                                 T.C. Memo. 2012-185



                         UNITED STATES TAX COURT



                    YORON D. ISRAEL, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 18868-10L.                         Filed July 5, 2012.



      Yoron D. Israel, pro se.

      Michael R. Fiore, Janet F. Appel, and Erika B. Cormier, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION


      COHEN, Judge: This case was commenced in response to a notice of

determination concerning collection action that declined to consider the underlying

liability but approved an installment agreement with respect to petitioner’s unpaid

Federal income tax for 2007. The underlying deficiency resulted from disallowance
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of claimed exemptions for petitioner’s children and related adjustments. The

deficiency was assessed after petitioner failed to petition this Court in response to a

notice of deficiency that he received. The issue for decision is whether the refusal

to consider the underlying liability was an abuse of discretion. All section

references are to the Internal Revenue Code, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

                                     FINDINGS OF FACT

       Some of the facts have been stipulated, and the stipulated facts are

incorporated in our findings by this reference. Petitioner resided in Massachusetts

at the time he filed his petition.

       Petitioner was divorced from his former wife in 2000. The divorce decree

granted the parties joint custody of their three children, designated petitioner’s

former wife the “parent of primary residence”, and directed that petitioner had the

right to claim exemptions for all three children on his income tax returns for all odd

years commencing in 2001.

       Petitioner claimed exemptions for the three children on his 2007 Federal

income tax return in accordance with the divorce decree. He attached to his tax

return a copy of the divorce decree. He did not, however, attach to his return a

written declaration signed by his former wife that she would not claim the children,
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or any one of them, as dependents for 2007. He was contacted by the Internal

Revenue Service (IRS) and advised that he needed to obtain a Form 8332, Release

of Claim to Exemption for Child of Divorced or Separated Parents. Subsequent

efforts by petitioner to obtain the required form or other declaration were

unsuccessful, even though pursued in part through actions in the court in

Massachusetts that granted the decree and in a court in Arizona, where his former

wife had moved.

      In a notice of deficiency sent March 13, 2009, the IRS disallowed the claimed

dependency exemptions and made related adjustments. The notice of deficiency

sent by certified mail was returned unclaimed and had not been received as of April

13, 2009, when petitioner requested that a copy be mailed by regular mail.

Petitioner was then working with the Taxpayer Advocate Service in an attempt to

resolve the issue and missed the deadline for filing a petition in this Court. A

petition that he filed on March 4, 2010, was dismissed for lack of jurisdiction on

June 17, 2010.

      The deficiency was assessed after the time for filing a petition in this Court

had passed. On February 22, 2010, the IRS sent to petitioner a final notice of intent

to levy and notice of his right to a hearing under section 6330. Petitioner requested

a hearing, stating as his reason that he was “not liable for the taxes indicated, due to
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legal reasons.” After a hearing in which the settlement officer determined that

petitioner could not challenge the liability because of the prior opportunity to

do so, a collection alternative in the form of an installment agreement was

reached.

                                        OPINION

       In the petition in this case and at trial, petitioner continued to dispute the

underlying liability, contending that he is entitled to the dependency exemptions

claimed for his three children in 2007. However, that challenge to the underlying

liability is precluded by section 6330(c)(2)(B), which provides: “The person may

also raise at the hearing challenges to the existence or amount of the underlying tax

liability for any tax period if the person did not receive any statutory notice of

deficiency for such tax liability or did not otherwise have an opportunity to dispute

such tax liability.”

       The statutory preclusion just quoted might end the matter, as suggested by

respondent’s two summary judgment motions filed in this case but denied because

respondent failed to establish that there were no genuine issues of material fact in

dispute and that judgment could be rendered as a matter of law. Because

petitioner’s efforts have been consistent and in good faith, we believe he is entitled
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to an explanation of why those exemptions were disallowed. So far as the record

reflects, he has not been given an adequate explanation.

      The historic explanation appears in Miller v. Commissioner, 114 T.C. 184,

187-189 (2000), aff’d on another ground sub nom. Lovejoy v. Commissioner, 293

F.3d 1208 (10th Cir. 2002), as follows:

             Prior to 1985, the definition of dependent led to substantial
      controversy in cases involving divorced or separated taxpayers because
      determining which parent provided over one-half of a child's support
      presented difficult issues of proof and substantiation. See H. Rept. 98-
      432 (Part 2), at 1498 (1984). In 1984, Congress amended section
      152(e) to simplify the rules for determining which parent properly may
      claim the dependency exemption(s) for Federal income tax purposes.
      See Deficit Reduction Act of 1984, Pub. L. 98-369, sec. 423(a), 98
      Stat. 799.

