SCOTUS Reports

Tag: I.R.C. § 6330

  • Jenner v. Commissioner, 163 T.C. No. 7 (2024): FBAR Penalties and Collection Due Process Rights

    Jenner v. Commissioner, 163 T. C. No. 7 (U. S. Tax Court 2024)

    In Jenner v. Commissioner, the U. S. Tax Court ruled that Foreign Bank Account Reporting (FBAR) penalties are not taxes and thus not subject to the collection due process (CDP) hearing requirements of I. R. C. §§ 6320 and 6330. The court dismissed the case for lack of jurisdiction, clarifying that the IRS was not obligated to provide a CDP hearing for FBAR penalties, which are governed by Title 31, not Title 26 of the U. S. Code.

    Parties

    Stephen C. Jenner and Judy A. Jenner, petitioners, v. Commissioner of Internal Revenue, respondent.

    Facts

    Stephen C. Jenner and Judy A. Jenner were assessed FBAR penalties under 31 U. S. C. § 5321 for failing to file foreign bank account reports for the years 2005 through 2009. The Department of the Treasury’s Bureau of the Fiscal Service (BFS) informed the Jenners that funds would be withheld from their monthly Social Security benefits under the Treasury Offset Program (TOP) to satisfy their debts. The Jenners requested collection due process (CDP) hearings, but the IRS denied these requests, asserting that FBAR penalties are not taxes and thus not subject to I. R. C. § 6330 requirements. The Jenners subsequently filed a petition with the U. S. Tax Court, alleging they were deprived of their CDP rights.

    Procedural History

    The Jenners filed their petition with the U. S. Tax Court on June 5, 2023, while residing in Florida. The Commissioner moved to dismiss the case for lack of jurisdiction on July 19, 2023, arguing that the collection of FBAR penalties is not subject to the notice and other requirements of I. R. C. § 6330. The Tax Court, in its opinion dated October 22, 2024, granted the Commissioner’s motion and dismissed the case for lack of jurisdiction.

    Issue(s)

    Whether Foreign Bank Account Reporting (FBAR) penalties are subject to the requirements of I. R. C. §§ 6320 and 6330, which mandate collection due process (CDP) hearings for unpaid taxes?

    Rule(s) of Law

    The Internal Revenue Code, specifically I. R. C. §§ 6320 and 6330, mandates collection due process (CDP) hearings for unpaid taxes. FBAR penalties are authorized and imposed by Title 31 of the U. S. Code, specifically 31 U. S. C. § 5321, and are not considered taxes under the Internal Revenue Code. The U. S. Tax Court has jurisdiction over cases involving unpaid taxes as per I. R. C. § 7442.

    Holding

    FBAR penalties are not taxes imposed by the Internal Revenue Code and thus are not subject to the requirements of I. R. C. §§ 6320 and 6330. The U. S. Tax Court lacks jurisdiction over the Jenners’ petition because FBAR penalties do not fall within the court’s jurisdiction.

    Reasoning

    The court’s reasoning was based on the statutory distinction between Title 26 (Internal Revenue Code) and Title 31 (Money and Finance) of the U. S. Code. FBAR penalties, governed by Title 31, are considered nontax debts to the United States, and their collection is subject to different procedures than those for taxes under Title 26. The court emphasized that the CDP procedures under I. R. C. §§ 6320 and 6330 apply only to unpaid taxes, as evidenced by the language in these sections that consistently refers to “tax. ” The court cited previous decisions, such as Goza v. Commissioner and Williams v. Commissioner, to support its conclusion that FBAR penalties are not subject to the deficiency procedures or CDP requirements. The court also noted that the collection mechanism for FBAR penalties is a civil action, not a lien or levy, further distinguishing them from taxes. The court rejected the Jenners’ arguments that the administrative offsets on their Social Security benefits constituted levies by the Secretary that entitled them to a CDP hearing, stating that such offsets are governed by Title 31, not Title 26.

    Disposition

    The U. S. Tax Court dismissed the case for lack of jurisdiction.

    Significance/Impact

    Jenner v. Commissioner clarifies that FBAR penalties are not subject to the collection due process (CDP) requirements of I. R. C. §§ 6320 and 6330. This decision reinforces the distinction between Title 26 and Title 31 penalties, impacting how taxpayers and the IRS handle FBAR penalty assessments and collections. The ruling may influence future litigation regarding the applicability of tax court jurisdiction to penalties imposed under other titles of the U. S. Code. Practitioners must advise clients that FBAR penalties are not subject to the same procedural protections as tax liabilities, potentially affecting strategies for challenging such penalties.

