SCOTUS Reports

Tag: Collection Due Process

  • Wiley Ramey v. Commissioner of Internal Revenue, 156 T.C. No. 1 (2021): Timeliness of Collection Due Process Hearing Requests

    Wiley Ramey v. Commissioner of Internal Revenue, 156 T. C. No. 1 (2021)

    In Wiley Ramey v. Commissioner of Internal Revenue, the U. S. Tax Court ruled that the IRS’s mailing of a notice of intent to levy to a taxpayer’s last known address by certified mail triggers the 30-day period for requesting a Collection Due Process (CDP) hearing, regardless of whether the taxpayer personally receives it. The court dismissed the case for lack of jurisdiction because the taxpayer’s request for a hearing was untimely, highlighting the strict statutory requirements for CDP hearings and the implications for taxpayers’ rights to judicial review.

    Parties

    Wiley Ramey, the petitioner, represented himself pro se throughout the litigation. The respondent, Commissioner of Internal Revenue, was represented by Joanne H. Kim, Justine S. Coleman, and Jordan S. Musen.

    Facts

    Wiley Ramey had a tax debt of $247,033 for the taxable years 2012 to 2016. On July 13, 2018, the IRS sent a Notice LT11 (Notice of Intent to Levy and Notice of Your Right to a Hearing) to Ramey at his address, 9520 Castillo Drive, San Simeon, CA, via certified mail, return receipt requested. This address was shared with several businesses. The notice was left at the address on July 16, 2018, by a USPS letter carrier and signed for by an individual named Joel, who was not Ramey’s employee or authorized to receive his mail. Ramey received the notice shortly before the 30-day deadline but submitted his request for a CDP hearing on August 16, 2018, which was after the deadline of August 13, 2018.

    Procedural History

    The IRS treated Ramey’s request as untimely and offered an equivalent hearing under section 301. 6330-1(i)(1) of the Treasury Regulations. After the equivalent hearing, IRS Appeals issued a decision letter sustaining the notice of intent to levy. Ramey petitioned the U. S. Tax Court for review. The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction, which was later supplemented with additional evidence of service. An evidentiary hearing was held on July 31, 2020. The court granted the Commissioner’s motion, dismissing the case for lack of jurisdiction due to the untimely request for a CDP hearing.

    Issue(s)

    Whether mailing a notice of intent to levy to a taxpayer’s last known address by certified mail, return receipt requested, starts the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330, even if the taxpayer does not personally receive the notice because the address is shared by multiple businesses and the notice is left with someone unauthorized to receive the taxpayer’s mail.

    Rule(s) of Law

    I. R. C. sec. 6330(a)(2) requires that the notice of intent to levy be sent to the taxpayer’s last known address by certified or registered mail, return receipt requested. Treasury Regulation section 301. 6330-1(a)(3), Q&A-A9, states that “Notification properly sent to the taxpayer’s last known address * * * is sufficient to start the 30-day period within which the taxpayer may request a CDP hearing. * * * Actual receipt is not a prerequisite to the validity of the CDP Notice. “

    Holding

    The U. S. Tax Court held that the mailing of the notice of intent to levy to Ramey’s last known address by certified mail, return receipt requested, started the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330, despite Ramey not personally receiving the notice due to the shared address and unauthorized receipt by a third party. As a result, Ramey’s request for a CDP hearing was untimely, and the court lacked jurisdiction to review the case.

    Reasoning

    The court’s reasoning focused on the statutory and regulatory requirements for initiating the 30-day period for requesting a CDP hearing. The court emphasized that the statute and regulations do not require actual receipt of the notice, only that it be sent to the taxpayer’s last known address by certified or registered mail, return receipt requested. The court rejected Ramey’s argument that the notice was deficient because he did not personally receive it, finding that the IRS complied with the statutory requirements by properly addressing and sending the notice. The court also noted that Ramey’s choice to share an address with multiple businesses did not change the IRS’s obligation under the statute. The court’s analysis included a review of prior case law and statutory interpretation, reinforcing the strict adherence to the 30-day deadline and the implications for judicial review.

    Disposition

    The U. S. Tax Court dismissed the case for lack of jurisdiction due to Ramey’s untimely request for a CDP hearing.

    Significance/Impact

    This case underscores the strict statutory requirements for initiating the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330. It clarifies that the IRS’s responsibility is fulfilled by sending the notice to the taxpayer’s last known address, regardless of actual receipt. This ruling may impact taxpayers who share addresses with other entities, emphasizing the importance of timely action upon notification of IRS actions. The decision also highlights the limited jurisdiction of the U. S. Tax Court in reviewing CDP cases, reinforcing the procedural nature of these hearings and the consequences of missing statutory deadlines. Subsequent cases may reference this decision to interpret the notice requirements under I. R. C. sec. 6330 and related regulations.

  • Amanda Iris Gluck Irrevocable Trust v. Commissioner, 154 T.C. No. 11 (2020): Collection Due Process and Jurisdiction over Computational Adjustments

    Amanda Iris Gluck Irrevocable Trust v. Commissioner, 154 T. C. No. 11 (U. S. Tax Court 2020)

    In Amanda Iris Gluck Irrevocable Trust v. Commissioner, the U. S. Tax Court clarified its jurisdiction in collection due process (CDP) cases involving computational adjustments under the Tax Equity and Fiscal Responsibility Act (TEFRA). The Court held that while it lacked jurisdiction over the 2012 tax year due to the absence of a collection action, it could review the Trust’s underlying tax liabilities for 2014 and 2015 in a CDP context, despite these liabilities stemming from computational adjustments. This ruling underscores the broader scope of judicial review in CDP proceedings compared to deficiency cases, offering taxpayers a chance to contest liabilities they could not previously challenge.

    Parties

    Amanda Iris Gluck Irrevocable Trust (Petitioner) v. Commissioner of Internal Revenue (Respondent). The Trust was the petitioner at the U. S. Tax Court level, challenging the Commissioner’s actions through a collection due process (CDP) hearing and subsequent judicial review.

    Facts

    The Amanda Iris Gluck Irrevocable Trust (the Trust) was a direct and indirect partner in partnerships subject to the unified audit and litigation procedures of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). In 2012, one of these partnerships sold property and realized a large capital gain. The Trust allegedly failed to report its entire distributive share of this gain, prompting the IRS to make computational adjustments to the Trust’s 2012-2015 tax returns. These adjustments eliminated the Trust’s net operating loss (NOL) for 2012 and disallowed NOL carryforward deductions for 2013-2015, resulting in assessed tax liabilities for those years. The IRS issued a levy notice for the 2013-2015 tax years, which the Trust challenged through a CDP hearing and subsequent petition to the U. S. Tax Court.