             The pertinent parts of section 152(e) as amended provide:

            “SEC. 152(e). Support Test in Case of Child of
      Divorced Parents, Etc.--

                    (1) Custodial parent gets exemption.--Except
             as otherwise provided in this subsection, if--

                          (A) a child (as defined in section 151(c)(3))
             receives over half of his support during the calendar year
             from his parents--

                                (i) who are divorced or legally
                          separated under a decree of divorce or
                          separate maintenance,
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                         (ii) who are separated under a written
                   separation agreement, or

                          (iii) who live apart at all times during
                   the last 6 months of the calendar year, and

                   (B) such child is in the custody of one or both of
            his parents for more than one-half of the calendar year,

      such child shall be treated, for purposes of subsection
      (a), as receiving over half of his support during the
      calendar year from the parent having custody for a greater
      portion of the calendar year (hereinafter in this subsection
      referred to as the “custodial parent”).

             (2) Exception where custodial parent releases claim to
      exemption for the year.--A child of parents described in
      paragraph (1) shall be treated as having received over half of
      his support during a calendar year from the noncustodial parent
      if--

                   (A) the custodial parent signs a written declaration
            (in such manner and form as the Secretary may by
            regulations prescribe) that such custodial parent will not
            claim such child as a dependent for any taxable year
            beginning in such calendar year, and

                  (B) the noncustodial parent attaches such written
            declaration to the noncustodial parent’s return for the
            taxable year beginning during such calendar year.”

      *       *        *       *         *       *        *
       Although section 152(e) was amended effective for years
beginning after December 31, 1984, the only regulations promulgated
with respect to section 152(e) since its amendment in 1984 are
temporary regulations. Section 1.152-4T(a), Q&A-3, Temporary
Income Tax Regs., supra, provides that a noncustodial parent may
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      claim the exemption for a dependent child “only if the noncustodial
      parent attaches to his/her income tax return for the year of the
      exemption a written declaration from the custodial parent stating that
      he/she will not claim the child as a dependent for the taxable year
      beginning in such calendar year.” The declaration required under
      section 152(e)(2) must be made either on a completed Form 8332 or on
      a statement conforming to the substance of Form 8332. See sec.
      1.152-4T(a), Q&A-3, Temporary Income Tax Regs., supra. The
      exemption may be released for a single year, for a number of specified
      years, or for all future years “as specified in the declaration.” Sec.
      1.152-4T(a), Q&A-4, Temporary Income Tax Regs., supra.
             [Fn. refs. omitted.]

      Permanent regulations under section 152 were adopted for taxable years

beginning after July 2, 2008. See T.D. 9408, 2008-2 C.B. 323. While repeating the

essential provisions of the temporary regulations, section 1.152-4(e), Income Tax

Regs., provides in part:

             (e) Written declaration.--(1) Form of declaration.--

             (i) In general.--The written declaration under paragraph (b)(3)(i)
      of this section must be an unconditional release of the custodial
      parent’s claim to the child as a dependent for the year or years for
      which the declaration is effective. A declaration is not unconditional if
      the custodial parent’s release of the right to claim the child as a
      dependent requires the satisfaction of any condition, including the
      noncustodial parent’s meeting of an obligation such as the payment of
      support. A written declaration must name the noncustodial parent to
      whom the exemption is released. A written declaration must specify
      the year or years for which it is effective. A written declaration that
      specifies all future years is treated as specifying the first taxable year
      after the taxable year of execution and all subsequent taxable years.
                                         -8-

                    *      *       *       *       *       *       *

             (5) Written declaration executed in a taxable year beginning on
      or before July 2, 2008.--A written declaration executed in a taxable
      year beginning on or before July 2, 2008, that satisfies the requirements
      for the form of a written declaration in effect at the time the written
      declaration is executed, will be treated as meeting the requirements of
      paragraph (e)(1) of this section. Paragraph (e)(3) of this section
      applies without regard to whether a custodial parent executed the
      written declaration in a taxable year beginning on or before July 2,
      2008.

      As unfair as it may seem to petitioner, the statute, regulations, and numerous

cases subsequent to Miller v. Commissioner, 114 T.C. at 187-189, compel the

conclusion that his former wife’s failure to execute the required declaration

defeats his claim to the exemptions for 2007. See Santana v. Commissioner, T.C.

Memo. 2012-49; Nixon v. Commissioner, T.C. Memo. 2011-249; Briscoe v.

Commissioner, T.C. Memo. 2011-165; Himes v. Commissioner, T.C. Memo. 2010-

97; Gessic v. Commissioner, T.C. Memo. 2010-88; Thomas v. Commissioner, T.C.

Memo. 2010-11.
                                        -9-

      Because petitioner has not contested the agreement for an installment

payment of the liability or otherwise challenged the determination, the notice of

determination will be sustained and


                                              Decision will be entered for

                                       respondent.
