I.R.C. Section 6320

The United States Tax Court handed down an opinion on July 30, 2020 at Docket No. 15274-17L, Carol Joy Biggs-Owen v. Comm’r of Internal Revenue, in which it ruled that a Notice of Federal Tax Lien (NFTL) was properly upheld where underlying tax liabilities were not properly challenged and the IRS Settlement Officer (SO) didn’t abuse her discretion in sustaining the NFTL filing. The Taxpayer owned two home healthcare businesses during the years at issue – 2013 and 2014. In both years the tax withholdings were not enough to cover the liabilities. The taxpayer established an installment agreement that defaulted. The IRS then issued a NFTL, which triggers appeal rights in the form of a Collection Due Process (CDP) hearing. When setting the CDP hearing, the SO requested copies of the 2015 and 2016 returns and proof of estimated tax payments, among other things. After reviewing financial information and documentation submitted by the taxpayer, the SO said she would sustain the NFTL filing because the taxpayer was not in compliance with her estimated tax obligations and her withholdings were insufficient. Further, the taxpayer did not accept the SO’s calculation of ability to pay. With no collection alternative deemed acceptable by the taxpayer, the SO closed her case. The Court ruled that it was not an abuse of discretion for the SO to reject a proposal for a collection alternative where a taxpayer fails to comply with current estimated tax obligations. The taxpayer argued she did not have enough time to fix her estimated tax issues and propose actual terms of a collection alternative. The Court disagreed. The Court said that the SO provided an opportunity in both her initial letter and call, along with two extensions of time to address the issue. This was a two-month time period. The Court ruled that the SO had not abused her discretion in upholding the NFTL and returning the case to IRS collections.