Seasons of Taxpayer Rights

We welcome Francine J. Lipman as our guest blogger today with her reflection on the tenure of Nina Olson as National Taxpayer Advocate.  Francine is the William S. Boyd Professor of Law at the University of Nevada, Las Vegas.  Francine is also a terrific (and creative) writer as you will see when you read this post and she is a tireless advocate for low income taxpayers from her position as a doctrinal professor.  Keith

(sing to Seasons of Love from Rent by Mr. Jonathan D. Larson)

Nine million, four sixty thousand, eight hundred minutes.
Nine million, four sixty thousand, eight hundred moments in a career.
Nine million, four sixty thousand, eight hundred minutes.
How do you measure.
Measure NTA Olson’s career?

In tax refunds?
In blog posts?
In reports to Congress?
In reforms, in speeches, in analytics?
In nine million, four sixty thousand, eight hundred minutes.
How do you measure eighteen years of a stellar career?

How about taxpayers?
How about LTAs?
How about LITCs?
Measure in rights …
Seasons of taxpayer rights ….
Seasons of taxpayer rights …

Nine million, four sixty thousand, eight hundred minutes.
Nine million, four sixty thousand, eight hundred words in her plans.
Nine million, four sixty thousand, eight hundred minutes.
How do you measure a career of a woman so grand?

In truths that we learned,
Or in times that she heard?
In bridges that she built,
Or the respect that she earned?

It’s time now to sing out,
though public service never ends.
Let’s celebrate eighteen years of advocacy we must commend.

Remember passion …
(Oh, you’ve got to you’ve got to remember taxpayer rights)
Remember tax maps …
(You know the rights are a gift from Congress)
Remember tireless service
and tax vans
(Share rights, give rights, protect rights, measure Nina’s career in rights)
Seasons of taxpayer rights …
Seasons of taxpayer rights …

Post Script

Dear National Taxpayer Advocate Nina E. Olson:

Thank you for the nine million, four sixty thousand, eight hundred minutes in which you have inspired, mentored, driven, pushed, prodded, probed, analyzed, sacrificed, written, crunched, calculated, blogged, testified, criticized, applauded and lead generations of passion warriors for tax justice from sea to shining sea and across the globe to be the best we can be. In nine million, four sixty thousand, eight hundred minutes you have touched countless lives (including uncountable kids) and exponentially changed the world for the better. For this alone our gratitude is immeasurable and our respect for all that you have accomplished immense.

As Maya (Angelou), said, “When someone shows you who they are believe them, the first time.” Like Christine (A. Brunswick) and Janet (R. Spragens) you showed us who you were when you called Keith Fogg at IRS’ Chief Counsel and pitched your epiphany about a low-income taxpayer clinic in the 1990s. And the rest is “herstory,” your incredible tax story. We are in shock and awe at what you have accomplished for a greater good. And know that your public service will never end.

“Never doubt that a small group of thoughtful, committed, citizens can change the world.” Margaret Mead

Because you have …

With gratitude, appreciation, and nine million, four sixty thousand, eight hundred thank yous,

Francine J. Lipman (one of nine million, four sixty thousand, eight hundred indebted #TeamNina foreverfans)

Collection Due Process Summit Initiative

Today we welcome guest blogger Carolyn Lee who practices tax controversy and litigation in the San Francisco offices of Morgan Lewis.  Carolyn represents individual and business clients, including pro bono and unrepresented taxpayers while volunteering with the low income tax clinic of the Justice & Diversity Center of The Bar Association of San Francisco.  She has taken on the task of trying to reform and improve CDP after our first two decades of experience with this statute and created the CDP Summit Initiative.  The CDP Summit Initiative plans to hold sessions at several committee meetings during the upcoming ABA Tax Section meeting in San Francisco on October 4 and 5.  It also plans to hold a CDP summit in Washington, D.C. on the morning of December 3.  If you have an interest in improving CDP, here’s a chance to get involved.  Keith 

Few topics engage the tax controversy and litigation community more than the Sections 6320 and 6330 collection due process (CDP) protections as applied. The CDP community is vast – virtually anyone touched by IRS tax collection efforts including taxpayers, practitioners in firm and clinic practice environments, the IRS Collections division, the Office of Chief Counsel, the Tax Court, and the IRS Taxpayer Advocate Service (TAS). We are unified by the fact that everyone has ideas or plans for CDP’s improvement. Note, however, there is no movement to eliminate CDP. CDP indisputably offers valuable protections and procedures to the community.

