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In re Tax Indebtedness of Robertson

United States District Court, D. Idaho

September 12, 2016

In the Matter of the Tax Indebtedness of JOE W. ROBERTSON and ALICIA J. ROBERTSON

          FINDINGS OF FACT & CONCLUSIONS OF LAW

          B. Lynn Winmill, United States District Court Chief Judge.

         INTRODUCTION

         The Internal Revenue Service (IRS) seeks approval to sell Joseph Robertson's home and apply the proceeds to the back taxes he owes. The Court held an evidentiary hearing on August 29, 2016, and took the matter under advisement. For the reasons expressed below, the Court will approve the sale.

         FINDINGS OF FACT

         Joseph Robertson and his then-wife, Alicia Robertson, did not file tax returns for 1999 through 2005. The IRS assessed a tax deficiency for those years of over a million dollars. See Robertson Affidavit (Dkt. No. 7) at ¶ 11. The Robertsons responded in 2006 by having their accountant prepare tax returns for the years 1999-2005 and provide them to the Taxpayer Advocate Service, who forwarded them to the IRS. After initially accepting some of the returns, the IRS audited all of those tax periods in 2007.

         The Robertsons' accountant calculated their tax deficiency for those years to be about $41, 000, relying on substantial deductions the IRS had not considered. But the Robertsons claim that the supporting evidence for all of these deductions was destroyed when their basement flooded.

         Robertson testified that during this time, he sought help from the IRS's Taxpayer Advocate's Office, and was assisted by a Taxpayer Advocate named Anthony Subiak. Robertson testified that the two of them talked numerous times over the telephone, and that Subiak worked for over a year before calculating Robertson's tax deficiency as $27, 000, a figure even lower than Robertson's accountant calculated. Subiak explained, according to Robertson's testimony, that the accountant had failed to take into account some favorable tax savings.

         Subiak's analysis was obviously of great value to Robertson because it was so much less than the IRS's deficiency calculation of over a million dollars. Thus, one would assume that Robertson would do everything in his power to obtain Subiak's written analysis.

         Robertson testified that Subiak mailed his tax analysis to Robertson on two occasions, but both times the analysis was returned because Subiak was not aware that the Robertsons had moved to a new home. While Subiak was trying to call Robertson to determine why the mailings were being returned, Subiak's calls went unreturned because Robertson had given his cell phone to his daughter, who apparently either did not get Subiak's messages or failed to pass them along.

         So at the very moment that Robertson was to receive a tax analysis that slashed his deficiency calculation by nearly a million dollars, he made it nearly impossible for anyone to contact him. At the evidentiary hearing, Robertson made no attempt to explain why he failed to inform Subiak that he could not be reached at his old address or cell phone number.

         By the time Robertson finally asked why he had not received the analysis, Subiak told him that after unsuccessfully attempting to reach Robertson by mail and cell phone, he had “closed them [the tax analysis papers] out and sent them to a file.” Robinson did not explain what this meant or why Subiak could not retrieve the analysis and send it to the correct address. When asked whether he had contacted Subiak more recently to confirm this story, Robertson testified that Subiak had retired two or three years earlier. Beyond this, Robertson did not describe any efforts he has made to contact Subiak. The Court is left simply with Robertson's account, described above.

         Throughout 2007 and 2008, the IRS audit of the tax returns prepared by the Robertsons' accountant was continuing. When the Robertsons failed to produce any evidence to support their deductions - the evidence having allegedly been lost in a basement flood, as discussed above - the IRS refused to allow the deductions, assessed a tax deficiency of about $1, 000, 000, and sent deficiency notices to the Robertsons in 2008. The notices gave the Robertsons 90 days to file a petition with the Tax Court to challenge the IRS assessments. The Robertsons failed to file any challenge and have not cured the deficiency. Today they owe, with interest and penalties, $1, 602, 723.46. See Petition (Dkt.No. 1) at p. 5.

         The IRS began its efforts to collect this sum in 2009. The Robertsons responded by filing an offer in compromise that was denied in 2010.

         The IRS evaluated the assets the Robertsons had to pay the back taxes and determined that the only real asset of value was their principal residence. There was no evidence submitted by the Robertsons ...


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