P that he intended to assert trust fund recovery penalties (TFRPs) against her and her husband under I.R.C. § 6672. P did not challenge the pro- posed assessment, as she was entitled to do, and R there- after assessed TFRPs totaling $146,682. In an effort to col- lect this unpaid liability R issued P a Letter 3172, Notice of Federal Tax Lien Filing

see Tricarichi IV, 980 F.3d at 592. As explained in the text, the Internal Revenue Code, not Arizona law, determines the amount of the IRS’s claim against the transferor. 12 [*12] 1243 (5th Cir. 1986)) (discussing joint and several liability under section 6672). Of course, “the tax liability of the transferor can be collected only once.” Holmes v. Commissioner, 47 T.C. 622, 627 (1967). Thus, the IRS may take no further collection action against any of the transferees once Slone Broadcasting’s a

The IRS ac- cordingly assessed civil penalties against him under section 6672 (com- monly called trust fund recovery penalties or TFRPs).

eriods ending June 30, September 30, and December 31, 2012; March 31, June 30, September 30, and December 31, 2013; and March 31, 2014.1 We must consider whether respondent’s determination to proceed with the collection action regarding petitioner’s section 6672 Trust Fund Recovery Penalty (TFRP) liabilities for tax periods ending September 30 and December 31, 2012; March 31, June 30, September 30, and 1 The notice of determination is dated April 12, 2019, but it was not actually mailed until Ap

see Tricarichi IV, 980 F.3d at 592. As explained in the text, the Internal Revenue Code, not Arizona law, determines the amount of the IRS’s claim against the transferor. 12 [*12] 1243 (5th Cir. 1986)) (discussing joint and several liability under section 6672). Of course, “the tax liability of the transferor can be collected only once.” Holmes v. Commissioner, 47 T.C. 622, 627 (1967). Thus, the IRS may take no further collection action against any of the transferees once Slone Broadcasting’s a

see Tricarichi IV, 980 F.3d at 592. As explained in the text, the Internal Revenue Code, not Arizona law, determines the amount of the IRS’s claim against the transferor. 12 [*12] 1243 (5th Cir. 1986)) (discussing joint and several liability under section 6672). Of course, “the tax liability of the transferor can be collected only once.” Holmes v. Commissioner, 47 T.C. 622, 627 (1967). Thus, the IRS may take no further collection action against any of the transferees once Slone Broadcasting’s a

(Unless otherwise indicated all section references are to the Internal Revenue Code for the years at issue.) We note that for 2013, Mrs. Mason has penalty liabilities for two different quarters: one ending March 31 and one ending December 31. - 5 - [*5] B. From Collection to Petition The Commissioner began filing liens against the Mason

(Unless otherwise indicated all section references are to the Internal Revenue Code for the years at issue.) We note that for 2013, Mrs. Mason has penalty liabilities for two different quarters: one ending March 31 and one ending December 31. - 5 - [*5] B. From Collection to Petition The Commissioner began filing liens against the Mason

Grant Thornton'sjustification paper concluded that the new tool plan qualified as an accountable plan and was therefore exempt from employment taxes and that the potential for a penalty imposed under section 6672 was limited.

Grant Thornton's justification paper concluded that the new tool plan qualified as an accountable plan and was therefore exempt from employment taxes and that the potential for a penalty imposed under section 6672 was limited.

did so without reaching the question whether section 6751(b)(1) applied.° Since then, however, we have held that the requirement applies to the assessable failure-to-file °In multiple cases involving the assessable trust fund recovery penalty under section 6672, we found that written supervisory approval had been obtained, so the cases did not turn on the question whether section 6751(b)(1) applied to those penalties.