    Procedural History

    The IRS made computational adjustments to the Trust’s 2012-2015 tax returns and assessed the resulting tax liabilities. The IRS then issued a levy notice for the 2013-2015 tax years, prompting the Trust to request a CDP hearing. The settlement officer (SO) sustained the levy notice, and the Trust timely petitioned the U. S. Tax Court for review. The Commissioner moved to dismiss the case as to the 2012 and 2013 tax years, arguing that the 2012 tax year was not subject to the levy notice and that the 2013 liability had been fully paid. The Commissioner also moved for summary judgment as to the 2014 and 2015 tax years.

    Issue(s)

    1. Whether the U. S. Tax Court has jurisdiction to review the Trust’s underlying tax liability for the 2012 tax year in this CDP proceeding?

    2. Whether the U. S. Tax Court has jurisdiction to review the Trust’s underlying tax liabilities for the 2013-2015 tax years in this CDP proceeding?

    3. Whether the Trust’s challenge to the collection action for the 2013 tax year is moot due to full payment of the liability?

    4. Whether the Trust is entitled to challenge its underlying tax liabilities for the 2014 and 2015 tax years in this CDP proceeding?

    Rule(s) of Law

    1. Under I. R. C. § 6330(d)(1), the U. S. Tax Court has jurisdiction to review a notice of determination issued following a CDP hearing if a timely petition is filed.

    2. I. R. C. § 6330(c)(2)(B) allows a taxpayer to challenge the existence or amount of an underlying tax liability in a CDP proceeding if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute such tax liability.

    3. I. R. C. § 6230(a)(1) generally prohibits the U. S. Tax Court from reviewing computational adjustments in deficiency proceedings, but this limitation does not apply in CDP cases.

    4. The U. S. Tax Court reviews the SO’s determination regarding underlying tax liabilities de novo and other aspects of the determination for abuse of discretion.

    Holding

    1. The U. S. Tax Court lacks jurisdiction over the Trust’s 2012 tax year because no collection action was taken for that year.

    2. The U. S. Tax Court has jurisdiction under I. R. C. § 6330(d)(1) to review the Trust’s underlying tax liabilities for the 2013-2015 tax years in this CDP proceeding.

    3. The Trust’s challenge to the collection action for the 2013 tax year is moot because the liability has been fully paid.

    4. The Trust is entitled to challenge its underlying tax liabilities for the 2014 and 2015 tax years because it did not have a prior opportunity to dispute these liabilities.

    Reasoning

    The U. S. Tax Court’s reasoning in this case focused on the scope of its jurisdiction in CDP proceedings and the distinction between deficiency and CDP cases regarding computational adjustments. The Court emphasized that while it generally lacks jurisdiction to review computational adjustments in deficiency proceedings under I. R. C. § 6230(a)(1), its jurisdiction in CDP cases is not similarly limited. The Court cited McNeill v. Commissioner, 148 T. C. 481 (2017), to support its authority to review underlying liabilities arising from computational adjustments in CDP proceedings.

    The Court also analyzed the Trust’s right to challenge its underlying liabilities under I. R. C. § 6330(c)(2)(B), which allows such challenges if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute the liability. The Court determined that the Trust did not have a prior opportunity to dispute its 2014 and 2015 liabilities in a prepayment posture, thus entitling it to raise these challenges in the CDP hearing.

    The Court rejected the Commissioner’s argument that the Trust was merely disputing its 2012 tax liability to create an overpayment for offsetting purposes. Instead, the Court found that the Trust was challenging the disallowance of NOL carryforward deductions for 2014 and 2015, which directly affected its underlying tax liabilities for those years. The Court noted that it could consider facts related to other tax years, such as the 2012 NOL, to determine the correct amount of deductions for the years in issue.

    The Court also addressed the standard of review in CDP cases, applying de novo review to the Trust’s underlying liability challenges and abuse of discretion review to other aspects of the SO’s determination. The Court found genuine disputes of material fact regarding the Trust’s entitlement to NOL carryforward deductions for 2014 and 2015, precluding summary judgment.

    Disposition

    The U. S. Tax Court granted the Commissioner’s motion to dismiss for lack of jurisdiction as to the 2012 tax year and dismissed the 2013 tax year as moot. The Court denied the Commissioner’s motion for summary judgment as to the 2014 and 2015 tax years, finding genuine disputes of material fact regarding the Trust’s underlying tax liabilities for those years.

    Significance/Impact

    This case clarifies the U. S. Tax Court’s jurisdiction in CDP proceedings involving computational adjustments under TEFRA. It underscores the broader scope of judicial review available to taxpayers in CDP cases compared to deficiency proceedings, allowing them to challenge underlying tax liabilities that they could not previously dispute. The decision also highlights the importance of the CDP process as a mechanism for taxpayers to contest tax liabilities assessed through computational adjustments, particularly when they have not had a prior opportunity to challenge those liabilities. This ruling may impact how taxpayers and the IRS approach CDP hearings and the litigation of tax liabilities arising from partnership items.

  • Do S. Wong v. Commissioner, T.C. Memo. 2020-32: Collection Due Process and Abuse of Discretion in Tax Law

    Do S. Wong v. Commissioner, T. C. Memo. 2020-32 (U. S. Tax Court 2020)

    In Do S. Wong v. Commissioner, the U. S. Tax Court upheld the IRS’s filing of a federal tax lien against Wong, affirming the agency’s collection action as not constituting an abuse of discretion. Wong, who failed to substantiate his 2013 tax deductions and did not respond to IRS requests for financial information during the collection due process (CDP) hearing, challenged the lien. The court’s decision emphasizes the IRS’s discretion in collection actions and the importance of taxpayer cooperation in CDP proceedings, impacting future tax collection cases.

    Parties

    Do S. Wong, the petitioner, represented himself pro se. The respondent was the Commissioner of Internal Revenue, represented by Halvor R. Melom.

    Facts

    Do S. Wong, a California resident, filed a timely federal income tax return for 2013, reporting a tax liability of $10,395. He claimed an overpayment, which he elected to apply to his 2014 tax liability. The IRS examined his 2013 return and disallowed several hundred thousand dollars in business expense deductions due to lack of substantiation. The IRS proposed a deficiency of $156,326 and an accuracy-related penalty of $31,265. Wong did not respond to the 30-day letter or the subsequent notice of deficiency sent on June 28, 2016. The IRS assessed the deficiency and penalty on February 13, 2017, after Wong failed to file a petition within the 90-day period. To collect the unpaid liability, the IRS filed a notice of federal tax lien (NFTL) on February 27, 2018, and sent Wong a notice of the lien filing and his right to a hearing.