Instead, there is a new movement to continue fortifying CDP through a newly launched CDP Summit initiative. The Summit objectives are three-fold: CDP education for all stakeholders to increase effective engagement; policy and procedure improvements; and transparency when change is not feasible, with an explanation. Summiteers are shamelessly piling on the years of work by Keith Fogg and Les Book and this Procedurally Taxing (PT) blog, Nina Olson and TAS, the often unheralded efforts by IRS and Office of Chief Counsel professionals, Tax Court directional Orders and Opinions, and observations by private bar practitioners. Summiteers recognize an infrastructure worthy of renovation instead of tear-down treatment. This posting is a call to join the CDP Summit initiative with input and, potentially, time and talent as a member of a Summit Working Group. More information about becoming a Summiteer closes this post.

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As commemorated by PT and others throughout last year, CDP is in its third decade. CDP’s implementation, through more than 20 million mailed CDP notices, has revealed its creaky aspects and unintentional, unproductive results in some circumstances. The community has had ample experience to identify opportunities for change, to more effectively and efficiently achieve CDP’s beneficial intent: Fairness when collecting tax due. Orderly procedures that result in progress. Sustainable, humane tax collection approaches to address outstanding tax liabilities.

New slipcovers and updated kitchen appliances have been a recurring feature of CDP’s life. Consider the ever-evolving lien and levy notices, beta tests of helpful outreach to taxpayers after a CDP request is submitted and before the case is referred to a Settlement Officer, and court Orders spurring resourceful efforts to craft sustainable collection alternatives instead of sending the taxpayer back to the street, no further along toward a sustainable collection plan than before filing a Court Petition. Generally unacknowledged is the fact that for years the IRS Collection teams and Chief Counsel attorneys have attended to many suggestions for improvement presented by TAS, PT posters and practitioners underwriting CDP impact litigation – in addition to surfacing opportunities for improvement based on their own experience. The IRM, CDP forms and related communications often change accordingly without fanfare. It is safe to say the point of these government efforts is to improve CDP processes, not torment taxpayers and their representatives. No one believes simply moving a file off a desk without progress, or with a determination that only pushes the (possibly redundant) work to someone else’s desk, is considered a successful or satisfying result by IRS Collections and Chief Counsel professionals.

There still is work to be done to realize CDP’s beneficial intent. The CDP Summit initiative is organized to press forward on an all-together-now basis, in earnest support of CDP. The Summit launched with a program of the ABA Tax Section Individual and Family Tax Committee during the 2019 May Meeting. It continues as an initiative with the active involvement of expert members of every CDP community stakeholder group. The May panelists – the Honorable David Gustafson, Judge, United States Tax Court; Mitch Hyman, Office of Chief Counsel and §§ 6320 and 6330 subject matter specialist; Keith Fogg, who needs no introduction here; Erin Stearns and William Schmidt, both Low Income Tax Clinic Directors; and me for the private tax controversy and litigation bar – are the foundation of the CDP Summit Steering Committee. We are joined by additional representatives from the IRS Office of Chief Counsel, IRS Collections and Collections Appeals, IRS SBSE Counsel responsible for Collections programs, TAS, tax academia and the private bar and tax clinics. 

