Tax Court in Brief | Estate of Kazmi v. Commissioner | Trust Fund Penalties and CDP Hearings

Share this Article
Facebook Icon LinkedIn Icon Twitter Icon

Freeman Law is a tax, white-collar, and litigation boutique law firm. We offer unique and valued counsel, insight, and experience. Our firm is where clients turn when the stakes are high and the issues are complex.

The Tax Court in Brief – February 28, 2022  – March 4, 2022

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

Tax Litigation:  The Week of February 28, 2022, through March 4, 2022

Estate of Kazmi v. Comm’r, T.C. Memo. 2022-13| March 1, 2022 | Paris, E. | Dkt. No. 5013-18L

Opinion

Short Summary: In this collection due process (CDP) case, the Tax Court sustained a notice of determination approving a notice of federal tax lien (NFTL) filed with respect to trust fund recovery penalties (TFRPs) assessed against petitioner Mohammad Kazmi. In his request for a CDP hearing and in his petition seeking review of the notice of determination, Kazmi made only one claim: that he was not liable for the TFRPs at issue because he was not a responsible person who willfully failed to pay over withholding taxes pursuant to IRC § 6672. Applying IRC § 6330(c)(2)(B), the appeals settlement officer determined that Kazmi was precluded from raising this liability issue during the CDP hearing because Kazmi received a properly mailed Letter 1153 providing him with a pre-assessment opportunity to dispute the merits of the proposed TFRPs at an Appeals conference. The Court agreed that the Letter 1153 gave Kazmi a “prior opportunity” for purposes of section 6330(c)(2)(B) and sustained the notice of determination for the NFTL filing without considering the merits of Kazmi’s liability claim.

Primary Holdings:

Key Points of Law:

Insights:  This case reminds us that the Tax Court is not a court of equity. In previous CDP cases involving a TFRP dispute, the Tax Court reached a similar result. Generally, the Court will follow precedent, even when it leads to a seemingly harsh result. Kazmi was a sympathetic taxpayer. He was a part-time bookkeeper for a company that failed to pay over employment taxes. He was not an officer of the company; he had no check writing authority and no authority to make payments on behalf of his employer. His employer Kazmi made a strong argument that he was not a responsible person who willfully failed to pay over withheld taxes. However, noting that the Tax Court is a court of limited jurisdiction, the Court did not reach that issue.