Obliging as always, Judge David Gustafson can’t help IE & J Co. CMD, LLC, Docket No. 16245-22L, filed 5/12/23. IE & J get stung for Section 6721 chops, and no, I didn’t know what those were either, until Judge Gustafson man-‘splained.

“(Section 6721 imposes a penalty for ‘Failure to file correct information returns’.).” Order, at pp. 1-2.

Not your run-of-the-mill knucklerapper; apparently the IE & J guys failed to file a bunch W-2s and W-3 coversheets for a couple years (hi, Judge Holmes). They did get a NFTL and a CDP, whereat they lost, but the lien issue isn’t preserved here.

When IE & J didn’t come across,  IRS gave the guys a NITL at no extra charge. The IE & J guys went to Appeals, wanting to contest liability, and checked both the lien box and the levy box on the Form 12153 CDP request, but that ship sailed with the NFTL CDP they lost. At the NITL CDP, IE & J’s representative claimed an installment agreement (for which no proof was submitted, and IRS had no record either). So Appeals gave them a NOD at no extra charge, which IE & J petition.

Trouble was, the NITL NOD spoke only about liens, not levies.

“… the contention in the petition that ‘[t]he filing of the notice was premature or otherwise not in accordance with the service’s administrative procedures’ tracks closely the language of section 6323(j), which is a provision pertinent to a notice of lien; but if we nonetheless assume that petitioner means to so contend about the notice of levy at issue here, we acknowledge that contention that a notice of levy was ‘premature’ or otherwise not in accordance with proper ‘procedures’ could be a valid contention in a levy-based CDP case if the contention is construed to invoke the general requirement of section 6330(c)(1) that ‘[t]he appeals officer shall at the hearing obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met.’” Order, at p. 5

IRS claims Appeals tagged all the bases, both for liens and for levies, and aver accordingly. “Of course, the notice of determination could have been mistaken in its recitation of  ‘verification’, or IRS Appeals could have overlooked (and this Court could overlook) a legal or procedural requirement. But we know of none, and petitioner has not alleged any.” Order, at p. 6.

This is Judge Gustafson, remember, so before giving IE & J the right-about-face-and-march-out, he provides a helpful hint.

“Although we will enter this Order and Decision, will sustain the notice of determination, and will close this case, we point out to petitioner that the closing of its Tax Court case does not end its opportunity to correspond with the IRS. Its further dealings with the IRS about collection of the [years at issue] liabilities by levy will not be subject to Tax Court review, but they might nonetheless result in a satisfactory agreement.” Order, at p. 6.

Taishoff says such chops may be rare because the usual problem is the FICA-FUTA-ITW that W-2s report never reached IRS, and the chops are Section 6722 TFRPs. The $250-a-pop Section 6721s are throwaways in comparison. I’m surprised that if IE & J correctly filed Forms 941 and paid the FICA-FUTA-ITW therewith, either their payroll service or their own in-house software didn’t automatically generate W-2s and W-3s.