Here Be Dragons

Here’s a heads-up. Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, and Waiver of Suspension of Levy Action, is an IED that blows up twice, and Abigail Richlin, 2020 T. C. Memo. 60, filed 5/18/20, gets nailed both times.

Abi’s trusty attorneys argue that the 12257s Abi signed at Appeals are contracts (they aren’t; only IAs, Section 7122 closing agreements, and OICs are). While IRM says Appeals can’t revoke a NOD, 12257s aren’t NODs.

Then they argue equitable estoppel. No, because Abi didn’t change her position in reliance; long before she went to Appeals, she spent the sales proceeds from her separate property, leaving deceased ex-spouse’s estate to pick up the tax, notwithstanding the pre-nup and her testimony on the divorce trial.

The question was certain estimateds paid by late spouse from trust he controlled. Appeals erroneously twice allowed them for Abi, who signed a 12257 each time, and never put forth collection alternatives, even though her Letter 12153s said she couldn’t pay. She stood pat on her trusty attorneys’ reading of the divorce decree.

Except Judge James S (“Big Jim”) Halpern isn’t buying.

Even though Appeals got the facts wrong, the pre-nup controls. Reg. 1.6654- 2(e)(5)(ii)(A) says the parties filing MFJ can whack up payments as they agree. And they did.

Family lawyers, watch those divorce decrees and separation agreements. And all lawyers, watch those 12257s; they can be boobytraps.

Edited to add, 9/23/21: Trusty attorneys appealed to 9 Cir a year ago August. I’m not sanguine about the outcome. I don’t as a rule follow appeals, so, if you’re interested, try PACER or watch the trade press and the blogosphere.