In Uncategorized on 03/17/2020 at 17:03

Subtitle C Employment taxes can spill over into what appears to be income tax, causing much confusion. Judge Albert G (“Scholar Al”) Lauber has such a case for us today, Research Scientific Services LLC, Docket No. 11424-19L, filed 3/17/20, a designated hitter on a strangely silent St. Patrick’s Day.

Of course, the lien here for is unpaid Forms 940 and 941 to the tune of better than $200K.

Spill-over is on RM, an officer of Research Scientific and its representative in this case. RM is trying to solve his own problems with IRS. So when Research Scientific got its own NITL, RM told Judge Scholar Al he thought that, if he squared up with IRS, he needn’t deal with Research Scientific’s problems, and ducked the CDP hearing.

“Mr. M stated that, in addition to the collection action involving petitioner’s unpaid employment taxes, the IRS also sought to collect certain taxes from him personally. Mr. M represented that he was negotiating with an IRS collection officer about his individual liabilities. Assuming that those negotiations would also resolve petitioner’s employment tax liabilities, Mr. M suggested that the notice of determination may have been issued in error.” Order, at p. 2. (Name omitted).

I’ll bet RM conflated the Section 6672 TFRP responsible person chops for unpaid FICA/FUTA/ITW with the taxes themselves; they are two separate things. RM, being pro se, missed the point.

But IRS wants, and gets, summary J against Research Scientific sustaining the NITL.

“In its response to the motion for summary judgment, petitioner admits that it was at fault for failing to participate in the CDP proceedings, an error attributable to Mr. Moffat’s mistaken belief that he ‘was resolving the issue with the [other] IRS officer.’ Mr. M represents that he has now executed an installment agreement with the IRS covering his personal liabilities, and he expresses hope that a similar agreement can be reached covering petitioner’s employment tax liabilities. Unfortunately, we cannot consider that option in this CDP case because petitioner failed to propose any collection alternative to the SO. See Solny v. Commissioner, T.C. Memo. 2018-71, at *10 (‘We have consistently held that it is not an abuse of discretion for an Appeals officer to reject collection alternatives and sustain collection action where (as here) the taxpayer has failed, after being given sufficient opportunities, to supply the necessary information.’); see also Gentile v. Commissioner, T.C. Memo. 2013-175, 106 T.C.M. (CCH) 75, 77, aff’d, 592 F.App’x 824 (11th Cir. 2014). However, petitioner is free to submit to the IRS at any time, for its consideration and possible acceptance, a collection alternative, in the form of an offer-in-compromise or an installment agreement, addressing the employment tax liabilities involved here.” Order, at p. 4.

For more on Solny, see my blogpost “Decision Equals Determination,” 5/22/18.

But Judge Scholar Al holds out hope for RM, and a suggestion for IRS.

“It appears to us that petitioner and Mr. M are genuinely interested in resolving all of their tax liabilities in a coherent manner. Mr. M expresses concern that a levy on petitioner’s assets would ’put the existing personal installment agreement at risk,’ which would be an unfortunate turn of events. We are hopeful that respondent’s counsel will work with the other IRS officers involved in this process to secure a sensible and comprehensive resolution.” Order, at p. 4. (Name omitted).

Crosstalk is always harmful.


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