  • Organic Cannabis Foundation, LLC v. Commissioner of Internal Revenue, 161 T.C. No. 4 (2023): Equitable Tolling of the 30-Day Period for Requesting a Collection Due Process Hearing

    Organic Cannabis Foundation, LLC v. Commissioner of Internal Revenue, 161 T. C. No. 4 (2023)

    In a significant ruling, the U. S. Tax Court decided that the 30-day deadline for requesting a Collection Due Process (CDP) hearing can be equitably tolled, overturning prior precedent. This decision expands taxpayer rights by allowing late-filed requests to be considered when equitable circumstances exist, impacting future IRS collection actions and taxpayer interactions.

    Parties

    The petitioner, Organic Cannabis Foundation, LLC, is a California limited liability company that elected to be taxed as a corporation. The respondent is the Commissioner of Internal Revenue. The case was heard in the U. S. Tax Court with docket numbers 381-22L and 5442-22L.

    Facts

    Organic Cannabis Foundation, LLC had unpaid income taxes for the years 2010, 2011, and 2018. The IRS issued notices of federal tax lien (NFTL) filings for these years. The petitioner timely requested a CDP hearing for the 2010 and 2011 tax years within the statutory 30-day period. However, the petitioner’s request for a 2018 CDP hearing was submitted one day after the 30-day period. The IRS provided a CDP hearing for 2010 and 2011 but determined the 2018 request was untimely and offered an equivalent hearing instead. The petitioner filed a petition seeking review for all three years, and after the petition was filed, the IRS issued a Decision Letter for 2018.

    Procedural History

    The IRS moved to dismiss the case regarding the 2018 tax year for lack of jurisdiction, arguing that the petitioner’s request for a CDP hearing was untimely, and thus, there was no determination to review. The petitioner argued that the 30-day period should be equitably tolled and that the IRS should have made a determination for 2018. The Tax Court overruled its previous holding in Kennedy v. Commissioner, which stated that the 30-day period was a fixed deadline not subject to equitable tolling, and remanded the case to the IRS to consider whether the circumstances warranted equitable tolling for the 2018 tax year.

    Issue(s)

    Whether the 30-day period for requesting a CDP hearing under I. R. C. § 6320(a)(3)(B) can be equitably tolled?

    Rule(s) of Law

    The Internal Revenue Code, I. R. C. § 6320, provides taxpayers with the right to a CDP hearing upon the filing of an NFTL. The statute requires that such a hearing be requested within 30 days after the 5-day notice period following the NFTL filing. The Supreme Court has established a rebuttable presumption that nonjurisdictional filing deadlines are subject to equitable tolling, as articulated in Irwin v. Dep’t of Veteran Affairs, 498 U. S. 89 (1990).

    Holding

    The Tax Court held that the 30-day period for requesting a CDP hearing under I. R. C. § 6320(a)(3)(B) is subject to equitable tolling. The court overruled Kennedy v. Commissioner, which had previously held that the 30-day period was a fixed deadline not amenable to equitable tolling.

    Reasoning

    The court’s reasoning focused on the statutory text, context, and legislative history of I. R. C. § 6320. The court found no clear statement in the statute that the 30-day period was an administrative bar that precluded Appeals from considering untimely requests. The court applied the Supreme Court’s framework from cases such as Boechler, P. C. v. Commissioner, 142 S. Ct. 1493 (2022), which held that a similar 30-day period under I. R. C. § 6330(d)(1) was subject to equitable tolling. The court noted the remedial nature of the CDP regime, designed to provide due process and fairness to taxpayers, supported the application of equitable tolling. The court also considered the Treasury regulations, which, while setting forth a strict 30-day deadline, did not categorically preclude equitable tolling and allowed for certain exceptions. The court concluded that the absence of a clear statement against equitable tolling, combined with the statute’s remedial purpose, supported the application of the doctrine. The court remanded the case for the IRS to determine whether equitable tolling was warranted based on the circumstances surrounding the petitioner’s late filing for the 2018 tax year.

    Disposition

    The Tax Court overruled its precedent in Kennedy v. Commissioner and held that the 30-day period for requesting a CDP hearing is subject to equitable tolling. The court remanded the case to the IRS to determine if equitable tolling applied to the 2018 tax year.

    Significance/Impact

    This ruling significantly expands taxpayer rights by allowing for the equitable tolling of the 30-day period to request a CDP hearing. It overturns prior precedent that treated the deadline as fixed, thereby enhancing due process protections for taxpayers. The decision aligns the administrative deadline with the judicial filing deadline under I. R. C. § 6330(d)(1), which the Supreme Court held was subject to equitable tolling. The ruling may lead to more flexible IRS practices in handling late-filed CDP hearing requests and could influence future cases regarding the application of equitable principles in tax law. It underscores the importance of the CDP regime as a protective mechanism for taxpayers facing IRS collection actions.