    Wong requested a CDP hearing, asserting he did not owe any tax for 2013. The settlement officer (SO) scheduled a telephone hearing for June 13, 2018, and outlined the required documentation for considering collection alternatives, including a Form 433-A and copies of unfiled tax returns for 2014-2017. Wong did not attend the hearing, submit the required documents, or communicate with the SO until after missing the hearing, when he requested additional time to provide documentation for his 2013 expenses and to complete his 2014-2017 returns. The SO denied the extension, advised Wong to pursue audit reconsideration, and closed the case on July 31, 2018. The IRS issued a notice of determination sustaining the NFTL filing on August 2, 2018.

    Procedural History

    Wong timely filed a petition with the U. S. Tax Court challenging the IRS’s determination. The Commissioner moved for summary judgment twice, first on July 11, 2019, and again on October 18, 2019, after supplementing the record with evidence of supervisory approval for the accuracy-related penalty. Wong did not respond to either motion. The court initially denied the first motion without prejudice due to uncertainty about the penalty’s supervisory approval but granted the second motion, finding no genuine dispute as to any material fact and ruling as a matter of law that the IRS did not abuse its discretion in sustaining the NFTL filing.

    Issue(s)

    Whether the IRS abused its discretion in sustaining the filing of a notice of federal tax lien against Wong, given his failure to substantiate his 2013 tax deductions and to cooperate in the CDP hearing process?

    Rule(s) of Law

    In a CDP case, the Tax Court reviews the IRS’s determination for abuse of discretion if the taxpayer’s underlying liability is not at issue. Abuse of discretion occurs when a determination is arbitrary, capricious, or without sound basis in fact or law. The IRS must verify that the requirements of applicable law or administrative procedure have been met, consider any relevant issues raised by the taxpayer, and balance the need for efficient tax collection with the taxpayer’s concerns about the intrusiveness of the collection action.

    Holding

    The U. S. Tax Court held that the IRS did not abuse its discretion in sustaining the filing of the NFTL against Wong. The court found that the IRS properly verified compliance with legal and administrative requirements, considered Wong’s concerns, and appropriately balanced collection needs with the taxpayer’s interests.

    Reasoning

    The court reasoned that Wong’s underlying tax liability for 2013 was not at issue because he received a valid notice of deficiency and did not petition the Tax Court within the statutory period. Thus, the court reviewed the IRS’s determination for abuse of discretion. The court found that the SO verified that the notice of deficiency was sent to Wong’s last known address, the tax liability was properly assessed, and supervisory approval was secured for the accuracy-related penalty, as required by section 6751(b)(1). The court noted that the SO provided Wong with instructions on how to pursue audit reconsideration, a discretionary process outside the CDP framework. Wong’s failure to attend the scheduled hearing, submit required financial information, or seek audit reconsideration justified the SO’s decision not to grant further extensions. The court concluded that the IRS’s actions were not arbitrary, capricious, or without sound basis in fact or law, thus not constituting an abuse of discretion.

    Disposition

    The U. S. Tax Court granted summary judgment in favor of the Commissioner and sustained the IRS’s collection action by upholding the filing of the NFTL.

    Significance/Impact

    Do S. Wong v. Commissioner reinforces the discretion afforded to the IRS in collection actions and the importance of taxpayer cooperation in CDP proceedings. The decision highlights that taxpayers must substantiate their claims and comply with IRS requests for information to challenge collection actions effectively. It also clarifies the IRS’s authority to proceed with collection actions when taxpayers fail to engage in the CDP process, potentially affecting future cases where taxpayers seek to challenge collection actions without providing necessary documentation or pursuing alternative remedies such as audit reconsideration. The case underscores the procedural requirements and the limited scope of judicial review in CDP cases, emphasizing the need for taxpayers to address their underlying liabilities through appropriate channels before challenging collection actions.

  • Sun River Financial Trust v. Commissioner, T.C. Memo. 2020-30: Abuse of Discretion in Collection Due Process Hearings

    Sun River Financial Trust v. Commissioner, T. C. Memo. 2020-30 (U. S. Tax Court 2020)

    In a significant ruling on collection due process (CDP) hearings, the U. S. Tax Court upheld the IRS’s decision to proceed with a levy and filing of a federal tax lien against Sun River Financial Trust for unpaid frivolous return penalties under Section 6702. The court found no abuse of discretion by the IRS, emphasizing that the taxpayer’s challenge to the reliability of IRS computer systems was insufficient to contest the underlying liability or the collection actions. This decision underscores the importance of raising meaningful challenges during CDP hearings and the deference given to IRS determinations in such cases.

    Parties

    Sun River Financial Trust, with Jay A. Greek as Trustee, was the petitioner in this case. The respondent was the Commissioner of Internal Revenue. The case was heard in the U. S. Tax Court under docket number 20735-16L.

    Facts

    Sun River Financial Trust filed delinquent tax returns for the years 2010 and 2011, reporting taxable incomes of $42,371 and $53,888 respectively, and claiming full refunds despite tax withholdings. The returns included Forms 1099-A, 1099-B, and 1099-OID, which the IRS deemed frivolous. After notifying the Trust of the frivolous nature of its returns and offering a chance to amend, the IRS assessed $5,000 penalties under Section 6702 for each year. The Trust did not amend its returns and instead submitted correspondence arguing the unreliability of IRS computer systems, based on GAO reports, without contesting the penalties’ merits. The IRS proceeded with notices of intent to levy and file a federal tax lien, leading to a CDP hearing.

    Procedural History

    The IRS issued a Final Notice of Intent to Levy and a Notice of Federal Tax Lien Filing in 2016, to which the Trust responded with requests for CDP hearings. The Settlement Officer (SO) reviewed the case, confirmed the assessments, and upheld the collection actions after the Trust failed to present evidence connecting the GAO reports to the assessments. The Trust then sought review in the U. S. Tax Court, which denied a motion to dismiss and upheld the IRS’s decision, finding no abuse of discretion.

    Issue(s)

    Whether the IRS abused its discretion in sustaining the proposed levy and the filing of a federal tax lien against Sun River Financial Trust for the collection of Section 6702 penalties for the years 2010 and 2011.

