IRC 6159

The Tax Court held that an IRS Settlement Officer did not abuse her discretion in sustaining collection action against a taxpayer in Michael J. Stevens and Alexis M. Stevens v. Comm’r of Internal Revenue, Docket No. 15761-21L, filed July 24, 2023.  The IRS filed notices of intent to levy against the taxpayers for tax years 2015 and 2016 to collect over $100,000 owed in income taxes.  As a result, the taxpayers requested a Collection Due Process hearing.  During the course of the hearing, the Settlement Officer explained to the taxpayers that she would need a Collection Information Statement disclosing assets, income and expenses, in order to entertain an installment agreement or Offer in Compromise.  While the taxpayers attended the hearing, they never provided complete financials.  Rather, they provided an incomplete financial with little supporting documentation that showed they could pay $93 per month.  The IRS then used information they had to make adjustments to the financials, which ultimately showed the taxpayers could pay $746 per month.  This was offered as an installment agreement a couple of times, but the taxpayers refused to accept it or respond with more documentation to support their proposal.  IRC Section 6159 authorizes the Secretary of the Treasury to enter into a written agreement to pay tax in installments if it determines it will ultimately facilitate collection of the liability.  The IRS generally has discretion to accept or reject an installment agreement proposal.  The Court ruled there was no abuse of discretion by the IRS since the Settlement Officer based many of her calculations on IRS standardized expenses and income on tax returns and a paystub that was provided by the taxpayers.