In Uncategorized on 05/21/2019 at 16:42

When it comes to TFRP liens and levies, 11 Cir. says it doesn’t fly, even though Tax Court thought it did. I didn’t blog Romano-Murphy v. Commissioner, T.C. Memo. 2012-330, nor the vacation and remand thereof in 816 F.3d 707 (11 Cir., 2016), for which omissions I now apologize and remedy.

Judge Morrison has the remand in Linda J. Romano-Murphy, 152 T. C. 16, filed 5/21/19. 11 Cir told Tax Court figure out what to do about IRS’ violation of Section 6722(b)(3)(B); IRS assessed first and determined afterward. That, says 11 Cir, is a no-no.

Here’s the short answer.

“…we hold that the assessment is invalid and that the Office of Appeals abused its discretion in upholding the proposed levy and the filing of the notice of lien to collect the assessment.  We do not sustain the determination of the Office of Appeals.” 152 T. C. 16, at p. 6.

Every IRS argument to the contrary is met by “but that’s not what 11 Cir said.” Wherefore I’ll spare you IRS’ multifarious attempts to rescue their $346K lien, which take up about 70 pages of Judge Morrison’s prose.

For a refresher on the entire IRS collections process, read this opinion.

IRS claims harmless error. Even if Linda didn’t get a determination before assessment, she got the same kind of hearing she would have gotten. No good, says Judge Morrison. Because 11 Cir.

“…the timing of assessment affects the ‘procedure used’ for collecting a tax liability.  Here we cannot be sure when the assessment of the trust-fund-recovery penalty would have taken place had the IRS made a final administrative determination before the assessment.  Therefore, its error potentially had a bearing on the ‘procedure used’ for collecting Romano-Murphy’s penalty. Furthermore, Romano-Murphy had a right, under the Eleventh Circuit opinion, to a pre-assessment administrative determination of her liability.  A pre-assessment determination is fundamentally different from a post-assessment determination.  A person seeking a post-assessment determination may be simultaneously dealing with collection actions, such as proposed levies and notices of liens.  The harmless-error rule therefore does not apply.” 155 T. C. 16, at pp. 58-59 (Citation and footnote omitted, but the footnote matters. It says IRS claims it can just redetermine and reassess, as SOL hasn’t run. So what, says Judge Morrison. The old assessment is no good, and that you could do a new one doesn’t validate the defective old one.)

Finally, Linda wants an injunction, but since IRS (which improperly took the “litigation hold” off her file and restarted collection) has reinstated the “litigation hold,” and anyway, the underlying assessment is invalid, there’s no basis for collection.

Linda was pro se throughout. She gets a Taishoff “Good job, first class.”

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