Attorney-at-Law

JENNY, JENNY, JENNY

In Uncategorized on 10/19/2021 at 22:16

I’m sure Kirk E. Heaton, Docket No. 10833-19L, filed 10/19/21*, is singing the words of the immortal Little Richard’s and Enotris Johnson’s 1957 hit, as that Obliging Jurist, Judge David Gustafson, lets Kirk amend his petition to claim CNC, and gently suggests to IRS’ counsel that maybe so perhaps they might settle this CDP (nudge nudge, wink wink).

Kirk is an oilfield pipeline welder in the Great Northwest, but he suffers from “… progressively worsening cervical and lumbar spondylosis in addition to shortness of breath, heart palpitations, high blood pressure, and a spot on his lung suspicious of asbestosis.” Order, at p. 2. This caused him to undergo two surgeries, and study to be an inspector rather than a welder, because he wanted to keep working, but employment is spotty. He had to stop paying off an old tax liability, but it has ballooned with interest and chops. He could stop working and go on disability, so he could be in CNC status, but IRS hit Kirk with a NITL for one year where he owes only $11K.

Kirk petitioned when Appeals said he could pay more than the $500 per month he offered. He didn’t raise CNC at the hearing because he said he wanted to go on working. The SO disallowed Kirk’s claimed health insurance payments because his non-liable spouse paid them out of a bank account in her name, and sustained the NITL.

Kirk petitioned, but never mentioned CNC therein. IRS moved for summary J, claiming no disputed facts. I suspect the Gonzaga University School of Law’s LITC got into the act here, because in replying to IRS’ motion, Kirk moves for leave to amend his petition to mention CNC..

IRS claims bad faith, delay of the game, and futility. Kirk says the NOD never mentioned CNC, so he didn’t mention it in his petition.

Judge Gustafson buys Kirk’s story.

“We find that Mr. Heaton’s reason for the amendment, that he inadvertently omitted the currently not collectible issue from the petition because it was not discussed at all in the notice of determination, excuses his delay for purposes of granting leave to
amend, and that any inconvenience to the Commissioner in permitting the amendment is outweighed by the justice of allowing Mr. Heaton to advance all allegations of abuse of discretion regarding the notice of determination because the Commissioner has adequate time to respond to the currently not collectible issue.” Order, at p. 6.

As for bad faith, Kirk moved to amend as soon as he realized that he’d raised CNC at the CDP. But Judge Gustafson allows IRS to answer the CNC issue in supplementary papers, and he’ll consider it with the rest of IRS’ summary J motion.

IRS claims the amendment is futile, because the record doesn’t mention CNC, and the record is what determines abuse of discretion.

Judge Gustafson: “We do not agree that Mr. Heaton’s proposed amendment is futile because the amendment asserts that SO P’s failure to consider CNC status at all was an abuse of discretion. Because the notice of determination does not discuss CNC at all, we cannot know if there was a factual basis for failing to consider currently not collectible status as a collection alternative. Mr. Heaton appears to have had a good faith basis to request CNC status as a collection alternative on the basis of his excessive medical bills, irregular employment, and reliance on limited unemployment benefits during periods where he was not working, see IRM 5.16.1.2.9(6), and he raised the CNC issue both before and during the CDP hearing.

“Based on these facts and circumstances, we can assume that whether Mr. Heaton could qualify for CNC status warranted at least some consideration by Appeals and some discussion in the notice of determination, and that failure to consider the issue could conceivably be an abuse of discretion. In our view, justice favors allowing Mr. Heaton to advance all allegations of abuse of discretion by IRS Appeals, and whether Mr. Heaton could have qualified for CNC status on the basis of the information provided to SO P is a merits issue that we would rather consider not under a motion for leave but under the Commissioner’s motion for summary judgment.” Order, at p. 7. (Name omitted).

So Judge Gustafson tells Kirk and IRS to fold CNC in with the summary J mix, do the papers up accordingly, and see if y’all can settle, OK?

Personal note- Lumbar spondylosis is a very painful illness. It affects one of my nearest and dearest.

On a happier note, I can’t close without a Taishoff “Good job, First Class” to Jennifer A. Gellner, Esq., now or formerly honcho of the Gonzaga LITC Bulldogs.

*Kirk E Heaton 10833-19L 10 19 21

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