TFRPs Section 6672 imposes a penalty for the willful failure to collect, account for, and pay over income and employmenttaxes ofemployees. Section 6671 provides in relevant part that assessable penalties, including TFRPs under section 6672, shall be assessed and collected in the same manner as taxes against a person, including an officer or employee ofa

was a director ofCompany ("C"). C failed to pay over to R employment withholding taxes for its employees for 10 quarters in 2010-12. R sent and P received a Letter 1153, "Trust Fund Recovery Penalty ["TFRP"] Letter", proposing to assess TFRPs under I.R.C. sec. 6672 against P as a responsible person for C. P filed an appeal disputing the TFRP liability before R's Office ofAppeals ("Appeals"). Appeals sent P a Letter 5157 scheduling a conference and describing P's options for giving information a

In June 2015 a revenue agent made the initial determination to assert the section 6672 trust fund recovery penalty against Mr.

6672 trust-fund-recoverypenalty is referred to by the acronym TFRP. Erosion Stopper, Inc., is referred to as Erosion Stopper. - 3 - [*3] review the July 28, 2016 determination by the IRS Office ofAppeals to sustain a proposed levy to collect section 6672 trust-fund-recoverypenalties assessed against him for failing to collect and pay the trus

The levy notice stated that petitioner owed $751,495.92 through January 3, 2016, for the TFRP under section 6672 for the tax periods at issue.

(CCH) 1255, 1257 (holding that the position ofthe United States was substantiallyjustified where the Appeals Office conceded the case, notwithstanding prior assessment oftrust fund recovery penalties under section 6672); see also Milligan v.

In this setting, "the employer bears principal liability under sec- tion 3403 for the trust fund taxes that should have been withheld, and the 'respon- sible persons' bear derivative liability for those same taxes under section 6672." Dixon v.

The IRS assessed TFRPs against petitioner husband un- der section 6672, having determined that he was a "responsible person" required to collect, account for, and pay over the withheld employment taxes.

The IRS assessed TFRPs against petitioner under section 6672, having determined that he was a "re- sponsible person" required to collect and pay over the withheld employmenttaxes.

motion for summaryjudgment (motion) pursuant to Rule 121.¹ Respondent contends that no genuine dispute exists as to any material fact ¹Unless otherwise indicated, all section references are to the Internal (continued...) SERVED Jan 29 2018 - 2 - and that the determination to collect by levy petitioner's unpaid trust fund recovery penalties under section 6672 for taxable quarters ending December 31, 2012, and March 31, 2013, should be sustained.

ACKBURN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 27721-14L. Filed April 5, 2018. This case arises under I.R.C. secs. 6320 and 6330. P disputes R's attempt to collect the trust fund recovery penalty (TFRP) assessed under I.R.C. sec. 6672, but the immediate issue is framed by R's motion for summaryjudgment. The liability subject to collection is not in dispute under I.R.C. sec. 6330(c)(2)(B). R argues that the TFRP is not subject to I.R.C. sec. 6751(b) and also that t

Petitioner contends that section 6672 violates the Fifth Amendment to the Constitution under the void for vagueness doctrine.

The Commissioner is authorized to impose a TFRP on any "officer or employee of a corporation, or a member or employee ofa partnership who as such officer, employee, or member is under a duty to perform" the duties referred to in sec.

The Commissioner is authorized to impose a TFRP on any "officer or employee of a corporation, or a member or employee ofa partnership who as such officer, employee, or member is under a duty to perform" the duties referred to in sec.

Section 6672 imposes liability on "[a]ny person required to collect, truthful- ly account for, and pay over any tax imposed by this title" who willfully fails to do so. Sec. 6672(a). In this setting, "the employer bears principal liability under -11- [*11] section 3403 for the trust fund taxes that should have been withheld, and the 'responsible p

The Commissioner is authorized to impose a TFRP on any "officer or employee of a corporation, or a member or employee ofa partnership who as such officer, employee, or member is under a duty to perform" the duties referred to in sec.

The IRS subsequently assessed TFRPs against petitioner under section 6672, having determined that she was a "respon- sible person" required to collect, account for, and pay over the withheld employ- ment taxes.

The Commissioner is authorized to impose a TFRP on any "officer or employee of a corporation, or a member or employee ofa partnership who as such officer, employee, or member is under a duty to perform" the duties referred to in sec.

