In Uncategorized on 01/26/2021 at 16:05

Dana Ray Reynolds, 2021 T. C. Memo. 10, filed 1/26/21, went down for two years on two subscriptions in USDCCDCA. Dana Ray was a phony corp merchant, who used the corps to siphon income for himself, and sold his phony maneuver. So he wound up owing restitution via some Restitution-Based Assessments (RBAs). But DOJ got into the act via the DOJFLU (Department of Justice Financial Litigation Unit), resulting in Dana Ray’s request for an IA and CNC getting bounced around, ending up in a CDP, where the question of an ARI (Appeals Referral Investigation) by IRSCD (Internal Revenue Service Collection Division) was bruited. And that leaves out the marital agreement between Dana Ray and spouse, which left Dana Ray with no income or living expenses. So did IRS coordinate with DOJ? And should Dana Ray get an IA or be CNC?

If this leaves your head spinning, think of ex-Ch J Michael B (“Iron Mike”) Thornton, confronted with the task of unbaking this strawberry shortcake and putting the whipped cream back in the cow.

Well, ex-Ch J Iron Mike does it, without even a dictionary to chew upon for consolation.

First, there’s no Tax Court challenge to court-ordered restitution in a criminal case. And IRS has independent authority to collect same. Section 6201(a)(4) says so, and ex-Ch J Iron Mike is not revisiting that one.

As for DOJ billing and Dana Ray paying a few bucks monthly, that isn’t an IA and Section 6331(k)(2)(C) is no bar to the NFTL or the NITL (which ex-Ch J Iron Mike calls a FNTL) with which Appeals hit Dana Ray, because no IA per Section 6159.

Now for the headline hereof. Coordination. “Petitioner argues that SO T failed the verification requirement of section 6330(c)(1) by failing to ensure that the IRS coordinated with the DOJ, as he contends the Internal Revenue Manual (IRM) requires. Petitioner cites, and we have found, no case in which an SO flunked the verification requirement with respect to an IRM provision.” 2021 T. C. Memo. 10, at pp. 25-26. (Name and citations omitted). And there’s much about how IRS is supposed to coordinate with DOJ, and how IRS did. Well worth reading if you have clients about to take heavy-duty falls, with restitution on the menu.

Dana Ray’s bid for CNC fails, because a NFTL can be filed to protect the government’s interest howsoever broke the taxpayer may be today. And Dana Ray’s marital agreement shenanigans (like laying off a bunch of his corps on Mrs. Dana Ray) and his claims that he has no income or living expenses make an ARI unnecessary to bounce his CNC.

Dana Ray claims to be sick, but has no medical expenses.

“The attachment to the notice of determination indicated that in the absence of any claimed living expenses, petitioner had failed to demonstrate economic hardship justifying CNC status, stating that ‘[i]f, as you claim, you have no expenses, then making payments wouldn’t cause an economic hardship.’ As this statement suggests, if it were true, as petitioner claimed, that he had no assets, then there was no levy source at the time of the determination; if, however, a levy source were subsequently to become available, by petitioner’s own admission he had no living expenses that would cause a levy to give rise to economic hardship. Consequently, even accepting at face value the financial information petitioner submitted, respondent did not abuse his discretion in determining, on the basis of the information that petitioner provided, that he did not qualify for CNC status.” 2021 T. C. Memo. 10, at p. 38. (Footnote omitted, but it says there’s no need for a source of funds when a NITL is issued.)

I give Dana Ray’s counsel a Taishoff “Captain James Lawrence” Award. James Lawrence, USN, law student turned naval officer, was the dying captain of the USS Chesapeake in the War of 1812, who uttered the immortal words “Don’t give up the ship!” just as the British boarded the Chesapeake.



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