In Uncategorized on 08/22/2013 at 16:28

That obliging jurist Judge Gustafson contradicts the title of my blogpost “You Can Have One Without The Other”, 7/31/13, but this designated hitter is not about spouses. It’s about an opportunity to contest a deficiency at the CDP stage.

The order is Albert Sofian, Docket No. 17960-12L, filed 8/22/13.

Al’s beef has to do with gains on securities sales. Al claims he never got the final notice of intent to levy, which claim Judge Gustafson says defeats IRS’ summary judgment motion to sustain Appeals’ NOD. IRS says Al had a prior opportunity to dispute. Al says no.

Al never raised non-receipt at his CDP, so IRS says he waived any chance to do so, whether or not he got the final notice of intent to levy.

Judge Gustafson says no: “On the record before us, we cannot fault Mr. Sofian for failing to effectively challenge liability at his CDP hearing. IRS Appeals’ letter… explicitly told Mr. Sofian, ‘You are not able to dispute the liability because our records indicate that you had a previous opportunity to challenge the liability under IRC 6330 when you were issued a Notice of Intent to Levy…. Therefore, you are precluded from raising the liability during this CDP hearing request.’ Appeals cannot announce such preclusions to the taxpayer and then support taxpayer-adverse outcomes by saying that the taxpayer failed to dispute the liability.

“We acknowledge that Appeals’ letter went on to say, ‘However, we will consider your original Form 1040 for the tax year… under general authority if you submit a completed and signed tax return to me within 21 days of the date of this letter’; and we have no doubt that Appeals made this offer in good faith. However, the letter made it clear that, for purposes of his CDP rights (which would include judicial review thereof) Mr. Sofian was precluded. Appeals cannot have it both ways–on the one hand telling the taxpayer that his submissions will not count for CDP purposes, but on the other hand arguing that the taxpayer’s nonsubmissions should count against him in the Tax Court’s review of the CDP hearing.” Order, at pp. 1-2. (Emphasis by the Court).

So Al will get his day in court.

However, lest Al should feel too elated, Judge Gustafson warns him that he has a double-barreled burden of proof: he has to prove he didn’t get the final notice of intent to levy, and, if he does so, then he has to prove that his liability was less than IRS said it was. Just saying “no” won’t get it.

Al seemed to think IRS has the burden of proof on his tax liability, but he is wrong, and Judge Gustafson makes it clear.

And Al and IRS must do their document exchange soon, and will be precluded from introducing anything they didn’t exchange.

Appeals may have to revise their form letter.


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