How many CDP opportunities for improvement have already been captured? Almost thirty (30) from every CDP stakeholder constituency. What follows is only a sampling. Many opportunities will look familiar. Here we go: Do more, better, with CDP notices and other communications. (Note that here, the CDP Summiteers plan to join IRS and TAS notice improvement initiatives underway.) Simplify the CDP hearing request process and clarify what, if anything, is jurisdictional about CDP request submission dates. Regarding the CDP request Form 12153, keep the request simple and quick to complete and add tools for the taxpayer to understand and evaluate the value of and eligibility for collection options (link to the financial information Forms 433). For taxpayers ready to act, let them check a box on the Form 12153 seeking expedited attention. Expand the IRS beta program offering helpful support to develop sustainable collection alternatives after the CDP request and before the Appeals hearing.  Explore and test the role of the codified Taxpayer Bill of Rights (TBOR) within CDP. Clarify what is a “prior opportunity” to contest a tax liability. What about expanding the use of fee-free Appeals mediation while in a CDP or Tax Court docketed posture? Explore the use of Motions for Summary Judgment given the unforgiving abuse of discretion standard and scope of review, within the context of achieving CDP’s intended results. Are there more options for the Court to address CDP issues presented within the same standard and scope of review constraints? Should all CDP Motions for Summary Judgment be set for trial session hearings, to allow unrepresented taxpayers the opportunity of pro bono counsel and to facilitate settlement? Speaking of remand (an increasingly lively topic of interest), when might an Order of Remand be most productive? More proactively, let’s be in front of understanding the IRS’s planned uses of technology for collection within the context of TBOR.

Opportunities are being classified as Administrative (bifurcated as to point of entry to CDP and Appeals), Judicial and Remedies, with some blurring between the Judicial and Remedies classifications. Change opportunities will be administrative (for example, the IRM), regulatory (including revenue procedures and revenue rulings) and statutory. There may be proposed revised or new Tax Court Rules of Practice and Procedure. The Summit focus will be on feasible administrative and procedural change.

Because the CDP Summit is committed to impact, feasible change with significant effect is our goal. The Steering Community will prioritize opportunities. Working groups across all stakeholders will form around the priorities to explore and recommend change, or understand why change is not feasible (accompanied by possible beneficial alternatives). Education and communications will flow to the practitioner community and taxpayers including, but not limited to several CDP programs during the ABA 2019 Fall Tax Meeting (San Francisco, October 3-5).

Now to the call to action: PT readers and CDP fans, move beyond complaining in the corners and join us. Send us your ideas to improve CDP, within the boundaries of the current §§ 6320 and 6330 statutes. Opportunities within the administration of CDP, judicial engagement, and remedies leading to sustainable collection alternatives are welcome.

Consider whether you would like to be a Summiteer member of a volunteer working group addressing Administrative, Judicial or Remedies opportunities led by a fellow Summiteer. Collaborate with others across the CDP community, including IRS and Chief Counsel subject matter experts. While working group participation will be accompanied by tax geek glamour, it also will require work and time in several forms: Brainstorming, research and analysis, conference call and listserve discussion, requests to publish and present CLE programs about your efforts. We promise you the satisfaction of constructive and productive collaborative effort and outcomes will be immeasurable.

Sections 6320 & 6330 Collection Due Process Protections: Improve CDP, all together now.  Call for input and working group participation.

We look forward to hearing from you. If you have a suggestion or want to become a Summiteer member please contact Carolyn Lee at carolyn.lee@morganlewis.com; or William Schmidt at schmidtw@klsinc.org; or Erin Stearns at erin.stearns@du.edu.

Reflections on the impact of Nina Olson by Erin Stearns

We welcome Erin Stearns, Associate Professor of the Practice of Law and Director of the Low-income Taxpayer Clinic at University of Denver Sturm College of Law. She has directed that clinic now for several years and become an important member of the low-income tax clinic community. Keith

The first time I heard Nina speak was at the 2012 Annual Grantee conference. I’d been working at the University of Denver LITC for just a couple months and spent most of that conference feeling I was treading water trying to grasp the issues other clinicians were discussing. In her speech, Nina conveyed tremendous passion for the issues, and the critical importance of the work we do for taxpayers and communities. While she was speaking, I realized I was in exactly the right place, right job, and right community, even though I had a big learning curve ahead of me.

Since then, Nina has come to occupy a place of heroism in my world. Many of my students – to whom I refer to Nina as my “Tax Hero” (really) – now know who Nina is and of the critical importance of the work she has done. She has regularly motivated me with her unapologetically high expectations for all Taxpayer Advocate Service staff and members of the LITC community. For years and through incredibly challenging times at the IRS, Nina has shown us the very best example of an advocate, leading with intelligence, wit, compassion, and perseverance. Yep, still my Tax Hero.