Indicia ofresponsibility include "the holding ofcorporate office, control over financial affairs, the authority to disburse corporate funds, stock ownership, and the ability to hire and fire employees." Thibodeau v. United States, 828 F.2d 1499, 1503 (1Ith Cir. 1987). 3 In Fitzpatrick v. Commissioner, T.C. Memo. 2016-199, we found that m

Background This collection due process (CDP) case involves petitioner's liability for civil penalties under section 6672 for various calendar quarters from 2005 through 2009.¹ The IRS assessed this liability, totaling $772,282, on April 9, 2009.

On January 7, 2014, respondent sent petitioner a Letter 1153, Trust Funds Recovery Penalty Letter, proposing the assessment ofTFRPs against him under section 6672 "as a person required to collect, account for, and pay over withheld taxes for" Raiser Construction Co.

Overpayment ofSection 6672 Penalty Petitioners appear to argue in the alternative that, because respondent improperly applied their 2007 overpaymentto a nonexistent TFRP liability, they are entitled to apply an overpayment of$2,860 against their 2008 tax liability.

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

asurer of Company (C). In 2002 C filed for bankruptcy and P was removed and replaced by a bankruptcy trustee. C failed to pay over to R employmentwithholding taxes for its employees for two quarters in 2002. R sent P a Letter 1153 proposingto assess I.R.C. sec. 6672 penalties against P as a responsible person for C. P filed an appeal request and subsequently disputed the underlying liabilities in a conference with the Office ofAppeals (Appeals) in November 2006. Appeals rejected P's appeal, dete

SERVED Sep 21 2015 - 2 - [*2] unpaid trust fund recovery penalties (TFRPs) under section 6672 for the quarterly periods ended June 30, September 30, and December 31, 2009, and March 31, June 30, and September 30, 2010 (periods in issue).

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

Ifthe employer fails to pay trust-fund taxes to the IRS, the persons responsible for paying the taxes are personally liable for the amounts under section 6672, provided that those persons "willfully" failed to pay over the taxes.

SERVED Dec 15 2015 - 2 - [*2] (IRS or respondent) sustaining a proposed levy to collect section 6672 trust fund recovery penalties (TFRPs) assessed against her for failing to collect and pay over employmenttaxes ofLuuLuu Com, Inc.

ssessing the resulting liabilities, and then issuing aNotice ofTransferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a - 27 - "responsible person" under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itselfthwart respondent's crucial fu

ips, assessing the resulting liabilities, and then issuing a Notice of Transferee Liability to TFT Galveston Portfolio. Additionally, respondent could have potentially attempted to collect directly from Mr. Teachworth as a “responsible person” under section 6672. Thus, our decision against applying Federal common law successor rules and holding that TFT Galveston Portfolio is not a successor in interest to the six partnerships listed on the notices does not by itself thwart respondent’s crucial

vant facts SERVED MAR 2 2014 - 2 - [*2] have been stipulated, see Rule 122, and are so found.' The issue for decision is whether petitioner is entitledto recover administrative costs incurred in his attemptto have the IRS abate its assessment ofthe section 6672 penalty for failure to pay over employment/payrolltaxes that should have been collected in trust for the United States (trust fund recoverypenalties) for the quarters ended March 31, 1998, and June 30, 1998 (two quarters involved).

s penalty is assessed and collected in the same manner as taxes against a person who is "an officer or employee ofa -16- [*16] corporation * * * who as such officer, [or] employee * * * is under a duty to perform", in this case, the duties to which section 6672 refers. Sec. 6671. Such persons are referred to as "responsible persons", a term which may be broadly applied. Mason v. Commissioner, 132 T.C. 301, 321 (2009). III. CDP Generally Section 6320(a)(1) requires the Secretaryto provide written

OnNovember 29, 2001, petitioner signed Form 2751, Proposed Assessment ofTrust Fund Recovery Penalty, and consented to the assessment and collection of trust fund recovery penalties (TFRPs) pursuantto section 6672 of$22,789.42 for the period ending March 31, 2000, and of$14,859.16 for the period ending September 30, 2000.

