In Uncategorized on 08/06/2016 at 00:43

Judge Holmes examines whether Appeals did what the old English folk song directed: “Consider, good cow, consider.”

And The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Implacable, Imperturbable, Indomitable, Indefatigable, Illustrious, Incontrovertible, Ineluctable, Indispensable and Ineffable Foe of the Partitive Genitive, and Old China Hand, finds Appeals did so. Even a glance seems to be sufficient.

And it sinks poor Rudolfo B. Zapata, Docket No. 28931-09L, filed 8/5/16.

Rudy had health problems. His return for the year at issue showed tax due, that he didn’t pay, and Rudy admitted he owed. So no SNOD necessary. IRS hits Rudy with a NITL, he asks for a CDP, gets bounced, and petitions.

Judge Holmes was concerned that Rudy’s health problems might have rendered him financially disabled. See my blogpost “Elected, Depressed and Disabled,” 11/12/14, for the backstory on financial disability.

Anyway, Rudy claimed an overpayment for a subsequent year wiped out the shortfall for the year at issue. But the SOL on lookbacks would bar this.


Unless Rudy’s financial disability tolled the SOL. Judge Holmes, you’ll remember, is a great fan of remands to Appeals. So he bucks Rudy back, and asks Appeals to check out Rudy’s disability. Appeals bounces Rudy yet again.

“Our standard of review depends on whether Mr. Zapata’s [year at issue] tax liability is at issue. And, although Mr.Zapata conceded his [year at issue] tax liability, there’s a question lurking here of whether Mr. Zapata’s request that his [later but barred] overpayment affects his [year at issue] tax liability in such a way that the [year at issue] liability is thereby ‘at issue.’ This has turned out to be a difficult question that remains unsettled in our Court, Estate of Adell v. Commissioner, 107 T.C.M. (CCH) 1463, 1466 (2014) (delicately noting ‘lack of uniformity’ in cases). If the proper crediting of one year’s overpayment is an issue of the ‘underlying liability,’ the standard would be de novo. If it isn’t, the standard would be abuse of discretion. See, e.g., Kovacevich v. Commissioner, 98 T.C.M. (CCH) 1, 4-5 (2009). This would mean that we look to see if the Commissioner’s decision was based on an error of law, rested on a clearly erroneous finding of fact, whether he ruled irrationally, or otherwise acted arbitrarily or capriciously. Antioco v. Commissioner, 105 T.C.M. (CCH) 1234, 1237 (2013); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).” Order, at p. 2.

Judge Holmes is a grandmaster of the judicial duck. He ducks here, deciding he doesn’t need to decide, because whatever is the standard, IRS wins. “The Appeals officer conducting the hearing must verify that the requirements of applicable law and administrative procedures were met, consider issues properly raised by the taxpayer, and determine if the collection action fairly balances the need for efficient tax collection with the taxpayer’s legitimate concerns. See IRC§6330(c)(3).” Order, at p. 2 (Emphasis by the Court).

“The key question is whether the Appeals officer considered the issues properly raised by Mr. Zapata. There was only one on remand: Did Mr. Zapata qualify for a tolling of the statute of limitations that would otherwise bar a claim for refund or using his right to a refund to offset his tax liability for another year? The Code section that’s relevant here is section 6511(h), which tolls the statute for ‘financially disabled’ taxpayers. Congress told the Commissioner to issue a procedure to implement this section and there is a revenue procedure that does so. See Rev. Proc. 99-21, 1999-17 C.B. 960 (listing requirements to toll the statute). The administrative record here shows that Mr. Zapata submitted a note from his doctor, but we have to agree with IRS Appeals that — under either standard of review–it did not meet the requirements of the revenue procedure. It did not, for example describe Mr. Zapata’s impairment, link it to an inability to manage his financial affairs, or provide any specific time period when he could not manage his affairs. We are somewhat concerned that the Appeals officer appears to have barely acknowledged the subject during her communication with Mr. Zapata’s power of attorney [sic], and even told the power of attorney [sic] that the ‘only concern’ for the hearing was the [year at issue] tax debt and that the…refund should be addressed with another department. The CDP hearing might have been a helpful time to discuss the medical condition and the highly specific requirements for a doctor’s note, but we acknowledge that the Appeals officer is obligated only to consider the issue. She made no error on the record before her that Mr. Zapata’s proof of financial disability did not meet the requirements of the revenue procedure. Her determination upholding the levy on Mr. Zapata’s property was therefore not an abuse of discretion.” Order, at p. 3.

So we have an AO who has a docket to clear, a doctor who is by no means an expert on Rev. Proc. 99-21, 1999-17 C. B. 960, and a taxpayer (who was certainly disabled at one point) who puts in no answering papers on IRS’ summary J motion.

Great result.

BTW, Judge, a power of attorney is a piece of paper, sometimes also known as Form 2848; the person who acts for another by virtue of the power conferred by said piece of paper is denominated therein as the “agent.”







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