Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Rogers v. Illinois Department of Revenue

Court of Appeals of Illinois, First District, Fourth Division

March 23, 2017

JOHN E. ROGERS and FRANCES L. ROGERS, Petitioners,
v.
ILLINOIS DEPARTMENT OF REVENUE and ILLINOIS INDEPENDENT TAX TRIBUNAL, Respondents.

         Petition for Review of the Order of the Illinois Independent Tax Tribunal. No. 14 TT 153 Brian F. Barov, Administrative Law Judge Presiding.

          PRESIDING JUSTICE ELLIS delivered the judgment of the court, with opinion. Justices Howse and Burke concurred in the judgment and opinion.

          OPINION

          ELLIS, PRESIDING JUSTICE

         ¶ 1 Under section 506(b) of the Illinois Income Tax Act (Act) (35 ILCS 5/506(b) (West 2010)), an Illinois taxpayer must report any change in his or her federal income tax return within 120 days of the change having been "agreed to" or "finally determined for federal income tax purposes." The question in this case is whether petitioners John E. Rogers and Frances L. Rogers "agreed to" a change in their 2002 federal returns, or whether such a change was "finally determined, " when John signed a settlement agreement with the IRS on behalf of a partnership whose losses petitioners reported on their personal returns.

         ¶ 2 Petitioners listed a $495, 000 loss on their 2002 federal return based on a loss suffered by a partnership called Wacker-Madison, LLC (Wacker-Madison). Although petitioners did not have a direct interest in Wacker-Madison, one of the partners in Wacker-Madison was another partnership called Abingdon Trading, LLC (Abingdon). John held an interest in Abingdon, meaning that Wacker-Madison's loss passed along to Abingdon and again to John. After the Internal Revenue Service (IRS) conducted an audit of Wacker-Madison, it notified petitioners that the $495, 000 was incorrect. John signed a settlement agreement with the IRS on behalf of Abingdon, which adjusted the loss on Wacker-Madison's 2002 return.

         ¶ 3 Respondent, the Illinois Department of Revenue (the Department), sent petitioners a notice of deficiency (the Notice) that claimed that petitioners owed an additional $72, 336.86 in Illinois income tax for tax year 2002. The Department alleged that petitioners had not timely notified it of a change to their 2002 federal returns. Petitioners filed a petition with respondent, the Illinois Independent Tax Tribunal (the Tribunal), arguing that the Notice was premature because the change to their federal return was not "agreed to" or "finally determined" under section 506(b). The Tribunal granted the Department's motion for summary judgment, finding that petitioners had agreed to a change in their federal returns when John signed the settlement agreement with the IRS and that the settlement constituted a final determination of the change.

         ¶ 4 Petitioners appeal, claiming that the Tribunal erred in awarding the Department summary judgment for two reasons: (1) there were questions of fact surrounding John's status as a partner in Abingdon and Abingdon's status as a partnership, meaning that there were questions of fact regarding John and Abingdon's ability to agree to a change in the federal tax returns of Wacker-Madison; and (2) there were questions of fact regarding whether the settlement agreement John signed constituted a final determination of the change to his federal taxes. ¶ 5 We affirm the decision of the Tribunal. The settlement agreement showed that John, acting on behalf of Abingdon, which was a partner in Wacker-Madison, agreed to a change in the amount of loss reported on Wacker-Madison's 2002 tax returns. That adjustment passed through Abingdon to petitioners' personal income tax return. Moreover, the reduction in the loss was a final determination of the amount of loss Wacker-Madison suffered in 2002. We affirm the Tribunal's award of summary judgment for the Department.

         ¶ 6 I. BACKGROUND

         ¶ 7 Petitioners filed joint federal and Illinois income tax returns in 2002. Petitioners reported a $495, 000 loss on those returns. That $495, 000 loss reflected the loss incurred by Abingdon, a limited liability company taxed as a partnership. Abingdon itself incurred the loss because it was a partner in Wacker-Madison, which suffered the loss initially. In other words, Wacker-Madison reported a loss, which flowed to its partners, including Abingdon, which in turn flowed to petitioners.

         ¶ 8 Several years later (the record is unclear as to precisely when), the IRS audited Wacker-Madison and discovered that it had not suffered the $495, 000 loss. The IRS sought to collect on the deficiency from petitioners.

         ¶ 9 On June 17, 2008, John signed an IRS Form 870-LT, titled, "Settlement Agreement for Partnership Items and Partnership Level Determinations as to Penalties, Additions to Tax and Additional Amounts and Agreement for Affected Items, " on Abingdon's behalf. The form said that the IRS and Abingdon "agree[d] to the determination of partnership items and partnership level determinations as to penalties, additions to tax, and additional amounts that relate to adjustments to partnership items." The form said that Abingdon consented "to the assessment and collection of any deficiency attributable to partnership items, penalties, additions to tax, and additional amounts that relate to adjustments to partnership items."

         ¶ 10 On September 12, 2011, the IRS sent John a notice of intent to levy, indicating that it intended to take his personal property to satisfy his outstanding debt of $608, 474.06. The notice said that John still had "unpaid taxes for the tax year ending December 31, 2002."

         ¶ 11 In response to the IRS's threat to levy their property, petitioners filed a request for a collection due process hearing with the IRS. In explaining their reasons for requesting the hearing, petitioners said that the adjustment to Wacker-Madison's gains was incorrect and that the statute of limitations had run on the IRS's attempt to collect the deficiency. On February 24, 2012, the IRS sent petitioners a letter informing them that it had received their request for a collection due process hearing and that their request had been forwarded to the IRS's appeals department.

         ¶ 12 On March 25, 2013, the Department sent John a letter informing him that it had begun an audit of his and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.