In Uncategorized on 02/16/2021 at 10:26

Section 6404 abate-ability has figured numerous times in this my blog. When it comes to taxes, interest is inescapable. Only when one squeezes through the narrow gate of Section 6404(h) can one seek relief when IRS holds the ball in the backcourt.

Today, that obliging jurist Judge David Gustafson reminds us and Kanarkat P. Verghese, Deceased, Annie P. Verghese, Personal Representative and Annie P. Verghese, Petitioners, Docket No. 25757-15L, filed 2/16/21, that the Supremes said “…section 6404(h) ‘is a “precisely drawn, detailed statute” that, in a single sentence, provides a forum for adjudication, a limited class of potential plaintiffs, a statute of limitations, a standard of review, and authorization for judicial relief’ that is an exclusive remedy.” Order, at p. 1. (Emphasis by the Court).

Section 6404(h) borrows its networthiness claimant-sorting formula from Section 7430 via 28 USC §2412(d)(4)(B). If you want abatement, you must show net worth less than $2 million, as thereby computed. For an example of the Jacobean wrestling match this entails when estates are in play, see my blogpost “Net Worthiness,” 1/10/14.

Unlike the late Millie Quidley, who featured in my above-cited blogpost, the late Kanarkat did owe tax. So all this CDP concerns is abatement of interest.

IRS’ counsel wanted summary J, but at oral argument raised the $2 million cutoff.

But where do we begin, with IRS’ discretion (or abuse thereof), or with the Hogwartian sorting hat for the “limited class of potential plaintiffs”?

Judge Gustafson goes full Prof. McGonagall: “At the hearing (Doc. 56, pp. 3-4), when counsel for the Commissioner noted the existence of the net worth issue, the Court expressed an intention to address it after resolving the issues presented in the Commissioner’s motion. However, upon reflection we think that, if the net worth requirement is jurisdictional, then it would be appropriate for the Court to determine that it has jurisdiction before deciding any other issues.” Order, at p. 2.

So let IRS’ counsel and the persrep confabulate and see if they can stip to jurisdiction, and if they can’t, let the persrep show why they shouldn’t be tossed for want of jurisdiction.

Takeaway- If you’re bringing a Section 6404(h) claim, make sure you do the numbers on the claimant, as at date of filing of the claim (see 28 USC §2412(d)(2)(B)).






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