Attorney-at-Law

DON’T LOOK BACK

In Uncategorized on 09/24/2013 at 06:51

No, not the memorable saying of  baseball immortal Leroy Robert (“Satchel”) Paige, to whom is ascribed “Don’t look back, they might be gainin’ on you”, but rather Tom Reed, 141 T. C. 7, filed 9/23/13.

Tom wants IRS to consider an OIC he put in years before the CDP from which he now petitions. He argues IRS should consider the old, returned OIC. IRS says (a) they don’t have to and (b) Tax Court has no jurisdiction to decide whether they have to or not, because Tax Court can only review a new OIC, not an old one that was never petitioned.

Now there are two ways IRS can bounce an OIC: one is to reject it, the other is to return it. Returns are unprocessable, here because Tom wasn’t current with his taxes when submitted, and that bounces an OIC regardless of liability, collectibility, or effective tax administration issues. Rejections are based on consideration of the OIC on the substantive grounds just mentioned. “Briefly, a taxpayer has the right to administratively appeal the Commissioner’s rejecting an OIC but has no right to appeal the Commissioner’s returning an OIC.” 141 T. C. 7, at p. 6, footnote 5.

Tom made two offers. The first, in 2004, was rejected because Tom dissipated assets. Tom tried again, in 2008.

Here’s Judge Kroupa: “The offer unit returned the 2008 offer to petitioner as unprocessable. Petitioner then exchanged several letters with the offer unit. Petitioner attempted through the letter exchange to have the offer unit reconsider its returning the 2008 offer. To this end, petitioner argued that he was in fact in compliance with his Federal income tax obligations at the time he submitted the 2008 offer. Petitioner also argued in the letter exchange that he should be given the opportunity to become compliant if, in fact, he was not at the time he submitted the 2008 offer. Petitioner continued to make payments during the pendency of the letter exchange consistent with the 2008 offer. The letter exchange ultimately failed, however, to convince the offer unit to alter its decision to return the 2008 offer to petitioner.” 141 T. C. 7, at p. 6 (Footnote omitted).

Judge Kroupa blows off the IRS’ jurisdictional arguments: “Respondent argues this Court lacks jurisdiction because petitioner proposed no new OIC during the collection hearing and the Court therefore has nothing to consider. Respondent also argues this Court lacks jurisdiction because petitioner has no right of judicial review of respondent’s rejecting the 2004 offer or returning the 2008 offer. We are perplexed by the arguments that respondent raises as they appear to miss the thrust of the theories petitioner advances. Moreover, it is fundamental that we have jurisdiction in collection matters if the Commissioner issues a determination notice and a taxpayer timely files a petition. Both conditions apply here. Accordingly, we have jurisdiction to review the determination….” 141 T. C. 7, at pp. 8-9 (Citations omitted).

OK, let’s cut to the chase.

Tom says the AO must consider the 2008 OIC based on the facts then existing. IRS says no; while Section 7122(a) gives IRS discretion to compromise taxes due, IRS still has to collect all taxes due. A taxpayer has a right to a CDP before IRS can levy to collect, but has to propose an acceptable alternative to the levy.

Tom wants IRS to consider a three-year-old alternative today. That would impermissibly expand IRS’ statutory authority; caselaw holds taxpayers must submit current financial data at a CDP. See also IRM 5.15.1.1(4), Oct. 2, 2012). Numbers must be no older than six months.

What Tom wants is review of a returned OIC, and that’s off the table. “Taxpayers may currently seek administrative review of the Commissioner’s rejecting an OIC. Sec. 7122(e). Taxpayers currently have no right, however, to seek review of the Commissioner’s returning an OIC. Sec. 301.7122-1(f)(5)(ii), Proced. & Admin. Regs. The theory petitioner advances would, in effect, create additional layers of administrative and judicial review of the Commissioner’s returning an OIC before a collection hearing commences. See sec. 6330(d). Petitioner’s theory would not create analogous layers of review, however, for the Commissioner’s returning an OIC after a collection hearing concludes. See id. Whether a taxpayer may access these new layers of review would therefore depend on when the Commissioner returns an OIC. Petitioner offers no, and we can find no, reasonable explanation for such disparate treatment based only on when the Commissioner returns an OIC.” 141 T. C. 7, at p. 13.

Tom dissipated assets, so the 2004 OIC is out, and he hadn’t paid his estimateds when he put in the 2008 OIC, so that’s out.

Tom, you’re out.

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