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.