In Uncategorized on 10/30/2020 at 12:56

That’s Judge Buch’s view of the plight of Peter Hoskey, Docket No. 17570-19L, filed 10/30/20. Pete is up against it; he tried to take his grandchildren as dependents, IRS gave Pete a SNOD which he never petitioned, and he defaulted on the IA he entered into thereafter.

IRS gives Pete a NITL at no extra charge, which Pete CDPs claiming inability to pay, but provides no Form 433-A and doesn’t show for the phone conference or answer the last-chance letter. Appeals NODs the NITL, and Pete petitions Tax Court. Here’s Judge Buch’s off-the-bencher: “At trial, Mr. Hoskey testified about his efforts to provide information to the Commissioner and his current collectability status. Mr. Hoskey was, at some time, responsive to the Commissioner. It is likely that he was responsive during an earlier time, for example, when getting his installment agreement. But there is no evidence that he responded to the Appeals Officer during this collection proceeding. As for collectability, Mr. Hoskey had stopped making payments on his liability because he could no longer afford to do so.” Order, Transcript, at p. 6.

I have a certain amount of sympathy for Pete’s story. The old pilot’s Big Three “Aviate, Navigate, Communicate” is as true on the ground as in the air. First, don’t crash, fly the plane; second, find your way out of trouble; only then go on the air. But Appeals, even though independent of IRS, shares IRS’ proclivity to get peeved when ignored.

Pete’s tale gets sadder.”In the time since the Commissioner issued his notice of determination, matters have only gotten worse.  Mr. Hoskey had been earning income selling produce along the roadside. We glean from Mr. Hoskey’s testimony that his truck was impounded, and as a result, he lost that source of income. The result is that Mr. Hoskey remains unable to pay his liability or make the payments on the installment agreement.” Order, Transcript, at pp. 6-7. The Commissioner’s notice of determination? I thought Appeals was independent.

Howbeit, maybe so it’s time for Churchill. No, not Winston, although Judge Buch has nothing to offer Pete but blood, toil, tears, and sweat. I mean John L. Churchill, as to whom see my blogpost “Back to the Future,” 8/1/11, where John L.’s divorce earned him a remand back to Appeals.

“In limited situations, we can remand a case to appeals for further consideration even if the Commissioner did not abuse his discretion. One such instance occurs where a taxpayer has undergone a material change in circumstances after the Commissioner issued a determination. A material change in circumstances occurs when the taxpayer’s ability to pay has decreased such that Appeal’s determination would have differed had the circumstance been present at the time of the hearing.” Order, Transcript, at p. 10. (Citations omitted, but get them for your memos of law file).

Alas, that doesn’t help poor Pete. He was broke when he went to Appeals, so losing his truck and his produce-pushing gig makes him broker, but that isn’t remandable.

“In this particular case, Mr. Hoskey’s change in circumstances is not material under this standard. At the time Mr. Hoskey requested a collection hearing, he did not have the ability to pay the taxes owed. The Appeals Officer sustained the levy because Mr. Hoskey failed to provide the requested documentation substantiating his financial situation. If he could have afforded to pay and the subsequent loss of income made him uncollectible, this likely would have constituted a material change. However, Mr. Hoskey claimed to be unable to pay at the time he requested Appeals consideration, and his loss of income does not alter his claimed inability to pay. If he was uncollectible beforehand, his reduction in income does not change that material fact – that he was and remains uncollectible.” Order, Transcript, at pp. 10-11.

Pete could have requested CNC, but he provided no information, so the AO had nothing to go on. Pete can always go back to Appeals with documents in hand, and request CNC, but Judge Buch can’t give that to him on this record.

This is a classic case for a LITC, but Pete needs to be told to go to one.


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