  • William E. Ruhaak v. Commissioner of Internal Revenue, 157 T.C. No. 9 (2021): Collection Due Process Hearings and Equivalent Hearings

    William E. Ruhaak v. Commissioner of Internal Revenue, 157 T. C. No. 9 (2021)

    In a significant ruling, the U. S. Tax Court clarified the distinction between Collection Due Process (CDP) hearings and equivalent hearings under IRS procedures. William E. Ruhaak sought an equivalent hearing to voice his conscientious objection to tax payments, but the court ruled that his timely request within the 30-day period following the levy notice automatically triggered a CDP hearing. The decision underscores the strict adherence to statutory and regulatory frameworks governing IRS collection actions, impacting taxpayers’ rights to administrative hearings.

    Parties

    William E. Ruhaak, as the Petitioner, sought review of the IRS’s determination to sustain a proposed levy. The Commissioner of Internal Revenue, as the Respondent, defended the IRS’s actions and determination.

    Facts

    On March 10, 2017, the IRS sent William E. Ruhaak a Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice) via certified mail. Ruhaak responded by mailing Form 12153, Request for a Collection Due Process or Equivalent Hearing, on April 7, 2017, which was postmarked on that date and received by the IRS Office of Appeals on April 10, 2017. On this form, Ruhaak checked a box requesting an equivalent hearing if his request for a CDP hearing was untimely. The IRS, however, determined that Ruhaak’s request was timely for a CDP hearing, and thus, he was not entitled to an equivalent hearing. After a CDP hearing, the IRS issued a notice of determination sustaining the proposed levy. Ruhaak argued that he should have been granted an equivalent hearing, as his Form 12153 constituted a written request made within the one-year period for requesting such a hearing.

    Procedural History

    The IRS sent Ruhaak a levy notice on March 10, 2017, and Ruhaak timely filed a Form 12153 within the 30-day period provided for requesting a CDP hearing. The IRS Office of Appeals determined that Ruhaak’s request was timely for a CDP hearing and conducted such a hearing. Following the hearing, the IRS issued a notice of determination on September 15, 2017, sustaining the proposed levy. Ruhaak then filed a timely petition for review with the U. S. Tax Court, which denied respondent’s motion for summary judgment and proceeded to trial. The Tax Court ultimately ruled that Ruhaak’s request, made within the 30-day period, necessitated a CDP hearing, not an equivalent hearing, and upheld the IRS’s determination.

    Issue(s)

    Whether a taxpayer, who submits a hearing request within the 30-day period following the mailing date of a levy notice, may request an equivalent hearing instead of a CDP hearing under IRS regulations?

    Rule(s) of Law

    Section 6330 of the Internal Revenue Code authorizes the IRS to notify taxpayers of their right to a CDP hearing upon receiving a levy notice. A taxpayer must request a CDP hearing within the 30-day period following the mailing date of the levy notice. IRS regulations allow for an equivalent hearing if a taxpayer fails to timely request a CDP hearing, provided the request for an equivalent hearing is made in writing within the one-year period commencing the day after the date of the levy notice. See 26 C. F. R. § 301. 6330-1(i)(1), (2).

    Holding

    The court held that a taxpayer’s request for a hearing made within the 30-day period following the mailing date of the levy notice triggers a CDP hearing and not an equivalent hearing. Consequently, Ruhaak’s timely request necessitated a CDP hearing, and the IRS properly issued a notice of determination following the CDP hearing.

    Reasoning

    The court’s reasoning hinged on the statutory and regulatory frameworks governing CDP and equivalent hearings. The IRS regulations specify that a taxpayer who fails to make a timely request for a CDP hearing may request an equivalent hearing. Since Ruhaak’s request was made within the 30-day period for requesting a CDP hearing, he was not eligible for an equivalent hearing. The court emphasized that the one-year period for requesting an equivalent hearing begins only after the 30-day period for a CDP hearing expires. The court further noted that Ruhaak’s argument was based on a misreading of the regulations in isolation, without considering the full context of the IRS’s administrative procedures. Additionally, the court addressed Ruhaak’s claim that the IRS abused its discretion in not rescheduling a telephone conference, finding that his request for rescheduling was conditioned on an unlawful demand for an equivalent hearing, and his arguments during the CDP hearing were frivolous and precluded under the IRS regulations.

    Disposition

    The court upheld the IRS’s determination to sustain the proposed levy, ruling that Ruhaak was entitled to a CDP hearing, not an equivalent hearing, and that the IRS did not abuse its discretion in the conduct of the CDP hearing or in its determination to sustain the levy.

    Significance/Impact

    This case clarifies the distinction between CDP and equivalent hearings under IRS regulations, emphasizing the importance of the timing of a taxpayer’s request in determining the type of hearing available. It reinforces the IRS’s authority to strictly enforce the 30-day period for requesting a CDP hearing, impacting taxpayers’ ability to select the type of administrative hearing they receive. The decision also underscores the IRS’s ability to summarily dispose of frivolous arguments during CDP hearings, which may extend to equivalent hearings, affecting taxpayers’ rights to raise certain objections during IRS collection proceedings.

  • 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.