    Rule(s) of Law

    Section 6330(c)(3) of the Internal Revenue Code requires the SO to consider whether applicable legal and administrative requirements have been met, issues raised by the taxpayer, and the balance between efficient tax collection and the taxpayer’s concerns about the intrusiveness of collection actions. The standard of review in CDP cases is for abuse of discretion, except when the underlying tax liability is properly contested, in which case the review is de novo.

    Holding

    The U. S. Tax Court held that the IRS did not abuse its discretion in sustaining the proposed levy and the filing of the federal tax lien against Sun River Financial Trust for the collection of Section 6702 penalties for 2010 and 2011.

    Reasoning

    The court’s reasoning focused on the adequacy of the Trust’s challenge during the CDP hearing. The Trust’s argument centered on the unreliability of IRS computer systems, based on GAO reports, but failed to connect these reports to the specific assessments of the Section 6702 penalties. The court noted that without a meaningful challenge to the penalties themselves, the Trust did not properly raise its underlying liability. Furthermore, the court found that the SO adhered to statutory and administrative guidelines, relying on TXMODA transcripts to verify the assessments, which is permissible absent evidence of irregularity in the assessment procedure. The court emphasized that the SO considered all required elements under Section 6330(c)(3), including the verification of legal and administrative compliance, the issues raised by the Trust, and the balance between collection efficiency and taxpayer concerns. The court concluded that the SO’s decision was reasoned and balanced, and thus not an abuse of discretion.

    Disposition

    The U. S. Tax Court sustained the IRS’s decision to proceed with the proposed levy and the filing of the federal tax lien against Sun River Financial Trust.

    Significance/Impact

    This case reinforces the importance of taxpayers raising substantive challenges to their underlying liabilities during CDP hearings. It clarifies that general allegations about the IRS’s systems, without specific connections to the assessments in question, are insufficient to contest liability. The decision also upholds the deference given to IRS determinations in CDP cases, emphasizing that the court will not substitute its judgment for that of the SO unless there is clear evidence of abuse of discretion. This ruling has practical implications for legal practice, particularly in advising clients on how to effectively challenge IRS collection actions and the necessity of providing concrete evidence and arguments during CDP hearings.

  • Hubert W. Chang v. Commissioner of Internal Revenue, T.C. Memo. 2020-19: Timeliness of Collection Due Process Hearing Requests

    Hubert W. Chang v. Commissioner of Internal Revenue, T. C. Memo. 2020-19 (United States Tax Court, 2020)

    In a significant ruling on tax procedure, the U. S. Tax Court dismissed Hubert W. Chang’s petition for lack of jurisdiction due to untimely requests for Collection Due Process (CDP) hearings. Chang sought review of IRS collection actions for tax years 1999 to 2014 but failed to request a hearing within the required 30-day period following notices of lien and levy. The court’s decision underscores the strict adherence to statutory deadlines in tax collection disputes, reinforcing the importance of timely filing in administrative tax proceedings.

    Parties

    Hubert W. Chang, the petitioner, represented himself pro se. The respondent, Commissioner of Internal Revenue, was represented by David Lau and Trent D. Usitalo. The case was heard in the United States Tax Court, docketed as No. 307-18L.

    Facts

    Hubert W. Chang sought a collection due process (CDP) review for tax years 1999 to 2014 following notices of lien and levy from the IRS. On October 6, 2015, the IRS filed a notice of Federal tax lien and sent Chang a Letter 3172, advising him of his right to a CDP hearing by November 13, 2015. Chang did not request a hearing within this period. On January 12, 2016, the IRS sent Chang a Letter 1058, informing him of its intent to levy regarding his 2003 and 2008 tax liabilities and advising him of his right to a CDP hearing within 30 days, which expired on February 11, 2016. Chang claimed to have mailed requests for CDP hearings on February 11, 2016, but the IRS received them on February 16, 2016. The envelopes lacked postmarks, and USPS barcode data indicated they were processed on February 13, 2016.

    Procedural History

    Chang previously petitioned the Tax Court regarding a notice of determination for tax years 1996 through 2002, which was resolved in Chang v. Commissioner, T. C. Memo. 2007-100. In the current case, following his alleged late requests for CDP hearings, the IRS conducted equivalent hearings and issued decision letters on November 30, 2017. Chang timely filed a petition with the Tax Court on January 4, 2018, challenging the IRS’s determination that his requests for CDP hearings were untimely. The Commissioner moved to dismiss for lack of jurisdiction, asserting that no valid notice of determination under sections 6320 or 6330 was issued because Chang’s requests were late.

    Issue(s)

    Whether the Tax Court has jurisdiction over Chang’s petition given that his requests for Collection Due Process hearings were not timely filed under sections 6320 and 6330 of the Internal Revenue Code?

    Rule(s) of Law

    The Internal Revenue Code sections 6320 and 6330 provide taxpayers with the right to a CDP hearing upon receiving notices of lien filing or intent to levy, with a 30-day period to request such a hearing. The Tax Court’s jurisdiction under section 6330(d) is contingent upon the taxpayer timely requesting a CDP hearing and receiving a notice of determination from the IRS. The burden of proving jurisdiction lies with the petitioner. David Dung Le, M. D. , Inc. v. Commissioner, 114 T. C. 268, 270 (2000).

    Holding

    The Tax Court held that it lacked jurisdiction over Chang’s petition because his requests for CDP hearings were not timely filed within the 30-day period specified by sections 6320 and 6330 of the Internal Revenue Code. The court found that Chang’s requests, received by the IRS after the deadline, did not confer jurisdiction upon the court, and the subsequent equivalent hearings and decision letters issued by the IRS did not constitute a notice of determination under section 6330(d).

    Reasoning

    The court’s reasoning focused on the statutory requirement for timely filing of CDP hearing requests. It noted that Chang’s testimony regarding the mailing date of his requests was contradictory and ultimately unconvincing. The absence of postmarks on the envelopes and the USPS barcode data indicating processing on February 13, 2016, supported the conclusion that the requests were mailed after the deadline. The court rejected Chang’s speculation about possible postal delays, emphasizing the strict interpretation of statutory deadlines in tax law. The court also distinguished between a notice of determination, which would confer jurisdiction, and the decision letters issued after equivalent hearings, which did not. The court’s decision reflects a commitment to upholding statutory time limits as essential to the orderly administration of tax collection processes.

    Disposition

    The Tax Court granted the Commissioner’s motion to dismiss for lack of jurisdiction and entered an appropriate order and decision.

