In Uncategorized on 06/04/2018 at 16:09

The sixteenth-century Italian storyteller Giulio Cesare Croce furnishes the title and the plotline for this twenty-first century retelling, by The Judge with a Heart, STJ Rob’t. N. Armen, in a designated hitter.

Tung Dang & Hieu Pham Dang, Docket No. 21100-17L, filed 6/4/18, are “highly unusual” CDP litigants. Order, at p. 2. They actually want to pay up in full, and actually can do so.

So what are they doing in Tax Court? Well, they want IRS to accept a substitute. Rather than grabbing the Dang goods and chattels at random, they want IRS to levy on Tung’s IRA, which everyone agrees has sufficient cash to pay up and satisfy the levy. Tung and Hieu want the IRA levy because Section 72(t)(2)(A)(vii) exempts a distribution made on account of a levy under Section 6331 from the 10-percent early withdrawal additional tax.

At first Appeals claimed that Tung couldn’t pick where IRS should grab, but IRS’ counsel put them wise on a remand. “Substitution of assets” is a legitimate collection alternative. So Appeals issued a supplemental NOD, and said that Tung’s IRA was IRS’ go-to source.

But maybe IRS missed something. See my blogpost “No Invasion,” 4/23/14. Perhaps it’s not as simple as IRS’ counsel and STJ Armen think. But I won’t tell if you won’t.

Howbeit again, what are Tung and Hieu doing back in front of STJ Armen?

The supplemental NOD says if the levy isn’t satisfied in full from the IRA in sixty (count ‘em, sixty) days, IRS can grab what it likes, where it likes.

Tung and Hieu claim IRS is playing games.

STJ Armen won’t go that far, but the sixty-day cutoff goes by the boards.

STJ Armen: “The Court will not indulge in ‘conspiracy theories’, as alluded to in petitioners’ Status Report, nor will the Court presume bad faith on respondent’s part. However, petitioners do have a point: respondent is the party who will levy on the IRA, and the IRA custodian is a third party who will respond to the levy. This lack of control by petitioners, combined with the absence of any rationale expressed for the aforementioned 60-day proviso, together with respondent’s acknowledgment that levy on the IRA will fully satisfy petitioners’ outstanding liabilities for the two years in issue, lead the Court to conclude that respondent’s authority to proceed with the proposed levy should be limited to levying on the IRA in question. Further, given that petitioners’ underlying liabilities are not in issue in this case and that petitioners desire to promptly pay in full their outstanding liabilities for the two years in issue through a levy by respondent on the IRA in question, the Court concludes that good cause exists not to suspend the levy on such IRA. See I.R.C. sec. 6330(e)(2).” Order, at p. 3.

So let IRS grab the IRA, without regard to any sixty-day cutoff, and let the parties check in next month with a status report.

The plotline? Croce’s hero Bertoldo, a sort of primeval Tyl Eulenspiegel, got sentenced to be hanged. He asked for one last wish. It was granted. His wish? Let him choose the tree from which he was to be hanged. Bertoldo traveled the length and breadth of Italy for many years, lived to a ripe old age, and died in bed, never having found the right tree from which to be hanged.

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