  • Lander v. Commissioner, 154 T.C. No. 7 (2020): Validity of Tax Assessments and Prior Opportunity to Dispute Underlying Tax Liability

    Lander v. Commissioner, 154 T. C. No. 7 (U. S. Tax Ct. 2020)

    In Lander v. Commissioner, the U. S. Tax Court ruled that Joseph and Kimberly Lander could not challenge their 2005 income tax liability in a collection due process proceeding because they had a prior opportunity to dispute it during an IRS audit reconsideration process. The court also affirmed the validity of the IRS’s tax assessments for 2005, despite the Landers not receiving the notice of deficiency, as it was mailed to their last known address. This decision underscores the importance of prior opportunities to challenge tax liabilities and the procedural aspects of tax assessments.

    Parties

    Joseph Thomas Lander and Kimberly W. Lander, Petitioners, v. Commissioner of Internal Revenue, Respondent.

    Facts

    Joseph and Kimberly Lander filed a delinquent joint Federal income tax return for the taxable year 2005 on April 2, 2009, and subsequently filed an amended return in September 2009. The IRS examined their return, proposing adjustments that included disallowing a deduction for a flowthrough loss from GenSpec, LLC, and adjusting income due to unreported capital gains from K3 Ventures, LLC. The IRS sent a notice of deficiency to the Landers’ last known address on November 16, 2011, which was not received by them. Following the notice, the IRS assessed the tax liability on July 2, 2012, and began collection activities. The Landers, who did not receive the notice of deficiency, sought an audit reconsideration, which led to a conference with the IRS Appeals Office. During this process, some of the tax liability was abated. Later, the IRS filed a Federal tax lien, prompting the Landers to request a collection due process hearing, where they attempted to challenge the underlying tax liability.

    Procedural History

    The IRS issued a notice of deficiency on November 16, 2011, which the Landers did not receive. The IRS assessed the tax liability on July 2, 2012, and sent a notice and demand for payment. The Landers requested an audit reconsideration, which led to a conference with the IRS Appeals Office, resulting in some abatement of the tax. On January 13, 2015, the IRS filed a Federal tax lien and notified the Landers of their right to a hearing under I. R. C. § 6320. The Landers timely requested a collection due process hearing, challenging the validity of the underlying tax liability. The Appeals Office sustained the lien filing, and the Landers petitioned the U. S. Tax Court for review. The court remanded the case to the Appeals Office for further review of the notice of deficiency issue, and upon reevaluation, the Appeals Office upheld the lien filing. The case returned to the Tax Court, which affirmed the validity of the assessments and ruled that the Landers had a prior opportunity to dispute the tax liability during the audit reconsideration process.

    Issue(s)

    Whether the assessments entered against the Landers for the taxable year 2005 are valid despite the Landers not receiving the notice of deficiency?

    Whether the Landers had a prior opportunity to dispute the underlying tax liability for 2005, thus precluding them from challenging it in the collection due process proceeding?

    Rule(s) of Law

    Under I. R. C. § 6212(a), the IRS is authorized to send a notice of deficiency to a taxpayer by certified or registered mail. Section 6212(b)(1) states that mailing to the taxpayer’s last known address is sufficient. Section 6330(c)(2)(B) allows a taxpayer to challenge the underlying tax liability in a collection due process hearing if the taxpayer did not receive a statutory notice of deficiency or did not otherwise have an opportunity to dispute such tax liability. Section 301. 6330-1(e)(3), Q&A-E2, Proced. & Admin. Regs. , clarifies that an opportunity to dispute includes a prior conference with the IRS Appeals Office.

    Holding

    The Tax Court held that the assessments against the Landers for the taxable year 2005 were valid because the notice of deficiency was mailed to their last known address, despite not being received. The court also held that the Landers had a prior opportunity to dispute their underlying tax liability during the audit reconsideration process, thus they could not challenge it in the collection due process proceeding.

    Reasoning

    The court reasoned that the IRS satisfied the mailing requirement under I. R. C. § 6212 by sending the notice of deficiency to the Landers’ last known address, as evidenced by Form 3877 and USPS records. The court noted that the validity of the notice of deficiency does not depend on its receipt by the taxpayer. Regarding the opportunity to dispute, the court relied on the regulation at § 301. 6330-1(e)(3), Q&A-E2, which states that a conference with the IRS Appeals Office constitutes an opportunity to dispute the tax liability. The court found that the Landers had such an opportunity during the audit reconsideration process, where they engaged with the Appeals Office and some of their tax liability was abated. The court rejected the Landers’ argument that they were not given a full and fair opportunity to dispute their liability, citing the extensive engagement with the Appeals Office and the detailed consideration of their arguments and evidence. The court also distinguished the case from Lewis v. Commissioner, where the tax was not subject to deficiency procedures, but applied the same reasoning regarding the prior opportunity to dispute.

