In Uncategorized on 08/12/2015 at 17:20

I won’t cite here to my numerous blogposts engendered by the Supremes’ decisions in Chenery I and Chenery II. The agency’s stated rationale is the only thing on the table in an abuse-of-discretion review, and the administrative record is “all ye know on earth and all ye need to know,” as a much better writer than I put it.

But what happens when a CDP abuse-of-discretion gets bounced back to Appeals because IRS says it didn’t give petitioner the documents he asked for and failed to confirm he received the Letter 1085 (DO) asserting his unpaid FICA/FUTA?

Well, you can ask Michael E. Lunnon, or better yet, read Judge Marvel’s opinion in 2015 T. C. Memo. 156, filed 8/12/15.

IRS sent Mike a Letter 1058(DO) demanding the FICA/FUTA based on SFRs. The letter was signed for by one Cameron Curley, supposedly an employee of Mike’s at his UPS Store.

Mike never responded to that, but did respond to the Letter 1058 NITL, and got a hearing. Mike supplied frivolity but no information contradicting the SFRs or supporting his request for collection alternatives.

After the NOD, and after Mike’s timely petition, IRS subpoenaed more of Mike’s bank records in preparation for trial. Then IRS moved to remand on the above-stated grounds, and Tax Court granted the motion.

So Mike gets what might be another hearing, or might be a continuation of the first hearing. And claims IRS can’t rely on the later-acquired bank records, as this would violate Chenery.

Judge Marvel: “…sections 6320(b)(2) and 6330(b)(2) provide that a taxpayer is entitled to only one hearing with respect to either an NFTL or a proposed levy, respectively, for the year related to the unpaid liability. A hearing on remand is a supplement to the taxpayer’s original section 6320/6330 hearing and provides the parties with the opportunity to complete the initial section 6320/6330 hearing while preserving the taxpayer’s right to receive judicial review of the ultimate administrative determination. The Appeals Office on remand is not constrained by the original administrative record, as often the purpose of remand is to augment a deficient record. The Appeals Office makes a single determination with respect to an NFTL or a proposed levy for a taxable period. When this Court remands a case and the Appeals Office issues a supplemental notice of determination, we review the determination as supplemented.” 2015 T. C. Memo. 156, at pp. 17-18. (Citations and footnotes omitted).

And although the second set of subpoenaed bank records related to other periods, and to Mike’s LLC, they also contained information relevant to Mike and the years at issue.

“We remanded this case in part for the Appeals Office to clarify whether petitioner had a prior opportunity to challenge the underlying liabilities and to explain to petitioner the basis of the underlying assessments. Settlement Officer X appropriately relied on the additional documents to carry out the Court’s remand order and did not violate the Chenery doctrine in doing so. Petitioner may not distort the law to justify his continued refusal to cooperate with respondent or his abdication of the fundamental responsibilities of maintaining records and filing tax returns.” 2015 T. C. Memo. 156, at pp. 18-19. (Name omitted).

Mike never properly raised his liability for the FICA/FUTA at Appeals, so whether or not Cameron Curley was the proper party to get the Letter 1058(DO) is a nonissue.

Takeaway—An old saying, but a true one: protect your record.

  1. Were it only true that the good folks in the Chief Counsel’s staff (and the Whistleblower Office) were occupying their spare time reading Keats instead of working overtime to defeat the policy goals of inter Alia 7623(b), sigh.

    Pray that you indulge my borrowing an modifying another bit from the famous Ode, that the folks at the Service should take to heart:

    Whistleblowing is beauty,
    beauty is whistleblowing,
    tis… (Well, you know, and I hope, the rest.)


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