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Hunter v. Commissioner of Internal Revenue

June 29, 2010

ERNEST A. AND BERNIECE C. HUNTER, PETITIONERS,
v.
COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.



The opinion of the court was delivered by: Gabriel W. Gorenstein, United States Magistrate Judge

REPORT AND RECOMMENDATION

Ernest A. and Berniece C. Hunter filed this suit pro se principally to challenge the imposition of civil penalties by the Internal Revenue Service ("IRS") pursuant to 26 U.S.C. § 6702 of the Internal Revenue Code. The Commissioner of Internal Revenue has moved to dismiss the complaint because it was filed prior to the date permitted by statute and also because it is moot. For the reasons stated below, the Commissioner's motion should be granted.

I. BACKGROUND

As described in section 2.A, the Government's motion should be treated as one for summary judgment. The following facts are either taken from the complaint or are based on affidavits submitted by the Government that have not been controverted.

Petitioners,*fn1 husband and wife, assert that a levy of $5,000 was instituted against them by the IRS in response to their submission of an allegedly "false and frivolous tax return for the year ending December 2007." See Amended Petition, filed Aug. 25, 2009 (Docket # 8) ("Pet."), at 1.

On May 22, 2008, the IRS mailed the Hunters a "[n]notice delineating the liability of $5,000." Id. at 2. This notification stated that the IRS intended to impose penalties pursuant to 26 U.S.C. § 6702 in the amount of $5000 because the petitioners had filed a "frivolous" tax return for the tax year 2007. Letter from Dennis L. Paig (last name partially illegible) to Ernest A. and Berniece C. Hunter, dated May 22, 2008 (annexed as Ex. 1 to Supplement to Notice of Petition, filed June 19, 2009 (Docket # 4) ("Pet. Supp.")).*fn2 The Hunters responded to this letter on June 3, 2008, Pet. at 3, stating that there was a "reasonable basis for the tax treatment" submitted by the petitioners, including a $4,000.00 claimed expense for daily library attendance and a $3,354.05 deducted expense based on the "storage of household furnishing[s] and other records for safe keeping" during repairs to their apartment. See Letter from Ernest A. and Berniece C. Hunter to Mrs. Ranson, dated June 3, 2008 (annexed as Ex. 3 to Pet. Supp.) ("June 3 letter"), at 1. On January 30, 2009, the IRS mailed the Hunters a Notice of Deficiency. Pet. at 3; Letter from Henry Slaughter to Berniece C. Hunter, dated Jan. 30, 2009 (annexed as Ex. 2 to Pet.) ("Notice of Deficiency"). In that Notice, the IRS stated that petitioners owed $5,313.58, which included penalties and interest. Notice of Deficiency at 1.

On April 28, 2009, the Hunters filed a claim for refund on the standard Form 843. See Form 843 Claim for Refund and Request for Abatement, dated Apr. 28, 2009 (annexed to Petition, filed Apr. 30, 2009 (Docket # 1) ("Original Pet.")).*fn3 Two days later, on April 30, 2009, the Hunters filed this lawsuit, challenging the imposition of the penalties under section 6702. See Original Pet. They filed an amended petition on August 25, 2009, see Pet., raising virtually the same points, but seeking "to be restored all levied funds, [and] compensated for all damages and costs sustained" in the prosecution of this case, id. at 4, and attaching five additional Forms 843, see Pet. Ex. 9-13, which were received by the IRS in August 2009, see Memorandum of Law in Support of Respondent's Motion to Dismiss, filed Jan. 15, 2010 (Docket # 12) ("Resp. Mem."), at 3. There appear to be no additional claims in the amended petition based on these Forms 843, however.*fn4