    Significance/Impact

    The decision in Hubert W. Chang v. Commissioner reinforces the strict enforcement of statutory deadlines in tax collection proceedings, particularly the 30-day period for requesting CDP hearings. It serves as a reminder to taxpayers of the importance of timely action in response to IRS notices of lien or levy. The case may influence future litigation by clarifying the jurisdictional requirements under sections 6320 and 6330 and the distinction between notices of determination and decision letters following equivalent hearings. Practitioners must advise clients to strictly adhere to these deadlines to preserve their rights to judicial review.

  • Northside Carting, Inc. v. Commissioner, T.C. Memo. 2020-18: Collection Due Process and Installment Agreements in Tax Law

    Northside Carting, Inc. v. Commissioner, T. C. Memo. 2020-18 (United States Tax Court, 2020)

    In a significant ruling on collection due process (CDP) under tax law, the U. S. Tax Court upheld the IRS’s decision to sustain collection actions against Northside Carting, Inc. for unpaid employment taxes. The court found no abuse of discretion by the IRS in denying the taxpayer’s request for an installment agreement due to the company’s failure to provide necessary financial information and remain current with tax obligations. This decision underscores the IRS’s authority in managing collection alternatives and emphasizes the importance of taxpayer compliance during CDP proceedings.

    Parties

    Northside Carting, Inc. , the Petitioner, was represented by Jeff Thomson, an officer of the company, throughout the proceedings. The Respondent, the Commissioner of Internal Revenue, was represented by Marie E. Small.

    Facts

    Northside Carting, Inc. , a Massachusetts corporation engaged in trash removal and recycling, had outstanding employment tax liabilities for the quarters ending September 30 and December 31, 2015, and June 30, 2016. The IRS issued notices of levy and a notice of federal tax lien filing to collect these unpaid taxes. The company requested a CDP hearing regarding the lien notice and the 2017 levy notice, but its request was untimely for the 2016 levy notices. During the CDP hearing process, Northside Carting sought to negotiate an installment agreement (IA) and an offer in compromise (OIC), but failed to provide the required financial documentation and did not remain current with its tax obligations.

    Procedural History

    The IRS issued notices of levy on June 20 and September 12, 2016, for the 2015 quarters, and a notice of federal tax lien filing on January 6, 2017. Northside Carting requested a CDP hearing for the lien notice and the 2017 levy notice, but its request for the 2016 levy notices was untimely. The IRS Appeals Office conducted a CDP hearing regarding the lien filing and the 2017 levy notice, and an equivalent hearing for the 2016 levy notices. The settlement officer (SO) rejected Northside Carting’s proposed IA due to the company’s failure to submit required financial information and its noncompliance with current tax obligations. The SO issued a notice of determination sustaining the proposed collection actions. Northside Carting timely petitioned the Tax Court, which granted the Commissioner’s motion for summary judgment, finding no genuine dispute of material fact and no abuse of discretion by the IRS.

    Issue(s)

    Whether the IRS abused its discretion in rejecting Northside Carting’s proposed installment agreement and sustaining the proposed collection actions?

    Rule(s) of Law

    The IRS has discretion under section 6159 to enter into an installment agreement if it determines that doing so will facilitate full or partial collection of a taxpayer’s unpaid liability. The IRS may reject an IA if the taxpayer fails to provide necessary financial information or is not in compliance with current tax obligations. The Tax Court reviews the IRS’s action in a CDP case for abuse of discretion, which occurs when a determination is arbitrary, capricious, or without sound basis in fact or law.

    Holding

    The Tax Court held that the IRS did not abuse its discretion in rejecting Northside Carting’s proposed installment agreement and sustaining the proposed collection actions, as the company failed to provide the required financial information and was not in compliance with its current tax obligations.

    Reasoning

    The court’s reasoning was based on the following points:

    1. Legal Tests Applied: The court applied the abuse of discretion standard, which requires that the IRS’s decision be supported by a sound basis in fact or law. The court found that the SO properly discharged his responsibilities under section 6330(c) by verifying the applicable law and procedures, considering relevant issues, and balancing the need for efficient collection with the taxpayer’s concerns.

    2. Policy Considerations: The court emphasized the policy behind requiring current compliance as a condition for an IA, which is to prevent the pyramiding of tax liabilities and ensure that current taxes are paid.

    3. Precedential Analysis: The court relied on precedents such as Thompson v. Commissioner and Gentile v. Commissioner, which established that the IRS does not abuse its discretion by rejecting an IA when the taxpayer fails to provide necessary financial information or comply with current tax obligations.

    4. Treatment of Dissenting or Concurring Opinions: There were no dissenting or concurring opinions in this case.

    5. Counter-Arguments Addressed: The court addressed Northside Carting’s arguments that the SO did not fully consider an OIC or a penalty abatement request. The court found these arguments unpersuasive, as the company did not submit a completed Form 656 for an OIC or a written request for penalty abatement on a Form 843.

    Disposition

    The Tax Court granted the Commissioner’s motion for summary judgment, affirming the IRS’s determination to sustain the proposed collection actions.

    Significance/Impact

    This case reinforces the IRS’s authority to manage collection alternatives and highlights the importance of taxpayer compliance during CDP proceedings. It serves as a reminder to taxpayers that failure to provide necessary financial information and remain current with tax obligations can result in the rejection of proposed collection alternatives. The decision also underscores the Tax Court’s deference to the IRS’s discretion in these matters, as long as the IRS’s actions are supported by a sound basis in fact or law.

  • James Anthony Ransom v. Commissioner of Internal Revenue, T.C. Memo. 2018-211: Collection Due Process and Taxpayer Compliance

    James Anthony Ransom v. Commissioner of Internal Revenue, T. C. Memo. 2018-211 (U. S. Tax Court, 2018)

    In Ransom v. Commissioner, the U. S. Tax Court upheld the IRS’s decision to sustain a levy notice against a taxpayer who failed to comply with current estimated tax obligations. The court ruled that the IRS settlement officer did not abuse discretion by denying the taxpayer’s request for a collection alternative, emphasizing the need for taxpayers to remain current on tax liabilities to prevent pyramiding of debt. This decision underscores the importance of taxpayer compliance in negotiating collection alternatives with the IRS.

    Parties

    James Anthony Ransom, the petitioner, proceeded pro se. The respondent was the Commissioner of Internal Revenue, represented by William J. Gregg and Bartholomew Cirenza.