: This proceeding was commenced in response to a notice of determination concerning collection action(s) under section 6320 and/or 6330 with respect to petitioner's Federal income tax liability for 2010 and unpaid trust fund recovery penalties under section 6672 for quarters ended September 30 and December 31, 2006, March 31, 2007, December 31, 2008, March 31 and June 30, SERVED NOV 1 7 2014 - 2 - [*2] 2009 (collectively, quarters in issue), and December 31, 2010.

Ifthe investigation is conducted simultaneously with the crimi- nal investigation, the process is referred to as a parallel investigation." IRM 5.1.5.1 (3) says , "Some potential civil remedies that could occur in a parallel proceeding are IRC § 6672 Trust Fund Recovery Penalty investigations, injunctions for pyramiding taxpayers, Notice ofFederal Tax Lien filings, issuance oflevies,jeopardy levies, service of summons, and pursuit oferroneous refunds." You stated that you wanted on record that y

Respondent mailed a final notice ofintent to levy (levy notice) to petitioner for trust fund recovery penalties under section 6672 for periods ending June 30, September 30, and December 31 2007; and March 31, September 30, and December 31, 2008 (periods at issue).

Glossop's underlying liability is for trust fund recovery penalties under section 6672, which were assessed for the failure to collect, account for, and pay over income tax and employmenttaxes ofemployees.

ter (Letter 1153), to petitioner by certified mail. In that letter, respon- dent proposed to assess against petitioner the following penalties under section 66724 with respect to Specialty Staff's unpaid tax liabilities: Quarter Ended Penalty under Sec. 6672 12/31/2008 $83,570.12 6/30/2009 44,894.97 9/30/2009 69,134.96 12/31/2009 102,798.41 The U.S. Postal Service (USPS) made multiple attempts to deliver Letter 1153 to petitioner but was unable to do so. On May 5, 2010, the USPS returned that le

cause the structure and logic ofthe Code's withholding provisions mandate such crediting to avoid double collection ofthe same tax. - 32 - should have been withheld, and the "responsible persons" bear derivative liability for those same taxes under section 6672. In a "responsible person" situation, numerous individuals and/or entities may be liable for redundant penalties deriving from the same unpaid tax. See CommonwealthNat'l Bank ofDallas v. United States, 665 F.2d 743, 758 (5th Cir. 1982). T

usen, No. 96 CR 415-H-1 (S.D. Cal. Nov. 14, 1997). The Governmenthad also brought a tax assessment action against petitioner seeking to collect Federal income tax liabilities for 1991 and 1992 as well as trust fund recovery penalty assessments under section 6672.! See United States v. Scharringhausen, 226 F.R.D. 406, 407 (S.D. Cal. 2005). For his part, petitioner had attempted to fight offcertain administrative summonses that respondent had issued concerning the tax years at issue, by petitionin

6672 "the officers or employees ofthe employer responsible for effectuatingthe collection and payment oftrust-fund taxes who willfully fail to do so are made personally liable to a 'penalty' equal to the amount ofthe delinquent taxes." Slodov v. United States, 436 U.S. 238, 244-245 (1978). - 3 - and that he could request a hearing with respon

to unpaid trust fund recovery penalties under section 6672 for five quarters ended from September 30, 2003, to September 30, 2004.

Morris' liability for section 6672 trust fund penalties for the last quarterly tax period of SSVED JUL 3 0 2012 - 2 - 2000, four quarterly tax periods in 2001, quarterly periods ended March 31, September 30, and December 31, 2002, and all four quarterly periods in 2003.

In Weber, the taxpayer asserted that a section 6672 penalty liability (a nondetermination liability) had been overpaid and that the overpayment should be credited to a determination-year mcome tax liability.

