I entitle this blogpost with the 1942 Bette Davis – Hans Conreid classic because of timing only. Debra L. Zalk Spitulnik & Charles Alan Spitulnik, Docket No. 21687-18L, filed 11/26/19, object to Appeals’ verification that all bases were touched in bouncing their requested IA.

The issue is whether Deb & Charles were tax-compliant for 2017. That obliging jurist Judge David Gustafson can’t oblige Deb & Charles, who claim that an overpayment credit from 2018 would wipe out their 2017 underpayment.

“(1) It was on October 3, 2018, that IRS Appeals issued the notice of determination that we review here, whereas the overpayment credit from 2018 to the 2017 liability was made effective April 15, 2019 (the date on which the 2018 return was due) and could not have been made before the 2018 return was filed. Section 6330(c)(1) required IRS Appeals to verify the current facts, not to wait six months to see what might happen in the next year. We cannot fault IRS Appeals’ verification for not foreseeing future events. (2) Even after the application of the reported 2018 overpayment, the Spitulniks’ 2017 liability had not been fully paid; rather, as late as July 31, 2019, the unpaid balance still exceeded $10,000. By any measure, Appeals correctly verified that the Spitulniks were not in compliance as to 2017.” Order, at p. 6.

Deb & Charles also claim the AO didn’t verify what they owed. But the tax liabilities were those shown on the returns Deb & Charles themselves filed. “…the Spitulniks complain that ‘the IRS has not independently verified that the amounts stated by Petitioners were correct or, if it has conducted such independent verification it has not provided Petitioners with that information.’ As we noted above, section 6330(c)(2)(B) provides that a taxpayer may, in some circumstances, ‘raise … challenges to the … amount of the underlying tax liability’; but the statute states that it is the taxpayer who must ‘raise’ this issue. IRS Appeals had no duty to disprove the liabilities that the Spitulniks themselves had reported on their returns, and the Spitulniks did not raise any liability challenge before Appeals or in their petition.” Order, at p. 6.

Btw, Charles is a lawyer.

But Judge David Gustafson goes the extra. “In the Spitulniks’ case they were not in compliance for their current tax obligations, and thus an in-person hearing was denied and the IA was denied. This does not mean the Spitulniks are precluded from achieving compliance with their current tax obligations and proposing another IA for 2008, 2009, and 2012 (or from proposing an IA for 2008, 2009, 2012, and 2017); however, the denial of the IA in this case was not an abuse of discretion.” Order, at pp. 7-8.

And Judge David Gustafson made it easy for this blogger by designating this order.