Judge Mark V. Holmes has “a couple of conclusions” from the precedents he cites in Katherine Mason, et al., 2021 T. C. Memo. 64, filed 9/20/21, at p. 29. And the SO has clearly abused her discretion by not considering Katherine’s OIC, notwithstanding COIC’s return thereof (nonreviewable in Tax Court).

Unfortunately, Judge Holmes backslides when he points to “a couple helpful examples of when an OIC should be returned” in the IRM, 2021 T. C. Memo. 64, at p. 20. But I must encourage him to respect the partitive genitive.

Katherine and spouse were $155K behind for years at issue, and RO J threatened to seize their house, notwithstanding that Section 6334(e)(1) requires a USDJ to sign off, and the IRM requires area director and area counsel to sign off as well, Internal Revenue Manual (IRM) pt. 5.17.3.5.5 (Aug. 29, 2017). See 2021 T. C. Memo. 64, at p. 5. (Name omitted).

IRS liened and sent NITLs, so Katherine sent in an OIC, but the RO sent in a report nixing same, claiming Katherine just filed it to delay collection, so COIC just returned the OIC without reviewing it. Katherine asked for a CDP and raised the OIC, but the SO said it was returned and didn’t consider it. And Katherine’s CDP is bounced, so she petitions.

True, Tax Court has no jurisdiction to review COIC’s returns or rejections. But when one is not even considered at CDP, there is discretion, unless it is obvious to an impartial observer that there is no basis for the OIC other than to delay collection. After all, a CDP and a petition from a NOD delay collection.

The SO should have considered Katherine’s OIC offer, and that her and her spouse’s nearing retirement should have been in the mix.

“A recently updated provision of the IRM shows the Commissioner takes substantiated, imminent retirement into consideration when calculating a taxpayer’s current and future earning potential. See IRM pt. 5.8.5.20(4) (Mar. 23,2018). While we aren’t sure if a similar provision preceded this one, we do know that RO J didn’t find the current retirement of Mr. Mason and nearing retirement Mrs. Mason to be a valid consideration or special circumstance when she sent in her RO report recommending that the they be found to have submitted their OIC ‘solely to cause delay.’” 2021 T. C. Memo. 64, at p.31, footnote 16. (Name omitted).

If the SO was unhappy with the information in the OIC or at the CDP, she could have asked. But she needed to review the OIC independently, as it was raised at the CDP, and all collection alternatives raised there need to be considered there.

That doesn’t mean either IRS wins or that Katherine wins.

“We can’t guarantee that taxpayers like the Masons will have their offer accepted or their tax liabilities compromised, but we can ensure that they get a fair shake and that the decisions made by the Commissioner’s employees aren’t ‘grounded in an error of law.’ We therefore conclude that SO R abused her discretion by sustaining the proposed collection action without first independently reviewing the Masons’ offer.” 2021 T. C. Memo. 64, at p. 32. (Name omitted).

A Taishoff “Good Job” to Eric William Johnson, Esq., who once again provides “Honest tax representation at reasonable rates.”