Respondent's practice of prioritizing the payment of non-trust-fund taxes is reasonable because, consistent with the purpose of section 6672, it enables the Commissioner "'to reach those responsible for the corporation's failure to pay the taxes which are owing.'" See Olsen v.

(Unless otherwise indicated, references to sections in this opinion are to the Internal Revenue Code, and all references to Rules are to the Tax Court's Rules of Practice and Procedure.) 4 Rosenbloom testified that he vastly overreported his income some years--because "he was in a fog" before he became sober. Far too much time has passed

2000); see also Helland v.

2010-234 (receipt of notice of section 6672 assessment is opportunity to contest underlying liability).

SERVED FEB 29 2Öll - 2 - tax lien to collect section 6672 trust fund recovery penalties from Freeman.

at number. We note that because petitioner was required to match this amount, the.offer-in-compromise will not make the United States whole. We also note that Mr. and Ms. Kreitenberg were potentially personally liable for the trust fund amount under sec. 6672. At trial Mr. Kreitenberg explained that a joint check was a check written to more than one person. In their case the general contractor would write it to both petitioner and their supplier (continued...) For these reasons petitioner believ

of Federal tax lien (NFTL) with respect to section 6672 trust fund recovery penalt-1.es for the taxable SERVEDMar282011 - 2 - quarters ending December 31, 2003, March 31, 2004, and June 30, 2004 (the quarters at issue).1 Background The parties submitted this case fully stipulated pursuant to Rule 122.

Shebby, filed a petition to challenge the determination of the IRS Office of Appeals to sustain a levy to collect section 6672 penalties.1 We have jurisdiction to review the determïnation under section All section references are to the Internal Revenue Code, as amended.

On February 19, 2008, respondent sent to petitioner a Letter 1153, Trust Funds Recovery Penalty Letter, informing petitioner of his intent to assess against it trust fund recovery penalties under section 6672 because of its failure to withhold and pay employment taxes of one of its subsidiaries , Assured Source National, L .

Blecher replied to the settlement officer that petitioner was discharged from his postpetition section 6672 liabilities, as well as liabilities for New York State income taxes which arose during the subject years .

outlining income tax due of $10,693 for 2002, $515 for 2003, and $5,938 for 2006 and a section 6672 civil penalty of $667 for the period ending in 2003 .

Petitioner signed Form 2751, ,Proposed As essment of Trust Fund Recovery Penalty, agreeing to {assessmentslagainst him of section 6672 pehaltie's(cid:127)for the unpai d !trust fund On February 2, 2007, petitioner filed delinquent 2002, 2003 , !2004, and 2 05 income tax returns .

In 2004, the Commissioner opened another front by assessing a trust-fund-recovery penalty under section 6672 against Robert for all four quarters of 1994 and the first quarter of 1995 .

Sullivan's liability in calendar quarters in 1998 and 1999 for so-called "trust fund penalties" under section 6672, with respect to the operation of Paoli Local Restaurant .

Therefore respondent was T 4 - required to comply with the requirements of section 6672' before he could collect the unpaid tax from petitioner .

SERVED MAR 18 2009 2 - income tax liability for 2000 and trust fund recovery penalties under section 6672 for periods ended September 30, 1999, December 31, 1999, and December 31, 2000 (relevant quarterly periods) .

MEMORANDUM OPINION GOEKE,` Judge : These consolidated cases involve respondent's efforts to collect income taxes and section 6672' trust fund recovery penalties through lien and levy.

1964) (distinguishing section 6672 penalties not subject to deficiency proceedings from section 6651 additions subject to deficiency proceedings) ; Medeiros v..

ing the proposed levy, and P filed a timely petition . V Held : The notice of proposed assessment was mailed to P's last known address pursuant to secs . 6672, I .R.C ., and 6212(b), I .R .C . SERVED Jan 05 2009 Held, further, the assessment of the sec. 6672 penalty following the notice mailed to P's last known address did not violate P's due process rights . Held, further, R's supplemental determination is sustained . Phillip David Hickey, pro se . A. Gary Begun , for respondent . MEMORANDUM FI

V 3 - Background On August 9, 2004, respondent issued Mr .4 Brandon a proposed assessment regarding section 6672 trust penalties of $22,768 and $20,540, relating to the periods ending September 30 and'December 31, 2003, respectively .