I join many, many people who were sad to learn Nina was retiring – she leaves very big shoes to fill as NTA. However, I’m delighted to learn she’ll continue to be involved in the tax world through her nonprofit and am certain she will continue to find platforms from which to advocate and improve tax law and administrative operations of the IRS. Nina, thank you for all you’ve given us – I am so excited to see what you do next!

Interest Computation and Something Else

Guest blogger Bob Probasco returns with a lesson on tax overpayments, taking us through a helpful comparison between overpayment rules and those applicable to wrongful liens and levies. It isn’t always simple to properly characterize a claim. Christine

At the end of June, the IRS released CCA 201926001, addressing a question regarding computation of overpayment interest. The fact pattern was a bit out of the ordinary, so I understand why a field attorney might want clarification. The answer that the interest specialist reached seems reasonable as a practical matter. However, there are some complications and issues that the CCA didn’t address or even acknowledge. The interest computation discussion in the CCA was fairly straightforward and might not warrant discussion here by itself; I found the other questions more intriguing.

The interest computations

The issue was stated as: “Whether interest is allowable on the refund of a remittance made by a non-liable spouse that the Service incorrectly applied to the liable spouse’s tax liability?” You can probably anticipate the fact pattern.

  • Husband and Wife 1, who divorced in Year 7, had joint tax liabilities for multiple earlier years.
  • Husband married Wife 2 in Year 9, when the joint tax liabilities of Husband and Wife 1 were still outstanding.
  • Husband and Wife 2 bought real property in Year 11.
  • The Service filed a Notice of Federal Tax Lien with respect to Husband’s joint tax liability, which attached to the real property that Husband and Wife 2 had purchased.
  • Husband and Wife 2 wanted to sell the property, so they sought a certificate of discharge of the lien, in return for payment equal to the value of the government’s interest in the property. They sold the property in Year 13.

So far, so good. But the IRS’s Conditional Commitment to Discharge (Letter 403) overstated the amount to be paid, as almost the full amount of the sales proceeds rather than only Husband’s half-interest. Alas, no one noticed and corrected the error in time, so the title company sent the full amount of the sale proceeds to the IRS. The IRS received and applied the proceeds against the joint tax liabilities for Years 1 and 2 of Husband and Wife 1, sometime after April 15th of Year 13.

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Later in Year 13, Wife 2 realized that her half-interest in the sale proceeds had been applied to tax balances for which she was not liable, and she filed a claim for refund. On the same date she filed the refund claim, she also filed a request for assistance with the Taxpayer Advocate Service.

The IRS agreed that Wife 2 was entitled to get the money back and prepared to issue a refund in Year 14. But before the IRS issued the refund, it determined that Husband and Wife 2 also had unpaid joint tax liabilities, for Years 12 and 13. So the IRS credited some of Wife 2’s money to those balances. As we all know, when a taxpayer makes an overpayment of her tax liability, the IRS has the authority under Section 6402(a) to offset it against any other outstanding tax liability, e.g., for another year, and only refund the amount (if any) left over. There apparently was still a remaining amount to be repaid to Wife 2, which had not yet been refunded.

Now we get to the advice provided in the CCA: how much overpayment interest should the IRS pay to Wife 2 on that money applied to Years 12 and 13, or refunded? That was a fairly straight-forward analysis. Because Wife 2 had no liability for Years 1 and 2, to which the sales proceeds were applied, she had an overpayment. Interest on an overpayment is allowable under Section 6611. Interest begins on the date of the overpayment, regardless of whether the overpayment is credited to another liability or refunded. Here, that was the date that the proceeds from the sale of the real property were received and applied to Husband and Wife 1’s tax liabilities, sometime after April 15th of Year 13.

For the portion of the overpayment that was credited to Husband and Wife 2’s liability for Year 12, interest stops on the due date of that return, or April 15th of Year 13. Because the date of the overpayment was after that date, there would be no overpayment interest on the amount applied to the liability for Year 12. But there would be overpayment interest on the amount applied to the liability for Year 13, for the period from the date of the overpayment to April 15th of Year 14. For the remainder of the overpayment, to be refunded to Wife 2, interest runs from the date of the overpayment to a date no more than 30 days before the date of the refund check.

