IRC 6330

Levy Challenge

Posted on September 30, 2025 by katemley

The United States Tax Court in Ziegler v. Comm’r of Internal Revenue, Docket No. 4466-22L, filed June 13, 2025 sustained a Motion for Summary Judgment by the government in relation to the taxpayers’ action filed under IRC section 6330 to challenge a Notice of Determination by IRS Appeals to sustain collection action by Federal tax levy. Taxpayers owed income taxes for multiple years that exceeded $350,000. Taxpayers filed their own returns. Appeals determined the taxpayers could pay $600 per month. The record showed that from the outset, the taxpayers indicated that Mr. Ziegler’s health should be considered in determining whether the IRS levy action was appropriate. The taxpayers wanted to be placed in Currently Not Collectible (CNC) status. The Court was presented with evidence showing that Mr. Ziegler had leukemia and potential heart issues. In essence, the taxpayers’ concern for health issues was the primary reason they argued they should be placed in CNC status. But, their actual actions were their undoing. The Court, while explaining there are remedies to deal with dramatic health situations as it relates to tax collections, expressed dismay that the taxpayers had purchased a new vehicle with a value of $51,000 and took on a car payment of $800 per month. This action caused the taxpayers to own two vehicles…while neither of them were employed. Additionally, the Court reviewed their bank account statements and found that over a six month period, of the 207 transactions on the statements, only 8 were medical related…and none were significant or catastrophic in any way. Ultimately, the Court found that the taxpayers “purchase of [the] vehicle demonstrates [taxpayers] cavalier attitude about the tax liabilities, and also the fact that they were not overly concerned with the potential high cost of Mr. Ziegler’s medical bills.” The levy was sustained.

Collection Due Process

Posted on September 18, 2024 by katemley

IRC 6320 & 6330

The United States Tax Court in J.E. Ryckman v. Comm’r of Internal Revenue, Docket No. 750-21L, filed August 1, 2024 held that it lacked jurisdiction because a Canadian citizen whose Canadian tax liability had been accepted by the IRS as a tax assessment, lacked Collection Due Process hearing rights. This is a case of first impression. This case is more relevant than it may first appear given the fact that approximately a million Canadian citizens permanently reside in the United States. The taxpayer owed the Canadian Revenue Agency about $200,000. In an effort to collect, Canada sent the IRS a mutual collection assistance request pursuant to the Canada-US Income Tax Treaty. Upon receipt, the IRS filed a notice of federal tax lien. The Treaty requires the IRS to collect an accepted Canadian revenue claim as it would a U.S. Tax assessment for which the taxpayer’s right to a Collection Due Process (CDP) hearing has lapsed. At submission of the lien to the taxpayer, the IRS notified the taxpayer that is had no right to a CDP hearing. In this case, the taxpayer filed the request anyway. The Tax Court reviewed the treaty and concluded that its provisions foreclosed the administrative and judicial protections of the CDP statutes in the case of Canadian revenue claims. While arguments were made that the CDP statute should override the Treaty because Congress adopted the CDP statues later, the Court found that argument unpersuasive. The Treaty simply dictates rights of Canadian citizens and the US statutes do not expand those rights. The Court also commented that it would be “untenable for the IRS to grant a collection alternative, such as an installment payment arrangement or an offer-in-compromise,” on behalf of the Canadian Revenue Agency. In fact, the face of the lien in this matter indicated that payments should be made to the “Receiver General of Canada, not the IRS.” The practical conclusion of the above is that clients in this situation should seek a collection alternative with their home government.

Collection Due Process Hearing—Abuse of Discretion Standard

Posted on June 26, 2024June 26, 2024 by katemley

IRC 6330

The United States Tax Court ruled on April 17, 2024 in Hartmann v. Comm’r, T.C. Memo 2024-46 that the IRS Appeals office did not abuse its discretion when it denied the taxpayer a collection alternative and sustained the IRS collection levy action. The taxpayer is a lawyer that has practiced for many years. He filed his 2016 Form 1040 with a balance due. Ultimately, the IRS issued a Final Notice of Intent to Levy. The taxpayer filed a request for Appeal and indicated that he could not pay and either wanted an installment agreement or a settlement. On receipt, the Appeals office requested financial information from the taxpayer. In order to take advantage of any collection alternative, it is necessary for a taxpayer to be compliant with their return filings. He needed to file his 2018, 2019, 2020 and 2021 tax returns. Through a series of interactions, the taxpayer indicated that he was filing, or had filed his returns, though he did not provide them to the Appeals Officer. He provided a collection information statement without documentation that showed the ability to pay at least $6,000 per month, so the Appeals Officer noted he did not qualify for Currently Not Collectible. The Appeals Officer also noted that due to unfiled returns and failure to make estimated tax payments, he did not qualify for a payment agreement or a settlement. The taxpayer represented that the returns were in the mail to her, but the Appeals Officer indicated that she was sustaining collection enforcement. Even though she represented this, she ultimately checked the system again in 6 weeks to see if any returns were filed or other information was received. It was not. She closed her case and sustained enforcement action. The taxpayer filed a Petition for review with the Tax Court. In matters such as this, the Court reviews the actions of Appeals based on an Abuse of Discretion standard. This standard includes reviewing the following factors: 1) did Appeals properly verify that the requirements of any applicable law or administrative procedure were met, 2) did Appeals consider any relevant issues raised by the taxpayer, and 3) did Appeals consider whether the proposed collection actions balance the needs for the efficient collection of taxes with the legitimate concern of the taxpayer that any collection action be no more intrusive than necessary. Appeals properly followed all procedure and in regards to collection alternatives, Appeals applied proper guidance regarding the need to be in return and payment compliance prior to entering into a collection alternative. A taxpayer must have all returns filed and must be paying current year’s taxes, or all collection alternatives fail. The Court indicated that Appeals had offered the taxpayer multiple opportunities to come into compliance, including six separate calls with the Appeals Officer. Ultimately, there was deemed to be no abuse of discretion and the enforcement action was sustained.