    Disposition

    The Tax Court affirmed the validity of the assessments and ruled that the Landers could not challenge their underlying tax liability in the collection due process proceeding. The case was remanded to the Appeals Office to consider the Landers’ claim for spousal relief and their ability to pay the balance due.

    Significance/Impact

    The Lander decision reinforces the importance of the IRS’s mailing practices in validating tax assessments and the significance of prior opportunities to dispute tax liabilities in collection due process proceedings. It clarifies that a taxpayer’s failure to receive a notice of deficiency does not invalidate the assessment if it was mailed to the last known address. The case also underscores the role of the IRS Appeals Office in providing taxpayers with an opportunity to dispute their liabilities, which may preclude further challenges in collection proceedings. This ruling may influence how taxpayers approach audit reconsiderations and collection due process hearings, emphasizing the need to fully engage in any available administrative processes before seeking judicial review.

  • 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.

  • Weiss v. Comm’r, 147 T.C. 179 (2016): Timeliness of Collection Due Process Hearing Requests

    Weiss v. Commissioner of Internal Revenue, 147 T. C. 179 (U. S. Tax Court 2016)

    In Weiss v. Commissioner, the U. S. Tax Court clarified that the 30-day period for requesting a Collection Due Process (CDP) hearing starts from the mailing date of the IRS levy notice, not the date printed on the notice. This ruling ensures that taxpayers have the full 30 days to request a hearing, impacting how the IRS and taxpayers manage collection actions and the suspension of the collection statute of limitations.

    Parties

    Charles J. Weiss, the petitioner, filed a petition against the Commissioner of Internal Revenue, the respondent, in the U. S. Tax Court. Weiss sought review of the IRS’s determination to uphold a notice of intent to levy against him for unpaid federal income tax liabilities for the tax years 1986 through 1991.

    Facts

    Charles J. Weiss owed over $550,000 in federal income tax liabilities for the years 1986 to 1991. In an effort to collect these liabilities, the IRS prepared a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (levy notice) dated February 11, 2009. An IRS Revenue Officer (RO) attempted to hand-deliver the notice on February 11 but was prevented by Weiss’s dog. The RO then mailed the notice on February 13, 2009, using the original February 11-dated notice. Weiss’s wife received the notice on February 17, 2009. Weiss filed a request for a CDP hearing on either March 13 or 14, 2009, which was received by the IRS on March 16, 2009. Weiss argued that he intentionally filed the request late to receive an equivalent hearing, which would not suspend the collection statute of limitations.

    Procedural History

    The IRS issued a notice of determination on May 6, 2011, sustaining the proposed levy. Weiss timely petitioned the U. S. Tax Court for review. The Tax Court reviewed the IRS’s determination for abuse of discretion, focusing on whether the CDP hearing request was timely filed based on the mailing date of the levy notice.

    Issue(s)

    Whether the 30-day period for requesting a CDP hearing under I. R. C. § 6330(a)(3)(B) begins on the date the levy notice is mailed or the date printed on the notice when these dates differ?

    Rule(s) of Law

    The Internal Revenue Code section 6330(a)(3)(B) provides that a taxpayer may request a CDP hearing within 30 days of receiving a notice of intent to levy. The regulations under 26 C. F. R. § 301. 6330-1(b)(1) and (c)(1) state that the 30-day period commences the day after the date of the CDP Notice. The Tax Court has established that the mailing date of the notice controls when it is later than the date on the notice itself.

    Holding

    The U. S. Tax Court held that the 30-day period for requesting a CDP hearing under I. R. C. § 6330(a)(3)(B) is calculated from the date the levy notice is mailed, not the date printed on the notice. Therefore, Weiss’s request for a CDP hearing, filed within 30 days of the mailing date, was timely.

    Reasoning

    The court reasoned that when the date on a levy notice is earlier than the mailing date, the mailing date governs the start of the 30-day period. This principle ensures that taxpayers have the full 30 days to request a hearing, consistent with the court’s prior rulings on notices of deficiency and notices of determination in CDP cases. The court cited Bongam v. Commissioner to support its reasoning, emphasizing a broad, practical construction of jurisdictional provisions to favor taxpayer rights. The court rejected Weiss’s argument that the mismatch between the notice’s date and mailing date should invalidate the notice, as such mismatches have not historically led to invalidation. Additionally, the court found no merit in Weiss’s claim of prejudice or estoppel, noting his implausible testimony and the fact that he sought to avoid collection action.

    Disposition

    The U. S. Tax Court upheld the IRS’s determination to sustain the proposed levy action against Weiss.

    Significance/Impact

    Weiss v. Commissioner clarifies the starting point for the 30-day period to request a CDP hearing, ensuring that taxpayers have the full period to respond based on the mailing date of the levy notice. This ruling impacts IRS collection procedures and taxpayer rights, reinforcing the importance of the mailing date in determining the timeliness of CDP hearing requests. Subsequent courts have followed this precedent, affecting how the IRS administers collection actions and how taxpayers engage with the CDP process.

