High-flying insurance salesman Michael D. Brown, 2021 T. C. Memo. 112, filed 9/23/21, is back again, petitioning a NOD from a CDP, and still looking for the $80K TIPRA tip he plunked down with his OIC for the ten (count ’em, ten) years’ tax he owes. For the backstory, see my blogpost “High Flyer – Shot Down,” 9/16/19.

Well, Mike went to 9 Cir, who bucked the case back to Judge Kerrigan, asking her to sort out whether Tax Court has jurisdiction to order a refund of a TIPRA tip. TIPRA, the Tax Increase Prevention and Reconciliation Act, requires a 20% downpayment on the amount of your lump-sum OIC with the Form 656.

Judge Kerrigan: “Sections 6320(c) and 6330(d)(1) provide for judicial review of an adverse CDP determination. Therefore, the Court has jurisdiction in this case pursuant to sections 6320(c) and 6330(d)(1). Petitioner contends that pursuant to section 6512(b) the Court has express refund jurisdiction in a case in which the Court has already acquired jurisdiction. We disagree.” 2021 T. C. Memo. 112, at p. 5. (Citation omitted).

We all know that “no deficiency, no refund.” Tax Court has CDP jurisdiction here, not deficiency.

“Section 6512(b), contrary to petitioner’s contention, does not grant this Court refund jurisdiction in all cases in which the Court has already acquired jurisdiction. Rather, section 6512(b)(2) is an express grant of jurisdiction ‘to order the refund of such overpayment and interest.’ For a refund to be governed under section 6512(b), a notice of deficiency is required. The Tax Court’s jurisdiction in this case, however, does not derive from the mailing of a notice of deficiency. This Court’s jurisdiction under section 6512 cannot be invoked in this matter with respect to the TIPRA payment because this proceeding is not based on a postdecision action to modify a decision in a deficiency case under section 6213 or section 7481(c) or (d).” 2021 T. C. Memo. 112, at p. 6.

The two previous cases upon which Mike relies, his own and that of the famous Isley brother, went off on the finding that IRS did not abuse its discretion in bouncing the OICs there involved, so never considered if Tax Court could order a refund.

What might happen if an OIC was wrongfully refused and no refund made is another story. Note that Form 656 says the TIPRA tip is nonrefundable. And the legislative history shows “the legislative history of section 7122(c) refers to the 20% payment as a ‘partial payment’ or ‘down payment’ of the taxpayer’s liability. H.R. Conf. Rept. No. 109-455, at 234 (2006), 2006 U.S.C.C.A.N. 234, 420-421. The 20% payment of the offer amount is treated as a payment of tax rather than a refundable deposit under section 7809(b) or section 301.7122-1(h), Proced. & Admin. Regs. See Notice 2006-68, sec. 1.02, 2006-2 C.B. 105, 105.” 2021 T. C. Memo. 112, at p. 5.

So Judge Kerrigan tells 9 Cir that Tax Court has no jurisdiction.

Obviously, the TIPRA tip is Congress’ attempt to cool the ardor of the clientele of those who have turned making bogus OICs into a cottage industry.