In Uncategorized on 11/30/2021 at 18:23

I have often heard the motto of the Great Chieftain of The Jersey Boys: “Not to punish, but to bring into compliance.” The voluntary assessment system requires voluntary compliance. Hence Appeals’ rejection of an OIC or a PPIA, either of which would yield all that IRS might reasonably hope to collect, is not arbitrary or capricious, if acceptance would not be “in the best interest of the Government. See IRM pt. (Dec. 20, 2018); cf. IRM pt. 10, 2011).” James R. O’Donnell, 2021 T. C. Memo. 134*, filed 11/30/21, at p. 12.

Seems that Jim had run up a tax tab north of $2 million, with add-ons, chops, and interest. And hadn’t bothered filing for nigh on twenty (count ’em, twenty) years. Of course, with his insurance and financial business licenses revoked, Jim claims the $280K he put in his OIC is the best he can do, and the $2K per month PPIA the SO offered him didn’t take all his expenses into account.

As to the latter, Judge Albert G (“Scholar Al”) Lauber says that number was based on Jim’s numbers, and if Jim was unhappy he had a chance to say so. But remember, Appeals doesn’t have to negotiate; as the bridge players say, lead with your longest and strongest.

As to Jim’s OIC, “'[O]ffers may be rejected on the basis of public policy if acceptance might in any way be detrimental to the interests of fair tax administration, even though it is shown conclusively that the amount offered is greater than could be collected by any other means.” See IRM pt. Because reports of accepted OICs are publicly available, see sec. 6103(k)(1), the IRS may reject an OIC if it determines that the ‘public reaction to the acceptance of the offer could be so negative as to diminish future voluntary compliance,’ see IRM pt.

“For two decades (if not longer) petitioner failed to file returns and failed to pay the tax shown on SFRs that the IRS prepared for him. During this period he was evidently a successful practitioner in the insurance and finance business. As of 2016 his outstanding liabilities exceeded $2 million, and he offered to pay only a small fraction of these liabilities. Because of his lengthy history of ignoring his tax obligations, the Appeals Office determined that acceptance of his offer could be viewed as condoning his ‘blatant disregard for voluntary compliance’ and that negative public reaction to acceptance of his offer could lead to ‘diminish[ed] future voluntary compliance’ by other taxpayers.” 2021 T. C. Memo. 134, at pp. 12-13.

As The Great Chieftain has said.

*James R O’Donnell 2021 T C Memo 134 11 30 21


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