After the Hunters filed this suit, the IRS decided to abate the penalties and interest assessed against the Hunters under section 6702 for the tax year 2007. See Declaration of Linsey J. White, filed Jan. 15, 2010 (Docket # 13) ("White Decl.") ¶ 2. On October 16, 2009, id., the IRS wrote letters to both petitioners informing them of this action, see Letter to Ernest A. Hunter from Ms. White, undated and Letter to Berniece C. Hunter from Ms. White, dated Oct. 16, 2009 (annexed as Ex. 1 to White Decl.) ("Abatement letters"). The abated penalties and accrued interest were released to the Hunters in November, White Decl. ¶ 3, and their IRS account statements now reflect a zero balance for the tax year 2007, see Declaration of George Vazquez, filed Apr. 12, 2010 (Docket # 19) ("Vazquez Decl.") ¶¶ 2, 3; Account Transcript for Ernest A. Hunter, dated Mar. 22, 2010 (annexed as Ex. A to Vazquez Decl.), and a $290.00 balance in Mr. Hunter's favor on his account transcript for the section 6702 penalty, Vazquez Decl. ¶ 2(a); Section 6702 Account Transcript, dated Mar. 22, 2010 (annexed as Ex. B to Vazquez Decl.).

In connection with the abatement, a check was issued for $293.74 to Mr. Hunter, representing the amount of a New York school tax refund that had been levied upon. See Letter from Jacquelyne Yarbrough to Ernest A. Hunter, dated Jan. 29, 2010 (annexed as Ex. 26 to Memorandum of Law in Opposition to Respondent's Motion to Dismiss, filed Mar. 16, 2010 (Docket # 17) ("Pet Opp.")). The Hunters, however, returned the check for $293.74 to the IRS because they wanted the check to be issued to them by the State of New York in both of their names. See Letter from Ernest A. and Berniece C. Hunter, dated Jan. 11, 2010 to Maria McKinney (annexed as Ex. 24 to Pet. Opp.) ("School Tax letter"), at 2. The IRS has credited Mr. Hunter's IRS account for $290.00, see Vazquez Decl. ¶ 2(a); Section 6702 Account Transcript at 1.

The Commissioner has now moved to dismiss the amended petition. See Notice of Motion, filed Jan. 15, 2010 (Docket # 11); Resp. Mem.; White Decl; Notice to Pro Se Litigant Who Opposes a Rule 12 Motion Supported by Matters Outside the Pleadings, filed Mar. 10, 2010 (Docket # 15) ("Pro Se Notice"). The motion seeks to dismiss the Hunters' case because (1) "it was filed before the expiration of the six-month statutory waiting period" mandated by 26 U.S.C. § 6532, Resp. Mem. at 4-6, and (2) the petition is moot because the penalties have been abated, id. at 7. The Hunters filed opposition papers, consisting of a memorandum with attached affidavits and exhibits. See Pet. Opp. The Commissioner submitted reply documents. See Reply Memorandum of Law in Further Support of Respondent's Motion to Dismiss, filed Apr. 12, 2010 (Docket # 18); Vazquez Decl.

II. DISCUSSION

A. Applicable Law

While the Commissioner has moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) or for judgment on the pleadings under Fed. R. Civ. P. 12(c), he has also submitted affidavits in support of his motion. Where such materials are considered by a court, "the motion must be treated as one for summary judgment," disposed of as provided in Fed. R. Civ. P. 56, and "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R. Civ. P. 12(d); accord Friedl v. City of N.Y., 210 F.3d 79, 83 (2d Cir. 2000) (where materials outside the pleadings are presented on a motion to dismiss, a court "must either exclude the additional material and decide the motion on the complaint alone or convert the motion to one for summary judgment under Fed. R. Civ. P. 56 and afford all parties the opportunity to present supporting material") (citations and internal quotations omitted).

In accordance with Local Civil Rule 12.1, the Commissioner served the Hunters with a "Notice to Pro Se Litigant Who Opposes a Rule 12 Motion Supported by Matters Outside the Pleadings." See Pro Se Notice. That notice warned the Hunters that this Court might treat the Commissioner's motion as a motion for summary judgment under Fed. R. Civ. P. 56 and informed the Hunters of their obligation to submit evidence. Id. at 1-2. It also informed the Hunters that if they did not provide "affidavits or documentary ...


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