Pretty straight-forward and you may be wondering why a CCA was needed. Or you may have noticed that the issue as stated wasn’t how to determine the amount of allowable interest, but whether interest was allowable. And perhaps you raised the same question I did:

Did Wife 2’s share of the sale proceeds, improperly applied to Husband and Wife 1’s joint tax liabilities, really result in an “overpayment”?

Overpayment or something else?

First things first. Why might it be important to know whether the amount at issue is classified as an overpayment? Three important Code sections that apply to overpayments come to mind. The person making the overpayment can bring suit to compel the IRS to refund it, with a particular statute of limitations and a requirement to first exhaust administrative remedies. The IRS can, instead of refunding the overpayment, credit all or a portion against outstanding tax liabilities for other periods by the same person. With certain exceptions, the government pays interest to the person who made the overpayment when refunding or crediting it.

The Code doesn’t expressly define what an overpayment is. Generally, it’s considered to arise when a taxpayer pays more than the correct amount of the tax liability. But Wife 2 falls into a category that is sometimes referred to as “persons other than taxpayers” or “third parties” – that is, persons who make payments (voluntarily or involuntarily) of other persons’ tax liabilities. In at least some circumstances, those payments are not treated the same way as overpayments for purposes of judicial review, offset, or interest.

If the IRS had levied against the sales proceeds, that would be a wrongful levy. Judicial review is available, either before or after property has been surrendered or sold and without the requirement to exhaust administrative remedies, through a suit in district court (Section 7426(a)(1)). Wrongful levy suits have to be brought within two years of the levy, but if the third party makes an administrative claim under Section 6343(b), the period is extended to the earlier of 12 months after the administrative claim was filed or six months from the date of disallowance. A wrongful levy suit, rather than a refund suit, is the exclusive judicial remedy. Sections 6343 and 7426 refer to the return of property or payment of a judgment, rather than refund of an overpayment. Sections 6343(c) and 7426(g) are specific interest provisions, separate from Section 6611 but applying the overpayment rate from Section 6621.

Of course, the IRS had not levied Wife 2’s property. The IRS merely required payment in return for a discharge of the lien, allowing Husband and Wife 2 to sell the real property. The situation was very similar to that in United States v. Williams, 514 U.S. 527 (1995), where the plaintiff was coerced to authorize payment from the sale proceeds in order to convey clear title. She later submitted a refund claim and, when it was denied, filed a refund suit. The Court concluded that the amount the plaintiff sought to recover was an overpayment and that she could do so by a refund suit. This holding was based largely on the fact that there was no other feasible judicial remedy.

But in the Internal Revenue Service Restructuring & Reform Act of 1998, Congress enacted Sections 6325(b)(4) and 7426(a)(4) to address the problem noted in Williams. The owner of the property can deposit money equal to the amount determined by the IRS as the value of the government’s interest in the property (or furnish an acceptable bond) and the IRS “shall” – instead of “may” as in Section 6325(b)(3) – discharge the lien. The IRS “shall” refund the deposit, with interest at the overpayment rate of Section 6621, to the extent that it determines either that the value of the government’s interest was lower than previously determined or that it can satisfy the outstanding liability from other property. And just in case the IRS doesn’t agree or is slow to respond, the owner of the property can file suit in district court, to re-determine the amount of the government’s interest in the property, within 120 days after the certificate of discharge is issued. The IRS has concluded that this is the judicial remedy for an allegedly wrongful lien; a refund suit, as in Williams, is no longer an option. Most courts that have considered the issue have agreed with the IRS; Munaco v. United States, 522 F.3d 651 (6th Cir. 2008) is a good example and cites others.

How do the above provisions related to wrongful levies and wrongful liens line up against the three key aspects of how the Code treats overpayments?

Judicial review

There is a much shorter period of time to file suit for wrongful levy or wrongful lien, than the statute of limitations for a refund suit, which arguably can stay open indefinitely if the refund claim is never disallowed. A refund suit is not available for wrongful levies and liens. It certainly makes sense to require action by the third party promptly. Once the IRS collects from the third party, collection actions against the person who is actually liable for the tax may cease. A challenge by the third party does not toll the statute of limitations for collection and if the collection from the third party is held invalid, the IRS will want to go back to the liable party.