  • Guralnik v. Commissioner, 146 T.C. 230 (2016): Computation of Time for Filing in Tax Court

    Guralnik v. Commissioner, 146 T. C. 230 (2016)

    In Guralnik v. Commissioner, the U. S. Tax Court ruled that a petition filed one day late due to a snowstorm-induced closure of the court was timely under the principles of Federal Rule of Civil Procedure 6(a)(3). This decision clarified how to compute filing deadlines when the court is inaccessible, ensuring that taxpayers are not unfairly penalized by circumstances beyond their control.

    Parties

    Felix Guralnik, Petitioner, v. Commissioner of Internal Revenue, Respondent. Guralnik was the petitioner at both the trial and appeal stages, while the Commissioner of Internal Revenue was the respondent throughout the litigation.

    Facts

    On January 16, 2015, the Commissioner of Internal Revenue mailed a Notice of Determination Concerning Collection Action(s) to Felix Guralnik regarding his outstanding federal income tax liabilities for 2003 and 2005. The notice informed Guralnik that he had 30 days to file a petition with the U. S. Tax Court to challenge the determination. Guralnik mailed his petition via Federal Express First Overnight service on February 13, 2015. The last day for timely filing was February 17, 2015, which coincided with a closure of all federal government offices in Washington, D. C. , including the Tax Court, due to Winter Storm Octavia. Guralnik’s petition was delivered and filed on February 18, 2015, the next day the court was open.

    Procedural History

    The Commissioner moved to dismiss Guralnik’s case for lack of jurisdiction, arguing that the petition was filed outside the 30-day period mandated by I. R. C. § 6330(d)(1). The case was assigned to a Special Trial Judge, who recommended denying the motion to dismiss. The Commissioner objected to the recommendation but did not challenge the factual findings. Guralnik and an amicus curiae supported the recommendation and advanced additional legal theories to sustain jurisdiction. The Tax Court reviewed these arguments and issued a final ruling.

    Issue(s)

    Whether the petition filed by Felix Guralnik on February 18, 2015, was timely under I. R. C. § 6330(d)(1) when the Tax Court was closed due to Winter Storm Octavia on the last day of the filing period?

    Rule(s) of Law

    The 30-day filing period prescribed by I. R. C. § 6330(d)(1) is jurisdictional and cannot be equitably tolled. I. R. C. § 7502 provides a “timely mailed, timely filed” rule for documents sent via U. S. mail or certain designated private delivery services. I. R. C. § 7503 extends filing deadlines when the last day falls on a Saturday, Sunday, or legal holiday. Fed. R. Civ. P. 6(a)(3)(A) extends the filing deadline to the next accessible day if the clerk’s office is inaccessible on the last day for filing.

    Holding

    The U. S. Tax Court held that Guralnik’s petition was timely filed on February 18, 2015, because the court was inaccessible due to Winter Storm Octavia on February 17, 2015, the last day of the filing period. The court applied the principle from Fed. R. Civ. P. 6(a)(3)(A), extending the filing deadline to the next accessible day that was not a Saturday, Sunday, or legal holiday.

    Reasoning

    The court rejected the arguments for equitable tolling and the application of the “timely mailed, timely filed” rule under I. R. C. § 7502 because Federal Express First Overnight service was not a designated delivery service at the time of mailing. The court also found that I. R. C. § 7503 did not apply because the closure due to the snowstorm was not considered a “legal holiday. ” However, the court adopted the principle from Fed. R. Civ. P. 6(a)(3)(A) under the authority of Tax Court Rule 1(b), which allows the court to prescribe procedure by giving weight to the Federal Rules of Civil Procedure when there is no applicable rule of procedure. The court reasoned that this rule was “suitably adaptable” to the situation at hand, ensuring that litigants are not penalized for the court’s closure due to unforeseen circumstances. The court’s decision was supported by the fact that similar principles had been adopted by other federal courts and were consistent with the court’s prior practice of filling procedural gaps with analogous civil rules.

    Disposition

    The court denied the Commissioner’s motion to dismiss for lack of jurisdiction, ruling that Guralnik’s petition was timely filed on February 18, 2015.

    Significance/Impact

    This case establishes a precedent for computing filing deadlines when the Tax Court is inaccessible due to weather or other unforeseen events. It ensures that taxpayers are not unfairly penalized by circumstances beyond their control, such as government closures. The ruling clarifies the application of Fed. R. Civ. P. 6(a)(3)(A) in the context of Tax Court procedures, potentially affecting future cases where similar issues arise. It also reinforces the Tax Court’s authority to adopt principles from the Federal Rules of Civil Procedure to fill procedural gaps, which could influence the development of Tax Court rules and practices.

