Tax Court in Brief | Knight v. Commissioner | Collection Due Process and No Abuse of Discretion

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The Tax Court in Brief – July 11th – July 15th, 2022

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Tax Litigation:  The Week of July 11th, 2022, through July 15th, 2022

Knight v. Comm’r, T.C. Memo. 2022-76| July 14, 2022 | Lauber, A. | Dkt. No. 11719-20L


Short Summary: Petitioner has unpaid income tax liabilities for 2011-2017. Over the course of five years, the IRS issued to Petitioner five CDP notices, three of which resulted in CDP hearings. Petitioner requested one hearing in response to a levy notice issued for the tax years 2014-2016, and the other hearing in response to levy and lien notices issued with respect to 2017 and 2011-2017, respectively. In the latter hearing, Petitioner disputed his underlying liabilities for 2015-2017, and sought a payment plan for the other outstanding tax liabilities. The settlement officer (SO) advised Petitioner that he could not dispute his 2015 and 2016 liabilities. She also estimated that $1,620 would be an acceptable monthly payment but was told Petitioner probably could not pay that amount. The representative did not make a counter-proposal. The SO directed Petitioner to submit an amended return for 2017 and a completed Form 433-A “promptly.” No documents were forthcoming. After verifying that all requirements of applicable law and administrative procedures had been met and performing the “collection vs. intrusiveness” test under I.R.C. § 6330(c)(3)(C) (the “balancing test”), the SO was ready to close the case. Five months later, Appeals issued Notices of Determination sustaining the NFTL filing and the proposed levy for 2017. Petitioner timely petitioned. The only issue raised in the petition was a dispute over the correct amount of his underlying liability for 2015. The IRS moved for summary judgment on the ground that petitioner’s underlying liability was not at issue and because the settlement officer did not abuse her discretion. The Tax Court granted the government’s motion.

Key Issues:

Primary Holdings:

Key Points of Law:

Insights:   The holding in this case is based on well settled law. Petitioner’s interests – time and resources — would have been better served by requesting an audit reconsideration for 2015.