Tax Court in Brief | Hamilton v. Comm’r | Collection Due Process and Abuse of Discretion

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The Tax Court in Brief – March 14th – March 18th, 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.

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Tax Litigation:  The Week of March 14, 2022, through March 18, 2022

Hamilton v. Comm’r, T.C. Memo. 2022-21 | March 15, 2022 | Urda, J. | Dkt. No. 139-19L

Short Summary: In this collection due process (CDP) case, the Hamiltons, individuals, sought review of the determination of the Office of Appeals to uphold the filing of a notice of federal tax lien (NFTL) for income tax liability, interest, and additional taxes. The Hamiltons did not challenge the liability. They challenged primarily that the hearing officer found (and the Office of Appeals upheld) that the Hamiltons were not eligible for collection alternatives to a NFTL.

Primary Holdings:

Key Points of Law:

Insights:  Taxpayers are wise to remain communicative with IRS officials during a CDP hearing process that seeks collection alternatives to a NFTL. The settlement officer abuses its discretion (i.e., acts arbitrarily, capriciously, or not in compliance with law) by failing to consider each legitimate or meritorious issue or fact presented by the taxpayer in the CDP hearing. And, a taxpayer should ensure that the administrative record is complete or otherwise does not lack important documentation that was considered during the CDP hearing. The lack of records in an administrative record is also grounds for the Tax Court to remand the matter for a supplemental hearing. In sum, a taxpayer should keep the settlement officer informed about the taxpayer’s grounds for collection alternatives as well as efforts to submit documentary evidence, including records that the settlement officer might request.


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