6672; see also Bennett v. Commissioner, T.C. Memo. 2008-251. This may or may not be correct. United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994), and United States v. Haag, 94 AFTR 2d 6665, 2005-1 USTC par. 50,131 (D. Mass. 2004), affd. 485 F.3d 1 (1st Cir. 2007), don’t question the jurisdiction of Article III courts to entertain innoc

1964) (distinguishing section 6672 penalties not subject to deficiency proceedings from section 6651 additions subject to deficiency proceedings); Medeiros v.

We surmise that petitioner is concerned that the IRS may impose the 100-percent penalty under section 6672 against Mr .

While respondent has not produced a copy of this section 6320 notice, the request for a collection hearing that petitioner mailed to respondent on June 15, 2006, discussed below, does include the unpaid section 6672 penalties for the penalty periods in issue .

Internal Revenue Code (notice of determination) with respect to petitioner's Federal income tax liabilities for 2000, 2003, and 2004 and unpaid trust fund recovery penalties under section 6672 for periods ended June 30 , SERVED SEP - 3 `2008 2 - 2000, September 30, 2000 , December 31, 2000, March 31, 2001, September 30, 2001, December 31, 2001 , and March 31, 2002 .

Respondent sent petitioner a Final, Notice of Intent to Levy on March 25, 1999, to collect trust fund recovery penalties under section 6672 for the relevant periods .

MEMORANDUM FINDINGS OF FACT AND OPINIO N SWIFT, Judge : In this section 6320 lien case, petitioner seeks reversal of respondent's determination that petitioner is liable as a "responsible officer" under section 6672 for trust fund employment taxes (trust fund taxes) relating to periods ending December 31, 2001 through 2003 (the relevant periods) .

ions 6700, 6701, and 6702”); Van Es v. Commissioner, 115 T.C. 324, 329 (2000) (the Tax Court does not have jurisdiction to redetermine liability for sec. 6702 penalties); Wilt v. Commissioner, 60 T.C. 977 (1973) (trust fund recovery penalties under sec. 6672 fall outside the Tax Court’s deficiency jurisdiction). Whether the Tax Court’s "collection due process” jurisdiction extends to the review of collection efforts directed to the assessable penalties is a different question, to which the answe

A key issue in such cases is often whether the person suing for a refund is a "responsible person" within the meaning of section 6672(a) .

iew the frivolous return penalty imposed under section 6702); Moore v. Commissioner, 114 T.C. 171, 175 (2000) (case dismissed for lack of jurisdiction on the ground the Court lacks jurisdiction to review the trust fund recovery penalty imposed under section 6672). The record reflects that the civil penalty notice is based on the assessment of a penalty against petitioner pursuant to section 6682. It is well settled that this Court lacks jurisdiction to redetermine such penalties. Sec. 6682(c); C

e was submitted on the basis of doubt as to collectibility. The amount of individual income tax and statutory additions compromised totaled $989,475.2 Petitioner offered to pay $100,000 to 2 The trust fund recovery penalties to be compromised under sec. 6672 were 4102,030. By order dated Oct. 21, 2002, the Court granted respondent's motion to dismiss for lack of jurisdiction and to strike as to the trust fund penalties. The parties agree: The doctrine of collateral estoppel will apply to prohibi

On March 5, 1986, respondent assessed a section 6672 trust fund recovery penalty (TFRP) against each petitioner of more than $40,000.3 The TFRP resulted from the failure to withhold and pay over income and Federal Insurance Contribution Act taxes for 2 Petitioners’ cases were consolidated for purposes of trial, briefing, and opinion.

The Offer in Compromise was based on “doubt as to liability” and covered: (a) Income tax liabilities for tax years 1991, 1992, and 1993; and (b) the Trust Fund Recovery Penalty, see section 6672, for tax periods ended December 31, 1993, March 31, and June 30, 1994.