  • Greenoak Holdings Ltd. v. Comm’r, 143 T.C. 170 (2014): Taxpayer Standing in Collection Due Process Appeals

    Greenoak Holdings Ltd. v. Comm’r, 143 T. C. 170 (U. S. Tax Court 2014)

    In Greenoak Holdings Ltd. v. Comm’r, the U. S. Tax Court ruled it lacked jurisdiction over a petition filed by third parties claiming ownership of assets potentially subject to levy for unpaid estate taxes. The court clarified that only the taxpayer, the estate in this case, has standing to appeal a collection due process (CDP) notice of determination. This decision underscores the limits of third-party rights in tax collection disputes and the procedural protections afforded to taxpayers under the Internal Revenue Code.

    Parties

    Greenoak Holdings Limited, Southbrook Properties Limited, and Westlyn Properties Limited (collectively, “Petitioners”) were the appellants in this case. They were represented by Michael Ben-Jacob. The respondent was the Commissioner of Internal Revenue, represented by Frederick C. Mutter. The estate of James B. Irwin was the taxpayer involved, with Howard L. Crown as the initial personal representative, later succeeded by Jill McCrory.

    Facts

    James B. Irwin died on September 21, 2009, and Howard L. Crown was appointed as the personal representative of the estate. The estate filed a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, in December 2010, reporting both probate and nonprobate assets. Among the nonprobate assets listed was the Karamia Settlement, an offshore trust owned by the decedent, which in turn owned the Petitioners. The estate failed to timely pay the reported estate tax, leading the Commissioner to issue a Final Notice of Intent to Levy and Notice of Your Right to a Hearing on November 28, 2012, to Crown. The estate requested a collection due process (CDP) hearing, which was held on April 18, 2013. On May 1, 2013, the Commissioner issued a notice of determination sustaining the levy on the estate’s nonprobate assets. The estate did not appeal this determination, but the Petitioners filed a petition with the U. S. Tax Court on May 30, 2013, asserting their ownership interest in the assets potentially subject to levy.

    Procedural History

    The U. S. Tax Court issued an order to show cause on June 19, 2013, directing the parties to explain why the estate should not be substituted as the petitioner. On July 11, 2013, the Commissioner moved to dismiss for lack of jurisdiction, arguing that the Petitioners were not proper parties to appeal the notice of determination. Crown, on behalf of the estate, agreed with the Commissioner’s position. On January 16, 2014, Crown resigned as personal representative, and Jill McCrory was appointed as his successor. McCrory filed supplemental responses on May 6, 2014, arguing that the Petitioners had standing to appeal and that the estate should be substituted as a party. The Tax Court ultimately dismissed the case for lack of jurisdiction on September 16, 2014.

    Issue(s)

    Whether a third party, who claims an ownership interest in property that might be subject to levy, has standing to appeal a notice of determination issued to the taxpayer under I. R. C. § 6330(d)?

    Rule(s) of Law

    The controlling legal principle is found in I. R. C. § 6330, which provides taxpayers with procedural protections before the Internal Revenue Service (IRS) can levy on their property to collect unpaid taxes. Specifically, I. R. C. § 6330(d) states that “[t]he person may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter). ” The regulations under § 6330 further clarify that the “person” entitled to notice and appeal rights is the taxpayer liable for the unpaid tax, not third parties who may claim an interest in the property subject to levy.

    Holding

    The U. S. Tax Court held that it lacked jurisdiction over the Petitioners’ appeal because they were not the taxpayers liable for the unpaid estate tax, nor were they authorized representatives of the taxpayer. The court ruled that only the estate, as the taxpayer, had standing to appeal the notice of determination under I. R. C. § 6330(d).

    Reasoning

    The court’s reasoning focused on the statutory language and legislative history of I. R. C. § 6330, which consistently refers to “the person” as the taxpayer liable for the unpaid tax. The court noted that the purpose of § 6330 was to provide taxpayers with due process protections before the IRS could levy on their property. The court rejected the Petitioners’ argument that they were “persons” entitled to appeal rights under § 6330(d) because they claimed an ownership interest in property potentially subject to levy. The court emphasized that the regulations under § 6330 explicitly state that only the taxpayer is entitled to notice and appeal rights, and third parties must pursue other remedies, such as a wrongful levy action under I. R. C. § 7426. The court also considered the legislative history, which further supported the conclusion that § 6330 was intended to benefit taxpayers, not third parties. The court dismissed the successor personal representative’s attempt to reverse the estate’s original position and substitute the estate as a party, noting that the estate had not filed a timely petition.

    Disposition

    The U. S. Tax Court dismissed the case for lack of jurisdiction, as the Petitioners were not proper parties to appeal the notice of determination issued to the estate.

    Significance/Impact

    The Greenoak Holdings Ltd. v. Comm’r decision clarifies the limits of third-party standing in collection due process appeals under I. R. C. § 6330. It establishes that only the taxpayer liable for the unpaid tax has the right to appeal a notice of determination, and third parties claiming an interest in property subject to levy must pursue other remedies, such as a wrongful levy action under I. R. C. § 7426. This ruling has important implications for tax practitioners and taxpayers, as it underscores the importance of timely filing by the taxpayer to preserve appeal rights in collection disputes. The decision also highlights the procedural protections afforded to taxpayers under the Internal Revenue Code and the limited role of third parties in such proceedings.