However, in the fact pattern of the CCA, the shorter statute of limitations for a wrongful lien suit might not have been a constraint. Wife 2 did file Form 911, Request for Taxpayer Advocate Service Assistance. In addition to the salutary effect on IRS personnel of the possibility of a Taxpayer Assistance Order, under Section 7811(d) the request itself suspends any relevant statute of limitations pending any relief that TAS might order. This was recently addressed in a wrongful levy case, Rothkamm v. United States, 802 F.3d 699 (5th Cir. 2015). (Note, however, that tolling under section 7811(d) is not automatically tracked by the IRS, and the National Taxpayer Advocate has recommended repealing the provision.)

Offset against other tax liabilities

For wrongful levies, Section 6343 refers to the return of property, rather than refund of an overpayment, and does not mention offset against other tax liabilities. For wrongful liens, Section 6325(b)(4) refers to the refund of a “deposit” and again does not mention offset against other tax liabilities. (The term “deposit” is explicitly distinguished from the term “payment” in other contexts; the former must be returned, regardless of the statute of limitations for refunds, on request without requiring proof of an overpayment.) And Section 7426 refers to payment of judgements, again without any mention of crediting the judgement amount against other tax liabilities. None of these provisions references Section 6402(a). A definitive court ruling would be nice but even without it I think the best interpretation of the statutory framework is that there is no right to unilaterally offset recoveries from a wrongful levy or lien against other liabilities the taxpayer may have.

Not allowing the IRS to offset these remedies for wrongful levies or liens against a third party also makes sense. The existence of an overpayment by the party liable for the tax does not imply any error or wrongful action by the IRS; a wrongful levy or lien does. Further, offset could be abused by the IRS to avoid the consequences of such error or wrongful action as well as procedural safeguards for collection actions in those other years.

An example, albeit extreme, of such abuse in a different context is described in Kabbaby v. Richardson, 520 F.2d 334 (5th Cir. 1975). Local police arrested the plaintiff and found cocaine, a substantial amount of cash, and assorted weapons and pieces of jewelry in his car. The police notified the IRS, which issued a termination assessment and seized the property. The IRS later abated the assessment, presumably because of previous court decisions invaliding such assessments when the IRS did not issue a subsequent notice of deficiency. But the IRS refused to return the property because it was an “overpayment” and could be credited to the plaintiff’s unsatisfied tax liabilities for other years. The court rejected that argument. The termination assessment without appropriate factual foundation was an abuse of authority. Allowing the IRS to keep the property would give the IRS an advantage and defeat procedural safeguards. Some other courts have disagreed; these are not always sympathetic plaintiffs.

Interest

Interest is payable on recovery of a wrongful levy or deposit to challenge a wrongful lien, as well as on a judgement resulting from judicial review in district court. However, Sections 6325, 6343, and 7426 contain separate interest provisions – with references to the overpayment interest rate in Section 6621 – rather than simply stating that Section 6611 applies. The amounts may be the same but other interest provisions, such as “restricted interest” and interest netting, may not apply to interest paid pursuant to Sections 6325, 6343, and 7426.

Based on these differences in judicial review, authority to offset, and interest, I think there’s a very strong case that Wife 2’s share of the sale proceeds, paid by mutual mistake in order to discharge the lien, was not an overpayment.

If this was not an overpayment, what effect does that have?

Obviously, the fair result is that Wife 2 can recover her share of the sale proceeds. But if the IRS had resisted, it’s not entirely clear whether Wife 2 was legally entitled to any relief at all. She apparently didn’t use the process set forth in Section 6343(b)(4). When she and Husband sought a certificate of discharge, she didn’t request a substitution of value as a deposit to be held by the IRS pending a determination whether the value of the government’s interest in the property included her half-share. If she had noticed the error in time, she might have done that or even obtained a revised Letter 403. It appears that she and Husband instead made a payment under Section 6343(b)(2), with a later refund claim. If Sections 6343(b)(4) and 7426(a)(4) really are the exclusive remedies for a wrongful lien, the IRS might have been able to push back successfully. Perhaps a court would decide that a refund claim and suit under Williams should still be available, but it seems unlikely.

