In Uncategorized on 04/20/2020 at 16:19

We’re all familiar with CP504, the State tax refund grab IRS pulls off. Paulette Etoty, 2020 T. C. Memo. 49, filed 4/20/20, had one such grabbed, but at the time was in CNC.

IRS admits that CNCs don’t get their State tax refunds grabbed, and promises not to do it again. Appeals did not sustain the NITL.

But Paulette wants to make sure IRS doesn’t grab her Federal tax refund, for a year she hasn’t filed yet. She was offered an OIC by Appeals, but never filed the Form 656.

Judge Albert G (“Scholar Al”) Lauber cannot oblige.

“…IRS issued a notice of determination in which it did not sustain the levy on petitioner’s State tax refund because her account had been placed in CNC status. The notice determined that ‘the Notice of Intent to Levy no longer balances the efficient collection of taxes with your legitimate concern that the collection action be no more intrusive than necessary.’

“Although the levy was not sustained, petitioner sought review in this Court. In her timely filed petition she asked that the IRS be prevented from taking any future tax refunds because she has ‘very limited income.’ … respondent moved for summary judgment. Petitioner filed a response stating that she would have proposed an OIC if she had understood what was required of her. She asks that interest on her … tax liability be waived and expressed willingness to execute an installment agreement requiring payments of $15 a month for 120 months.” 2020 T. C. Memo. 49, at p. 5.

Of course, an offset is not a levy. The Feds grabbing a Federal overpayment instead of refunding same to taxpayer isn’t a levy. See my blogpost “An Offset Isn’t a Levy,” 2/21/12.

And Judge Scholar Al really wants to help.

“While we are sympathetic to petitioner’s situation, she received a favorable outcome from the CDP hearing in that the levy was not sustained. That was the only relief the Appeals Office could offer without further documentation from her. Her failure to submit a Form 656 during the CDP hearing, however, does not prevent her from entering into an OIC or other collection alternative with the IRS. She is free to submit to the IRS at any time, for its review and possible acceptance, a collection alternative in the form of an OIC or an installment agreement, supported by information about her current financial circumstances.” 2020 T. C. Memo. 49, at pp. 9-10. (Citation omitted).

Given Paulette Etoty’s difficult circumstances, Judge Scholar Al points out “(S)he was incarcerated from 2009-2015; upon her release her poor health prevented her from resuming her previous work as a docketing clerk.” 2020 T. C. Memo. 49, at p. 2. I hope she has been rehabilitated.


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