Tax Court in Brief | Cosio v. Commissioner | Collection Due Process and Abuse of Discretion

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The Tax Court in Brief – March 7th, 2022 – March 11th, 2022

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Tax Litigation:  The Week of March 7, 2022, through March 11, 2022

Cosio v. Comm’r, T.C. Memo. 2022-18 | March 9, 2022 | Weiler, J. | Dkt. No. 23623-17L

Short Summary: Carl Cosio (“Mr. Cosio”) 2012 Form 1040 on August 1, 2016, and his 2015 Form 1040 on November 15, 2016. The IRS assessed Mr. Cosio with the tax liabilities reported, credited him for any payments and withholdings, and assessed certain late filing penalties, failure to pay penalties, and interest. On April 17, 2017, the IRS issued a Notice of Intent to Levy with respect to tax year 2015. Mr. Cosio then submitted Form 12153, requesting a Collection Due Process hearing for tax years 2006 through 2015. The IRS notified Mr. Cosio that his request for certain tax years was untimely but granted a CDP hearing for tax year 2015 and an equivalent hearing for tax year 2012.

Even though the IRS notified Mr. Cosio of the scheduled telephone conference for the hearings, neither Mr. Cosio nor his representative attended. Further, Mr. Cosio did not respond to further communications attempts by the IRS settlement officer. On October 12, 2017, the settlement officer issued a Notice of Determination, sustaining the proposed levy action for tax year 2015. Mr. Cosio timely filed a petition with the Tax Court for tax years 2012 and 2015. On May 11, 2018, the IRS filed a motion to dismiss for lack of jurisdiction with respect to tax year 2012. The Tax Court granted the motion.

Key Issue:

Primary Holding:

Key Points of Law:

Insight: Cosio underscores the relatively high bar the taxpayer must meet for the Tax Court to find an abuse of discretion by IRS Appeals. In this case, the taxpayer did not help his case by (1) not communicating (directly or through his representative) with the IRS settlement officer, and (2) not providing any evidence or documentation requested by the IRS settlement officer. Additionally, the Tax Court noted that because the taxpayer did not receive a notice of deficiency, he could have challenged the underlying tax liability in his Collection Due Process hearing. However, because the taxpayer did not communicate or provide any evidence for consideration, the issue was not preserved for judicial review.

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