Attorney-at-Law

“SLOW DOWN, YOU MOVE TOO FAST”

In Uncategorized on 09/24/2013 at 17:57

Taking his lead from Paul Simon’s 1966 hit, that’s Judge Lauber’s direction to the SO in Thomas Szekely, 2013 T. C. Memo. 227, filed 9/24/13.

Tom filed his returns but couldn’t pay his taxes. The Taxpayer Advocate suggested Tom be placed in not currently collectible, but IRS said no, filed an NFTL, and Tom filed for a CDP, attaching all the documentation he had compiled.

Although Tom filed well within the thirty-day limit for a CDP, it took IRS four months to acknowledge Tom’s request.

Judge Lauber: “Finally… a settlement officer (SO) from the IRS Appeals Office acknowledged receipt of petitioner’s Form 12153 and notified him that she had scheduled a telephone CDP hearing for February 23, 2012. In the letter, the SO informed petitioner that, if he wished her to consider an offer-in-compromise (OIC) or other collection alternative, he should submit, before the scheduled CDP hearing, a completed Form 433-A together with supporting documentation and three months of bank statements. The letter made clear that the SO could not consider collection alternatives without receiving these documents. The SO gave petitioner 14 days from the date of her letter to provide the required information.

“Petitioner timely complied with the SO’s request and submitted all of the required documentation by letter…. In that letter, petitioner clearly outlined his financial situation. He informed the SO that he could not stay current on his… obligations without a compromise of his [past] tax obligations.” 2013 T. C. Memo. 227, at p. 4.

Tom called the SO, left a message, got a callback and was told to submit a Form 433-A(OIC). The SO said she would mail Tom an instruction packet.

She did, but her letter said nothing about 14 days or what would happen if Tom didn’t provide the Form 433-A(OIC).

Tom didn’t reply by day 14, so the SO recommended confirming the Lien on Day 15 and her manager confirmed it a week later.

Tom testified that if he’d been told the SO had to have the From 433-A(OIC) on Day 14, she would have. Anyway, Tom sent everything in on day 24.

“Almost six months later…the IRS informed petitioner that it was unable to process the OIC that he had submitted on [Day 24]. The reason given was that petitioner had failed to provide a Form 433-A (OIC) as requested. The IRS accordingly closed its file on petitioner’s OIC request.” 2013 T. C. Memo. 227, at p. 6.

Judge Lauber goes through the NFTL litany, the litany for the standard of review when liability for the tax is not an issue, and concludes: “Superficially, the SO would not appear to have abused her discretion under these circumstances.” 2013 T. C. Memo. 227, at p. 9.

Hold off the righteous anger, readers. Let’s welcome Judge Lauber (see my blogpost “Acceuillons, Let’s Welcome, Judge Albert G. Lauber”, 2/5/13).

Judge Lauber is troubled. IRS’ counsel says that for CDP the Section 7502 “timely mailed is timely filed” is not the rule. That means if it took a few days for Tom to get the package and a few days for his reply to hit the SO’s desk, Tom had three or four days to deal with a complex form. Presumably Tom was also working for a living at the same time.

While Tax Court has approved of the 14-day limit to provide information, there has to be a rule of reason. Surely Tom should get an extra couple of days.

Judge Lauber again: “…we are troubled by the contrast between the IRS’s sluggishness in responding to petitioner’s request for a CDP hearing and its alacrity in closing the case. It took the IRS four months to acknowledge receipt of petitioner’s request for a hearing, yet only one day for the SO to conclude that his case should be closed because he had missed a deadline. This strikes us as a double standard.” 2013 T. C. Memo. 227, at p. 10.

I cannot say how it strikes me, if I am limited to using language fit for a blog meant for family reading at the dinner table.

“…in exercising her discretion, a settlement officer should take into consideration the entire context of the case. Until his final footfault, petitioner had manifested timeliness and good faith in all his dealings with the IRS….. The SO knew that petitioner’s liabilities were properly reported; that he had previously worked with TAS to receive assistance; that he was eager to work out a compromise of his tax liabilities; that he was current on his [current] tax liability; and that he had responded timely to her previous requests for documents and information. Armed with this knowledge, the SO should not have lightly assumed, when petitioner’s OIC package did not arrive on [Day 14], that he had decided to walk away from his efforts to secure a compromise. We would hope that the IRS would reach out to a taxpayer in these circumstances and assist him in his tax compliance efforts, rather than proceed to close his case the day after a deadline passes. All that was required was a two-minute phone call to inquire whether petitioner needed a little more time.” 2013 T. C. Memo. 227, at pp. 10-11. (Footnote omitted, but read it; failing to grant a reasonable extension of time “would be an abuse of discretion”).

Judge Lauber to the rescue: “Although we cannot substitute our judgment for that of the SO… our review of the overall record leaves us with a firm sense that petitioner has not been treated in a fair and rational manner. We will therefore remand the case for a supplemental CDP hearing to consider petitioner’s OIC. Before the supplemental hearing, petitioner may submit a revised OIC on Form 656 accompanied by a Form 433-A (OIC) with current financial information. If petitioner is dissatisfied with the outcome of the supplemental hearing, he may pursue further review in this Court.” 2013 T. C. Memo. 227, at pp. 11-12. (Citations omitted).

Way to go, Judge Lauber.

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