    Facts

    James Anthony Ransom, a contractor for nonprofit organizations, filed Federal income tax returns for 2012, 2013, and 2015. The IRS issued notices of deficiency for 2012 and 2013, which Ransom did not contest within the statutory period, resulting in the IRS assessing his tax liabilities for those years. For 2015, the IRS assessed the tax shown on Ransom’s return, which remained unpaid. As of March 2017, Ransom’s total outstanding liability was $88,418. In response to a notice of intent to levy, Ransom requested a Collection Due Process (CDP) hearing, seeking an installment agreement and claiming he did not owe the full amount for 2012 due to an unprocessed amended return. During the CDP process, Ransom failed to submit required financial information and make full payment toward his 2017 estimated tax liability, despite multiple extensions and opportunities provided by the IRS settlement officer.

    Procedural History

    The IRS mailed Ransom a notice of intent to levy on March 16, 2017, prompting his timely request for a CDP hearing. The IRS Appeals Office settlement officer (SO) reviewed Ransom’s case, confirming the proper assessment of tax liabilities and compliance with applicable laws. After a telephone hearing on August 18, 2017, and despite extensions to September 16, 2017, Ransom failed to fully comply with the SO’s requirements. Consequently, the SO issued a notice of determination on September 28, 2017, sustaining the proposed levy. Ransom petitioned the U. S. Tax Court, where the Commissioner moved for summary judgment, which was granted based on the absence of disputed material facts and the legality of the IRS’s actions.

    Issue(s)

    Whether the IRS settlement officer abused discretion in sustaining the proposed levy action against James Anthony Ransom due to his non-compliance with current estimated tax obligations and failure to provide required financial information?

    Rule(s) of Law

    The IRS’s determination in a CDP case is reviewed for abuse of discretion if the taxpayer’s underlying liability is not at issue. The IRS may deny collection alternatives if the taxpayer fails to comply with current tax obligations, as per Internal Revenue Manual pt. 5. 14. 1. 4. 1(19). The requirement of current compliance helps prevent the pyramiding of tax liabilities.

    Holding

    The U. S. Tax Court held that the IRS settlement officer did not abuse discretion in sustaining the proposed levy action against Ransom. Ransom’s failure to comply with current estimated tax obligations and provide required financial information justified the IRS’s denial of a collection alternative.

    Reasoning

    The court’s reasoning focused on the standard of review for CDP cases, which is abuse of discretion when the underlying tax liability is not contested. Ransom could not challenge his liabilities for 2012, 2013, and 2015 due to prior opportunities to contest them. The court emphasized that the SO properly verified compliance with applicable laws and considered Ransom’s issues. The key factor was Ransom’s non-compliance with his 2017 estimated tax obligations, which the court found to be a legitimate basis for denying a collection alternative. The court cited consistent precedents affirming that non-compliance with current tax obligations can justify the IRS’s refusal to consider collection alternatives. The court rejected Ransom’s argument about the termination of a consulting contract, as it occurred after the CDP hearing and did not excuse his earlier non-compliance. The court’s decision aligned with policy considerations to prevent the pyramiding of tax liabilities and ensure efficient tax collection.

    Disposition

    The U. S. Tax Court granted summary judgment to the Commissioner, affirming the IRS’s proposed collection action through the levy.

    Significance/Impact

    Ransom v. Commissioner reinforces the IRS’s authority to deny collection alternatives to taxpayers who fail to comply with current tax obligations. The decision underscores the importance of taxpayer compliance during the CDP process and the IRS’s discretion in managing tax collection efforts. It serves as a reminder to taxpayers of the need to remain current on tax liabilities when seeking to negotiate collection alternatives. This case may influence future CDP hearings and taxpayer negotiations with the IRS, emphasizing the critical role of compliance in preventing the pyramiding of tax debt.

  • Vigon v. Comm’r, 149 T.C. No. 4 (2017): Mootness in Collection Due Process (CDP) Hearings

    Vigon v. Commissioner, 149 T. C. No. 4, 2017 U. S. Tax Ct. LEXIS 37 (U. S. Tax Court 2017)

    In Vigon v. Commissioner, the U. S. Tax Court ruled that a Collection Due Process (CDP) case challenging IRS penalties remains viable despite the IRS’s abatement of those penalties and release of liens. The court rejected the IRS’s motion to dismiss the case as moot, emphasizing that the agency’s refusal to concede the taxpayer’s liability and its reservation of the right to reassess penalties in the future kept the case alive. This decision clarifies the scope of judicial review in CDP hearings and underscores the importance of finality in resolving taxpayer liability challenges.

    Parties

    Dean Matthew Vigon, the petitioner, represented himself. The respondent, the Commissioner of Internal Revenue, was represented by Scott A. Hovey.

    Facts

    Dean Matthew Vigon submitted nine Forms 1041, “U. S. Income Tax Return for Estates and Trusts,” on behalf of the “Dean M. Vigon Trust” from June 2010 through July 2011. The IRS assessed nine $5,000 penalties against Vigon under I. R. C. sec. 6702 for what it deemed “frivolous tax submissions. ” Vigon received a notice of Federal tax lien in May 2014 and requested a Collection Due Process (CDP) hearing, during which he challenged his liability for these penalties. The IRS’s Office of Appeals issued a determination sustaining the penalty liabilities and the notice of lien. Vigon subsequently filed a petition with the U. S. Tax Court. Before the trial, the IRS abated the penalties and released the lien but did not concede Vigon’s liability and reserved the right to reassess the penalties later.

    Procedural History

    Vigon’s case progressed through the Tax Court system with several notable procedural developments. Initially, the IRS moved for summary judgment, but the court denied this motion, citing genuine disputes of fact regarding the number of returns filed and the supervisory approval of the penalties under I. R. C. sec. 6751(b)(1). The case was then remanded to the IRS Office of Appeals for a supplemental hearing to verify compliance with I. R. C. sec. 6751(b)(1). After the supplemental hearing, the IRS Appeals reaffirmed its determination. As the trial approached, the IRS moved for a continuance, announcing its intention to abate the penalties and release the liens, and subsequently filed a motion to dismiss the case on grounds of mootness. The Tax Court, however, denied this motion, holding that the case was not moot due to the unresolved liability challenge and the IRS’s reservation of the right to reassess penalties.

    Issue(s)

    Whether a Collection Due Process (CDP) case remains viable and not moot when the IRS abates the penalties and releases the lien but does not concede the taxpayer’s liability and reserves the right to reassess penalties in the future?

    Rule(s) of Law

    The controlling legal principle in this case is derived from I. R. C. sec. 6330(d), which grants the Tax Court jurisdiction to review determinations made by the IRS Office of Appeals in CDP hearings. Under I. R. C. sec. 6330(c)(2)(B), a taxpayer may challenge the existence or amount of the underlying tax liability in a CDP hearing if the taxpayer did not receive a statutory notice of deficiency or otherwise have an opportunity to dispute such tax liability. Additionally, the court relied on the legal standard for mootness, which requires that there be no reasonable expectation that the conduct will recur and that interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.

