Gerald Lee Ridgely, Jr.’s story is also Scott E. Charnas’s story, in 2015 T. C. Memo. 153, filed 8/11/15. Gerald Lee and Scott E. both get paid on contingency, Gerald Lee as a CPA and Scott E. as a PI lawyer. Gerald Lee’s story is found in my blogpost “It’s Contingent? – Great,” 7/17/14.

For you civilians in the audience, “PI” means plaintiff’s personal injury, the wonderful world of torts. Practitioners in that field generally get paid only if they win; if they lose, it’s a long walk home. And cases can go on for years, if there are big bucks in the game.

So Scott’s income is, to say the very least, variable.

So when Scott E. files returns but doesn’t pay, and asks for a collection alternative or three when he gets the NITL, the SO doesn’t consider Scott E.’s variable income stream, although he put it all over his Form 433-A. Scott didn’t put on an attachment telling his contingent tale, and IRS says he should have, but Judge Wells doesn’t care.

Instead of a telephone CDP, Scott and representative showed up at the Appeals office with papers telling his tale. The SO was out sick, but the papers were dropped off and the SO reviewed them. But her notes say nothing about the discrepancy in Scott E.’s year-to-year income or his statement that his income varies year-to-year.

IRS claims the correspondence review does the job. Judge Wells doesn’t think so.

“The question is not whether a correspondence-only hearing is generally legally sufficient. Rather, the question is whether a correspondence-only hearing was sufficient to provide petitioner the fair hearing to which he is entitled pursuant to sections 6330 and 6320. We note that the regulations provide that, if the taxpayer presents ‘relevant, non-frivolous reasons for disagreement’ with the proposed collection action, the taxpayer will ‘ordinarily be offered an opportunity for a face-to-face conference’. Id. It is only if the offer is unsatisfactory to the taxpayer that the taxpayer will be ‘given an opportunity for a hearing by telephone or by correspondence’. Id.” 2015 T. C. Memo. 153, at p. 11.

The Id. is Reg. 301.6330-1(d)(2).

Correspondence-only might fly where the SO considered all of Scott E.’s relevant, non-frivolous reasons for disagreeing with the NFTL and wanting an installment agreement, OIC or CNC.

But the SO didn’t consider Scott’s fluctuating income. And that is both relevant and non-frivolous.

So back to Appeals for Scott E.

I really like this opinion.

As one who has done real estate deals stretching over years on contingency, I can definitely testify under oath that I have not known what my income would be in any year since 1976. And I still don’t know.