  • Greenoak Holdings Ltd. v. Commissioner, 143 T.C. 8 (2014): Jurisdiction in Collection Due Process Appeals under I.R.C. § 6330

    Greenoak Holdings Ltd. v. Commissioner, 143 T. C. 8 (2014)

    In Greenoak Holdings Ltd. v. Commissioner, the U. S. Tax Court ruled it lacked jurisdiction over a petition filed by entities asserting ownership interests in property potentially subject to levy, clarifying that only the taxpayer liable for the unpaid tax has standing to appeal under I. R. C. § 6330. The decision reinforces the statutory framework designed to protect taxpayers, not third parties, during IRS collection actions, and underscores the exclusive remedy of wrongful levy actions for third parties under I. R. C. § 7426.

    Parties

    Greenoak Holdings Limited, Southbrook Properties Limited, and Westlyn Properties Limited, collectively referred to as Petitioners, appealed to the U. S. Tax Court against the Commissioner of Internal Revenue, the Respondent. The petitioners were represented by Michael Ben-Jacob, and the respondent by Frederick C. Mutter.

    Facts

    James B. Irwin died on September 21, 2009, and his estate failed to timely pay reported estate taxes. Howard L. Crown, the estate’s personal representative, requested a Collection Due Process (CDP) hearing after receiving a notice of intent to levy from the IRS. The IRS Appeals officer sustained the levy on the estate’s nonprobate assets, which included the Karamia Settlement, an offshore trust that owned the petitioners. The petitioners, asserting ownership interests in the trust’s assets, filed a petition with the Tax Court, despite the estate not filing a petition.

    Procedural History

    The IRS issued a notice of determination to the estate’s personal representative on May 1, 2013, sustaining the proposed levy on nonprobate assets. The petitioners filed a petition with the Tax Court on May 30, 2013, without a petition from the estate. The respondent moved to dismiss for lack of jurisdiction, arguing that the petitioners were not the proper parties to appeal the notice of determination issued to the estate. The Tax Court issued an order to show cause why the estate should not be substituted as petitioner, and after further submissions, the court considered the jurisdictional issue.

    Issue(s)

    Whether entities claiming ownership interests in property potentially subject to levy by the IRS have the right to appeal a notice of determination issued to the taxpayer under I. R. C. § 6330?

    Rule(s) of Law

    I. R. C. § 6330 provides taxpayers with procedural protections before the IRS can levy property to collect unpaid taxes. The section mandates prelevy notice to the taxpayer and allows for a CDP hearing to challenge the levy. I. R. C. § 6330(d) grants jurisdiction to the Tax Court to review a notice of determination issued to the taxpayer. I. R. C. § 7426(a)(1) provides the exclusive remedy for third parties claiming wrongful levy by the IRS.

    Holding

    The Tax Court held that it lacked jurisdiction over the petition filed by the petitioners because they were not the taxpayers liable for the unpaid estate tax, and thus not entitled to appeal the notice of determination issued to the estate under I. R. C. § 6330(d).

    Reasoning

    The court’s reasoning hinged on the interpretation of the term “person” in I. R. C. § 6330, which it determined unambiguously refers to the taxpayer liable for the unpaid tax. The court analyzed the statutory language, legislative history, and regulations to conclude that only the taxpayer, not third parties with alleged ownership interests in property subject to levy, is entitled to prelevy notice, a CDP hearing, and judicial review. The court rejected the petitioners’ argument that they were “persons” under the statute, emphasizing that the IRS is authorized to levy only on the property of the taxpayer. The court also noted that third parties have the right to bring a wrongful levy action under I. R. C. § 7426(a)(1), but such actions fall under the jurisdiction of district courts, not the Tax Court. The court considered the legislative intent to provide due process protections to taxpayers, not to extend such rights to third parties. Additionally, the court addressed the change in the estate’s representation, finding that the new personal representative’s attempt to substitute the estate as petitioner was untimely and could not confer jurisdiction.

    Disposition

    The Tax Court dismissed the petition for lack of jurisdiction under I. R. C. § 6330(d).

    Significance/Impact

    The decision in Greenoak Holdings Ltd. v. Commissioner clarifies the scope of the Tax Court’s jurisdiction in CDP appeals, reinforcing that only the taxpayer liable for the tax has standing to appeal a notice of determination. This ruling underscores the distinction between the rights of taxpayers and those of third parties in IRS collection actions, directing third parties to pursue wrongful levy actions under I. R. C. § 7426. The decision impacts legal practice by limiting the avenues through which third parties can challenge IRS levies, emphasizing the need for taxpayers to actively engage in the CDP process to protect their rights.