Attorney-at-Law

AUTOMATION

In Uncategorized on 08/11/2020 at 14:30

They say automation is sweeping the nation, but even IRS’ Automated Underreporting System, known to the cognoscenti as AUR, needs to throw in a good, old-fashioned SNOD to nail the underreporter. But IRS, and especially SO K (name omitted), come up short when challenged, albeit obliquely, by Mark C. Mirken & Sheryl L. Mirken, Docket No. 18972-17L, filed 8/11/20.

True, Mark & Sheryl did move around a lot, but SO K seemed to throw to the wrong base, and couldn’t come up with what she threw, when it came to the necessary SNOD off the AUR.

Judge Elizabeth A. (“Tex”) Copeland has this one. There are three (count ’em, three) assessments here for the same year. First was self-assessed tax and underpaid ES, but that Mark & Sheryl paid. Second was late filing and late payment add-ons, but Mark & Sheryl have an OIC on the table for those. Third was the one Judge Tex Copeland  finds problematic, the AUR.

IRS hits Mark & Sheryl with the CP90 NITL pay-up letter, which Mark & Sheryl petition, but inartfully. “Here, Petitioners simply pleaded that the ‘I.R.S. settlement agent abused her discretion in prematurely terminating CDP rights.’ However, we take note of Petitioners [sic; I think you meant “Petitioners’,” Judge] self-represented status and construe their pleading broadly. We note that in their opposition to the Motion for Summary Judgment, Petitioners assert that the IRS ‘has not followed its own procedures as outlined in the Internal Revenue Manual.’ and ‘[A]lthough requested, the Petitioners have not received statutory collection due process in this matter.'” Order, at p. 5.

Judge Tex Copeland, interested in justice per Rule 41(a), treats all this as an amendment to the petition, and, as this is a motion for summary J, she runs the checklist.

“Relevant here is whether SO K verified that the requirements of applicable law or administrative procedure have been met. Sec.6330(c)(1), (c)(3)(A). In determining whether the verification requirement is met, the SO must determine if the tax liability was properly assessed before the IRS commenced its collection procedures. Sec.6303(a) (assessment before notice and demand); sec. 6331(a) (notice and demand before levy); sec. 6330 (notice and opportunity for administrative review in form of CDP hearing before levy). This includes verifying that any statutory notice of deficiency (SNOD) was properly issued or that an exception to the restrictions on assessments apply, even if the additional tax assessed was determined by the IRS’ AUR program. See secs. 6212, 6213, 6214, and 6215; see also Internal Revenue Manual (IRM) pt. 4.19.3.l(11) (September 4, 2015); IRM pt. 4.19.3.1.1.1 (September 30, 2014). A SNOD must be sent by certified or registered mail to the taxpayers’ last known address. Sec.6212(a),(b). If a SNOD is so mailed, before assessment, taxpayers may petition the Court within 90 days (150 days for taxpayers living outside the United States) for redetermination of the deficiency or penalties. Secs.6212; 6213. If the time for filing a petition with respect to the SNOD expires, then the IRS may assess the additional tax and penalties. Sec.6213. Again, in a CDP case, it is the SO’s responsibility under section 6330(c)(3) to verify that this all occurred; and Petitioners’ responsibility to timely petition this Court if not. See sec. 6330(d)(1).” Order, at pp. 4-5.

The NOD stated Section 6201 was the basis for the AUR assessment and the add-ons, but it should have been Section 6213 for the AUR; and the add-ons should have been based on Section 6665.

“In particular, as to Assessment 3, the record is unclear as to how SO K verified that a SNOD was properly mailed to the Petitioners or if an exception applied. In support of the Motion for Summary Judgment, Respondent did not provide documentation, such as a properly issued SNOD nor a showing that such notice was mailed to the taxpayers last known address. In fact, SO K did not appear to know the appropriate address for verification purposes. Petitioners’ address changed several times…. Although Petitioners’ CDP request… included their current address, SO K sent her letter setting up their CDP hearing to an old, possibly invalid, address. She also cited to the wrong Internal Revenue Code section (6201 rather than 6213) in the Notice of Determination. Given these questionable facts, the Court finds that the SO did not adequately explain how, for Assessment 3, she verified that the deficiency procedures were followed prior to the assessment…. The deficiency procedures require, among other things, that SO Krueger know Petitioners’ last known address…to verify that the SNOD was properly sent; whether she did so is unclear from her notes and the Notice of Determination.

“Furthermore, if a SNOD was not so required, Respondent did not adequately explain the relevant exception to the deficiency procedures.” Order, at p. 6.

Summary J denied without prejudice.

Takeaway- Guys, this is the real deal. Run this checklist for any AUR SNOD or NOD. And tell ’em Judge Tex sent ya.

 

 

 

 

 

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