    Holding

    The U. S. Tax Court held that Vigon’s CDP case was not moot despite the IRS’s abatement of the penalties and release of the lien. The court’s decision was based on the IRS’s non-concession of Vigon’s liability for the penalties and its reservation of the right to reassess the penalties at a later date.

    Reasoning

    The court’s reasoning centered on the principles governing mootness and the scope of its jurisdiction in CDP cases. The court emphasized that the IRS’s abatement of the penalties was a tactical retreat, not a surrender, as it did not concede Vigon’s liability and reserved the right to reassess the same penalties. The court found that the IRS’s actions did not meet the criteria for mootness because there was a reasonable expectation that the conduct (reassessment of penalties) could recur, and the abatement did not irrevocably eradicate the effects of the alleged violation. The court also cited precedent, such as Hotel Conquistador, Inc. v. United States, which held that a case is not moot if the government retains the ability to reinstate the disputed liability. The court rejected the IRS’s argument that the release of the lien and abatement of the penalties divested the court of jurisdiction over the liability challenge, asserting that its jurisdiction extended to all issues properly within the CDP hearing, including the liability challenge under I. R. C. sec. 6330(c)(2)(B). The court also considered the practical implications for taxpayers, noting that allowing the IRS to abate penalties, moot a case, and then reassess at a later date would leave taxpayers in a perpetual state of uncertainty.

    Disposition

    The Tax Court denied the IRS’s motion to dismiss the case on grounds of mootness and retained jurisdiction over Vigon’s liability challenge.

    Significance/Impact

    The Vigon decision has significant implications for the scope of judicial review in Collection Due Process hearings. It clarifies that a CDP case is not mooted by the IRS’s abatement of penalties and release of liens if the agency does not concede the taxpayer’s liability and reserves the right to reassess penalties. This ruling reinforces the importance of finality in resolving taxpayer liability challenges and protects taxpayers from the threat of perpetual reassessment by the IRS. The decision also underscores the Tax Court’s broad jurisdiction over all issues properly raised in a CDP hearing, including challenges to underlying tax liabilities. Subsequent cases have cited Vigon to affirm the principle that a liability challenge in a CDP hearing remains viable even if the IRS takes actions that would otherwise moot collection issues.

  • McNeill v. Commissioner, 148 T.C. 23 (2017): Jurisdiction in Collection Due Process Cases Involving Partnership Penalties

    McNeill v. Commissioner, 148 T. C. 23 (U. S. Tax Ct. 2017)

    In McNeill v. Commissioner, the U. S. Tax Court ruled that it has jurisdiction to review a Collection Due Process (CDP) determination concerning penalties related to partnership items, despite these penalties being excluded from the court’s deficiency jurisdiction under TEFRA. This decision clarifies the Tax Court’s authority in CDP cases post-amendment by the Pension Protection Act of 2006, ensuring taxpayers can contest collection actions for such penalties in the Tax Court, which is significant for those involved in partnership tax disputes.

    Parties

    Corbin A. McNeill and Dorice S. McNeill, as Petitioners, v. Commissioner of Internal Revenue, as Respondent.

    Facts

    In 2003, Corbin A. McNeill, after retiring, invested in a distressed asset/debt (DAD) transaction by purchasing an 89. 1% interest in GUISAN, LLC, which held Brazilian consumer debt. GUISAN contributed this debt to LABAITE, LLC, another partnership. A subsequent sale of these receivables by LABAITE resulted in a claimed loss, which the McNeills reported on their 2003 joint federal income tax return. The IRS issued a notice of final partnership administrative adjustment (FPAA) to LABAITE’s partners, disallowing the loss and asserting an accuracy-related penalty under I. R. C. section 6662. The McNeills paid the tax liability and interest but not the penalty. After the IRS assessed the penalty and initiated collection procedures, the McNeills requested a CDP hearing, challenging the penalty’s assessment. The IRS Appeals officer issued a notice sustaining the collection action, asserting that the McNeills could not raise the issue of their underlying tax liability.

    Procedural History

    The McNeills, as GUISAN’s tax matters partner, filed a complaint in the U. S. District Court for the District of Connecticut for judicial review of the 2003 FPAA. They made an estimated deposit to satisfy jurisdictional requirements but not the section 6662 penalty. The case was voluntarily dismissed with prejudice by the McNeills, and the District Court deemed the FPAA correct without adjudicating partner-level defenses. Following the IRS’s assessment of the penalty and subsequent collection notices, the McNeills requested a CDP hearing, which resulted in a notice of determination sustaining the collection action. The McNeills timely filed a petition with the Tax Court, challenging the Tax Court’s jurisdiction over the case due to the penalty’s exclusion from deficiency procedures under I. R. C. section 6230(a)(2)(A)(i).

    Issue(s)

    Whether the U. S. Tax Court has jurisdiction under I. R. C. section 6330(d)(1), as amended by the Pension Protection Act of 2006, to review a CDP determination when the underlying tax liability consists solely of a penalty that relates to an adjustment to a partnership item excluded from deficiency procedures by I. R. C. section 6230(a)(2)(A)(i)?

    Rule(s) of Law

    I. R. C. section 6330(d)(1) provides the Tax Court with jurisdiction to review a notice of determination issued pursuant to a CDP hearing. This jurisdiction was expanded by the Pension Protection Act of 2006 to include all such notices, regardless of the underlying liability’s type. I. R. C. section 6221 mandates that the tax treatment of partnership items and related penalties be determined at the partnership level. I. R. C. section 6230(a)(2)(A)(i) excludes penalties relating to partnership item adjustments from deficiency procedures.

    Holding

    The U. S. Tax Court holds that it has jurisdiction to review the Commissioner’s determination in the CDP case concerning the asserted I. R. C. section 6662(a) penalty, despite the penalty being excluded from the Tax Court’s deficiency jurisdiction under I. R. C. sections 6221 and 6230.

