Update on the Issue of the Prior Opportunity to Dispute a Liability in a Collection Due Process Case

20 Flares Filament.io 20 Flares ×

On February 28, 2017, I wrote about the Keller Tank case in which the 10th Circuit followed prior Tax Court precedent and the language of the collection due process (CDP) regulations in denying a taxpayer the opportunity to raise the merits of underlying liability in a CDP case where the taxpayer had the administrative, but not judicial, opportunity to raise the issue prior to the CDP case.  In that post, I noted that Lavar Taylor argued three cases in different circuits with this identical issue in a very short time span.  On March 7, 2017, the 4th Circuit issued its opinion in Iames v. Commissioner, No. 16-1154, the second of those three cases.  The 4th Circuit reached the same conclusion as the 10th Circuit validating the regulation as a reasonable interpretation of the statute.  You can hear the oral argument here.  Judge Wilkinson wrote a strong opinion explaining the basis for his decision.  He not only supported the position of the IRS based on IRC 6330(c)(2) but also bought the government’s secondary argument under IRC 6330 (c)(4) which the 10th Circuit did not reach.  This leaves taxpayers hoping for relief through the CDP process with only one circuit remaining to change the course of the discussion at least in this round of attacks on the governing regulation.  The 4th Circuit had no discomfort creating a distinction between taxpayers with deficiency procedure taxes versus those whose liabilities do not use those procedures.  For those interested in a full blown discussion of this issue, come to the Pro Bono and Tax Clinics Committee meeting on Saturday May 13 at the ABA Tax Section meeting in DC or order the recording of the discussion.

Comments

  1. I’ve seen this issue several times in the last few years and legally, I’m fine with it. But try to explain it to a taxpayer who did not understand that his one chance to “meaningfully” dispute a liability has already passed? Not easy.

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind

*