In Uncategorized on 11/09/2020 at 16:21

And a Goofy Regulation

Section 7430 legals and admins is a classic example of How Not to Do It in the best Charles Dickens tradition. Today we see the finale to Tung Dang and Hieu Pham Dang, 2020 T. C. Memo. 150, filed 11/9/20. Tung and Hieu wanted IRS to levy from their IRA, which would have paid their bill in full and spared them the 10% early-out bite.

If this sounds familiar to you, great; if not, see my blogposts “The Fruit of the Tree,” 11/1/18, and “The Tree of Bertoldo,” 6/4/18.

Ex-Ch J L Paige Marvel says you can’t get admins for a CDP.

“Reasonable administrative costs are limited to those costs incurred by the taxpayer on or after the earliest of: (1) the date of the receipt by the taxpayer of the notice of determination, (2) the date of the notice of deficiency, or (3) the date of the first letter of proposed deficiency that allows the taxpayer to appeal a decision to the IRS Appeals Office. Sec. 7430(c)(2); see also sec. 301.7430-4(a), Proced. & Admin. Regs. (providing that reasonable administrative costs include only those costs incurred on or after the “administrative proceeding date”); sec. 301.7430-3(c)(1)(i), Proced. & Admin. Regs. (providing that the “administrative proceeding date” is the date of the receipt of a notice of decision by the Appeals Office). Because a section 6330/6320 proceeding ordinarily occurs only after an assessment is recorded, the date of the notice of determination is the only applicable date under the statute for a claim of administrative costs in section 6330/6320 cases to begin accruing. Sec. 7430(c)(2); see also Worthan v. Commissioner, T.C. Memo. 2012-263, at *18. And, because the notice of determination in section 6330/6320 cases also concludes the administrative proceeding, a taxpayer cannot recover an award for administrative costs arising in a section 6330/6320 proceeding. Sec. 7430(c)(2); see Worthan v. Commissioner, at *18; see also sec. 301.7430-3(a) and (b), Proced. & Admin. Regs. (clarifying that hearings under sections 6320 and 6330 are collection actions and accordingly not administrative proceedings within the meaning of section 7430).” 2020 T. C. Memo. 150, at pp. 7-8.

For the Terry Worthan saga, see my blogpost “Lien on Me,” 9/12/12.

OK, so Legal Aid of SD CA are bowling for legals only. But IRS folded in its answer, and remanded to Appeals, which gave Tung and Hieu everything they wanted. And 9 Cir said that if IRS folds in its answer, it is substantially justified.

I guess I’m slow; so if Appeals is dead wrong on the law, and yoicks a taxpayer around, causing them great expense, the taxpayer gets nothing. And after the taxpayer hires counsel and petitions, when IRS folds it is deemed to be justified, notwithstanding any and every shenanigan theretofore pulled. And the taxpayer gets nothing.

Great statute.

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