    Reasoning

    The Tax Court’s jurisdiction in CDP cases is governed by I. R. C. section 6330(d)(1), which was amended in 2006 to grant the Tax Court exclusive jurisdiction over all CDP determinations. The amendment aimed to provide taxpayers with a single venue for contesting collection actions. The court noted that prior to the amendment, it lacked jurisdiction over penalties not subject to deficiency proceedings, such as those under I. R. C. section 6662 related to partnership items. However, the 2006 amendment intended to expand the court’s jurisdiction to include review of all collection determinations, regardless of the type of underlying liability. The court cited cases like Yari v. Commissioner, Mason v. Commissioner, and Callahan v. Commissioner, which upheld the Tax Court’s jurisdiction in similar situations. The court reasoned that the legislative intent behind the amendment was to ensure that taxpayers could contest collection actions for all types of liabilities in the Tax Court, thereby overriding the exclusion of certain penalties from deficiency jurisdiction in the context of CDP review.

    Disposition

    The U. S. Tax Court asserts jurisdiction over the case and will proceed to address the remaining issues in a separate opinion.

    Significance/Impact

    The McNeill decision is doctrinally significant as it clarifies the Tax Court’s jurisdiction in CDP cases involving penalties related to partnership items post-Pension Protection Act of 2006. This ruling ensures that taxpayers can challenge collection actions for such penalties in the Tax Court, which is crucial for those involved in partnership tax disputes. The decision aligns with the legislative intent to streamline the review process for collection actions and provides a clearer path for taxpayers to contest IRS determinations without the necessity of separate refund litigation for partner-level defenses. Subsequent courts have treated this ruling as authoritative in determining the scope of the Tax Court’s jurisdiction in similar cases, impacting legal practice by offering a more unified approach to resolving disputes over penalties related to partnership items.

  • First Rock Baptist Church Child Dev. Ctr. v. Comm’r, 148 T.C. 17 (2017): Jurisdiction and Mootness in Collection Due Process Hearings

    First Rock Baptist Church Child Development Center and First Rock Baptist Church v. Commissioner of Internal Revenue, 148 T. C. 17 (2017)

    The U. S. Tax Court upheld its jurisdiction in a case involving First Rock Baptist Church Child Development Center’s challenge to the IRS’s rejection of its proposed installment agreement for unpaid employment taxes. Despite the IRS withdrawing the Notice of Federal Tax Lien (NFTL) as requested, the court found the case not moot because the dispute over the installment agreement remained unresolved. The court’s decision clarifies that jurisdiction is retained over issues addressed in a notice of determination, even if part of the relief sought is granted, and emphasizes the requirement for taxpayers to raise challenges to underlying liabilities during CDP hearings.

    Parties

    First Rock Baptist Church Child Development Center (Petitioner) and First Rock Baptist Church (Petitioner) v. Commissioner of Internal Revenue (Respondent). The case originated in the U. S. Tax Court, Docket No. 16724-14L.

    Facts

    First Rock Baptist Church Child Development Center (the Center) incurred employment tax liabilities for the years 2007-2010, totaling $438,381, including additions to tax and interest. The IRS issued a Notice of Federal Tax Lien (NFTL) to the Center but mistakenly listed First Rock Baptist Church (the Church) as the addressee. Both the Center and the Church requested a collection due process (CDP) hearing. During the hearing, the Center proposed an installment agreement, which was rejected. After a remand, a new settlement officer (SO2) withdrew the NFTL but again rejected the installment agreement because the Center had not complied with its ongoing tax return filing obligations.

    Procedural History

    The IRS issued the NFTL to collect the Center’s employment tax liabilities. The Center and the Church requested a CDP hearing, during which the Center’s proposed installment agreement was rejected. The case was petitioned to the U. S. Tax Court, which remanded it to the IRS Appeals Office. Upon remand, SO2 withdrew the NFTL but denied the installment agreement. The Tax Court subsequently reviewed SO2’s determination under the standard of abuse of discretion.

    Issue(s)

    1. Whether the Tax Court has jurisdiction to review the IRS’s determination concerning the Center’s proposed installment agreement despite the withdrawal of the NFTL.
    2. Whether the case is moot given the withdrawal of the NFTL.
    3. Whether the Tax Court can consider the Center’s challenge to its underlying tax liabilities.
    4. Whether SO2 abused his discretion in denying the Center’s request for an installment agreement.

    Rule(s) of Law

    1. Under I. R. C. § 6330(d)(1), the Tax Court has jurisdiction to review determinations made by the IRS in a CDP hearing.
    2. A case is not moot if there remains a live controversy between the parties, even if part of the requested relief is granted.
    3. Challenges to underlying tax liabilities must be raised during the CDP hearing to be considered by the Tax Court.
    4. The IRS may reject a proposed installment agreement if the taxpayer is not in compliance with all filing and payment requirements. Internal Revenue Manual (IRM) pt. 5. 14. 1. 4. 2(3).

    Holding

    1. The Tax Court has jurisdiction to review the IRS’s determination regarding the Center’s proposed installment agreement because the notice of determination addressed this issue and was sent to the Center.
    2. The case is not moot because there remains a live controversy over the installment agreement despite the withdrawal of the NFTL.
    3. The Tax Court cannot consider the Center’s challenge to its underlying tax liabilities because the Center did not raise this issue during the CDP hearing.
    4. SO2 did not abuse his discretion in denying the Center’s request for an installment agreement because the Center was not in compliance with its ongoing tax return filing obligations.

    Reasoning

    The Tax Court’s jurisdiction hinges on the issuance of a valid notice of determination and a timely petition for review. The notice sent to the Center, despite the error in naming the Church as the addressee, sufficiently identified the Center’s tax liabilities and the collection action, thus conferring jurisdiction over the installment agreement issue. The court rejected the IRS’s argument that the case was moot because the withdrawal of the NFTL did not resolve all issues, particularly the unresolved dispute over the installment agreement. The court also noted that the Center failed to raise its challenges to the underlying tax liabilities during the CDP hearing, thus precluding judicial review on those grounds. Finally, the court upheld SO2’s decision to deny the installment agreement, as the Center was not in compliance with its filing obligations at the time of the determination, in line with the IRM’s requirement for such agreements.

    Disposition

    The Tax Court granted summary judgment in favor of the Commissioner of Internal Revenue, sustaining the collection action set forth in the supplemental notice of determination, which withdrew the NFTL but rejected the proposed installment agreement.

    Significance/Impact

    This case clarifies the scope of the Tax Court’s jurisdiction in CDP hearings, affirming that jurisdiction is maintained over issues addressed in a notice of determination, even if some relief is granted. It underscores the necessity for taxpayers to raise challenges to underlying liabilities during CDP hearings to preserve them for judicial review. The decision also reinforces the IRS’s authority to deny installment agreements based on noncompliance with filing obligations, as per the Internal Revenue Manual. The ruling may impact how taxpayers approach CDP hearings and the strategic considerations in challenging IRS collection actions.