In Uncategorized on 08/20/2014 at 16:42

Those nine (9) words, which, to the late President of the United States Ronald Wilson Reagan, were “the nine most terrifying words in the English language”, shouldn’t be for Barbara Delon & Welbon Delon, Docket No. 7097-13L, filed 8/20/14, because that Obliging Jurist, Judge David Gustafson, is throwing Barb and Wel a rope they shouldn’t drop, even if they don’t understand why it’s a rope.

Appeals admits they blew the CDP, so IRS wants a do-over and asks for a remand. You’ll remember that remands, like Ira Gershwin’s and Dubose Heyward’s idea of Woman, is a sometime thing. See my blogpost “Demand for Remand?”, 12/3/12, where Judge Swift sorts through a bushelbasketful of cases on Tax Court’s remand powers. But here it’s IRS asking, not Tax Court suggesting, so what’s the problem?

Barb and Wel don’t wanna go back to Appeals. So Judge Gustafson gets them on the blower with IRS and tries to tell them why they want to go back. And here’s what the practitioner, confronted with this situation, might wish to ponder as well.

First, only Appeals can grant a collection alternative. Tax Court can’t order IRS to provide one. So if Barb and Wel want installment, OIC, or CNC, Appeals is the only game in town. As for all the majesty and power of Tax Court, “…our final decision in a CDP case must be simply to sustain or not sustain Appeals’ determination, and the blunt instrument of not sustaining the determination would not give the taxpayer the collection alternative he seeks.” Order, at p. 1.

Next, each CDP considers one, and only one, “collection episode”. “If we decline to sustain Appeals’ determination and decide instead in favor of the taxpayer, our decision does not bar the IRS from subsequent collection attempts. If a proposed levy is not sustained, then the IRS may be able to propose another levy; if a given notice of lien must be withdrawn, then the IRS may be able to file another notice of lien. For some taxpayers, that truism will be a reason to consent to a remand.” Order, at p. 2.

Taxpayers, please copy. No double jeopardy here. Tax Court can bounce IRS, and provided SOL hasn’t run, IRS can lob another NFTL or NITL the next morning.

Worse, and finally, the Section 6320(b)(2) single-shot provision: only one CDP hearing for any tax period. So even if Barb and Wel win the trial and the lien or levy they’re fighting gets tossed, IRS can come back the next morning with a fresh one, and Barb and Wel have no ticket to a CDP or to Tax Court. Even if they won, they lost.

Now no court has so held. But “…for the unpaid liabilities at issue here, the Delons are entitled under this provision to ‘only one hearing’ with respect to the IRS’s filing of a notice of lien and the IRS’s issuance of a notice of levy. If a taxpayer prevails in a CDP case and thus succeeds in having the IRS’s notice of lien withdrawn, and if the IRS then files another notice of lien, the taxpayer may then want to propose a collection alternative. But does the taxpayer again have recourse to review by Appeals and by this Court? Perhaps the statutory limit of ‘only one hearing’ means that the answer is no, as the IRS appears to contend (see Internal Revenue Manual pt. (Nov. 5, 2013); or perhaps instead the taxpayer is entitled to a supplementation of his original CDP hearing as a continuation of that ‘one hearing’, and not as a new, second hearing; but no court has yet answered this question.” Order, at p. 2.

Heartily agreeing, I again quote that sage and savant of New York Civil Practice, Prof. David Siegel, now or formerly of Albany Law School: “Find out the answer in S. E. C.–Someone Else’s Case.”

Or, as Clint Eastwood might have put it: “Feelin’ lucky?”

“A taxpayer resisting remand therefore incurs the risk of forfeiting what may be his last chance for IRS Appeals and the Tax Court to review IRS collection activity. So that the Delons may further reflect on this matter, and so that the parties may have additional time to attempt to settle their dispute, it is ORDERED that the IRS’s motion to remand is taken under advisement ….” Order, at pp. 2-3.

And so the parties can talk among themselves, show up in Winston-Salem in September, guys, and we’ll all talk about it. And defer the trial.

Barb and Wel, listen to fatherly and obliging Judge Gustafson: he may be from the government, but he is here to help.

Footnote- Ya’d think Judge Gustafson would designate this order, as it has great information for the in-the-trenches practitioner and the ordinary taxpayer. But no! Instead I had to blow away a perfectly good hour wading through a fact-bound T. C. Memo., and four (4) designated exegeses on discovery that left me as wise as I was before (like, “what part of ‘answer the question’ don’t you understand?”). Modesty is all very well, Judge, but sometimes a modest blast on one’s own horn does no harm.

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