On March 5, 1986, respondent assessed a section 6672 trust fund recovery penalty (TFRP) against each petitioner of more than $40,000.3 The TFRP resulted from the failure to withhold and pay over income and Federal Insurance Contribution Act taxes for 2 Petitioners’ cases were consolidated for purposes of trial, briefing, and opinion.

- 3 - Trust Fund Recovery Penalty and Income Tax Deficiencies On September 3, 1992, respondent filed a Notice of Federal Tax Lien for $9,536.28 against petitioner with respect to a trust fund recovery penalty (the TFRP) under section 6672 for employment tax periods ending September 30, 1989, December 31, 1989, and March 31, 1990.3 Petitioners filed their 1993 Federal income tax return on April 15, 1994, showing tax due of $917.15, but remitted no payment with the return.

titioners’ modified adjusted gross income (MAGI) for purposes of determining eligibility for the earned income credit (EIC); (3) whether respondent should have allocated 10 percent of the proceeds of the levy to petitioners’ 1997 tax liability; and (4) whether petitioners are entitled to a deduction for payment of a portion of petitioner-husband’s section 6672 liability.

Commissioner, 80 T.C. 27, 33 (1983), affd. without published opinion 747 F.2d 1463 (5th Cir. 1984). A taxpayer is free to adopt such organization for his affairs as he may choose; having elected to do business as a corporation, he must accept 7Under sec. 6672, the IRS can collect a portion of unpaid corporate employment taxes, namely the employees’ shares of Federal income and FICA taxes reported on Forms 941, from persons responsible for the nonpayment of these taxes. A “responsible person” has

1255, 1259-1260 (1981) (section 6672 addition to tax); Judd v.

We concluded that because we did not have jurisdiction to redetermine Federal trust fund taxes determined by the Commissioner under section 6672, we did not have jurisdiction to review a determination made pursuant to section 6330 with regard to those taxes.

Also in 1991, petitioner paid the United States a total of approximately $23,662 in section 6672 responsible officer penalties that had been assessed by respondent against petitioner relating to unpaid trust fund Federal employment taxes owed by petitioner’s S corporations.

Revenue Officer James Land met petitioner during a field visit to Delafield's McDonald's restaurant in Baltimore.3 In July 1982, Revenue Officer Grace Jaecksch prepared a Form 4180, Report of Interview Held With Persons Relative to Recommendation of 100-Percent Penalty Assessments, based upon an interview with Shirley Thomas. On April 19

Respondent applied the $475 overpayment against an outstanding liability determined under section 6672 pursuant to the authority granted in section 6402(a).2 Subsequently, respondent determined a deficiency in petitioners' 1992 Federal income tax in the amount of $315.

Section 6672 is not in issue in this case. - 52 - HALPERN, J., dissenting: I. Introduction Section 163(h)(2)(A) exempts from the category of personal interest (which is nondeductible for individuals): "interest paid or accrued on indebtedness properly allocable to a trade or business (other than the trade or business of performing services as an e

both J & M and Tag Coal. Although an agreement was executed, it was never consummated and was effectively abrogated by the parties. 2 As responsible officers of Tag Coal, Mr. Templeman and Mr. Adkins would be liable for the 100-percent penalty under sec. 6672, and the IRS was of the view that their personal assets, including their partnership interests in J & M, would be subject to distraint. -5- Mr. Adkins did not contemplate transferring, nor did he ever transfer, any interest in Tag Coal to e

Section 6672 is not in issue in this case. --- DISSENT --- Halpern, J., dissenting: I. Introduction Section 163(h)(2)(A) exempts from the category of personal interest (which is nondeductible for individuals): “interest paid or accrued on indebtedness properly allocable to a trade or business (other than the trade or business of performing service

- 4 - The IRS ultimately assessed a responsible officer penalty under section 6672 (the 100-percent penalty) against Mr.