Assuming that the IRS did the right thing and agreed that she should get her share of the sale proceeds back, though, could the IRS unilaterally offset part of that against her and Husband’s tax liabilities Year 12 and 13? I’m not aware of any case law specifically on point but for the reasons described above I think Section 6402(a) doesn’t apply to such amounts and the IRS has no authority to make such offsets unilaterally. Husband and Wife 2 may have consented to that offset, because they wanted to resolve the liabilities or didn’t want to force the IRS to jump through the procedural hoops for a levy, but the CCA doesn’t mention anything about that. Other taxpayers might not want to give up the cash.

What about interest computation with respect to the credits to Husband and Wife 2’s tax liabilities for Years 12 and 13? The CCA’s answer is reasonable but how can you evaluate whether it’s legally correct? Section 6325(b)(4)(B) doesn’t provide the answer because it also doesn’t provide for offset against other tax liabilities.

Conclusion

Tax law is not always clear – as Bayless Manning ponders in Hyperlexis and the Law of Conservation of Ambiguity: Thoughts on Section 385, 36 Tax Law. 9 (1982):

Consider the United States Constitution. The Constitution is open-ended, generalized and telescopic in character. What has it spawned? Pervasive ambiguity and unending litigation.

Contrast the extreme counter-model of law, the Internal Revenue Code and its festooned vines of regulations. The Code and regulations are particularized, elaborated and microscopic in character. What have they spawned? Pervasive ambiguity and unending litigation.

I might have reached the same answer as in the CCA. Sometimes a reasonable answer based on analogy is the best that can be achieved. The final result seems fair.

Reflections on the Impact of Nina Olson by Scott A. Schumacher

We welcome back Scott A. Schumacher who has provided several guest blogs for us over the years. Scott is the Associate Dean and a Professor of Law at University of Washington Law School. He directed the tax clinic at the law school for many years. No other tax clinic director that I know of has become the Associate Dean of their law school. Through his writing, teaching and litigating, Scott has been a major voice for low income taxpayers for many years. Keith

There are public officials who occupy offices and there are those that transform them. Nina Olson not only transformed the office of the National Taxpayer Advocate, she transformed the tax system. I have been the director of the Federal Tax Clinic at the University of Washington School of Law since 2000. Back then, Nina was “one of us,” directing the Community Tax Law Project. It is astonishing and gratifying to look back and observe the changes to tax administration because of Nina’s leadership.

When I left private practice to join the low-income taxpayer community was also the time that the new taxpayer protections in the 1998 IRS Restructuring and Reform Act were beginning to take effect and wend their way through the courts. Prior to RRA ’98, taxpayers had few rights and protections, particularly in the collection arena, and engaging with the IRS was often like the weather, you had to just deal with it. However, Collection Due Process and other taxpayer rights in RRA ’98 helped to change the relationship between taxpayers and the taxing authorities.

This change was magnified by Nina’s effective deployment of low-income taxpayer clinics, Taxpayer Advocate Service personnel, and the bully pulpit. Tax clinics have represented thousands of low-income taxpayers and have helped shape law and policy through the efforts of clinic directors and staff. TAS employees have been a bulwark in support of taxpayers by not only assisting individuals in matters before the IRS, but also in the extensive research projects undertaken by TAS. The NTA’s Annual Reports to Congress are required reading for anyone interested in effective tax administration and protecting the rights of taxpayers. These reports have also been an effective counterweight to IRS and Treasury pronouncements.

Nina’s passion, eloquence, and tireless advocacy have ensured that each of these efforts were used to their maximum potential. Ultimately, Nina’s biggest contribution may be that she changed the conversation. The rights of low-income individuals and other taxpayers are no longer an afterthought, they are front-and-center in the discussion.

Reflections on Nina Olson from Ted Afield

We welcome Ted Afield to provide his thoughts on Nina’s impact.  Ted is an associate clinical professor of law and the Mark and Evelyn Trammell Professor and Director of the Philip C. Cook Low-Income Taxpayer Clinic at Georgia State Law School.  Ted and his clinic have partnered with the tax clinic at Harvard on several amicus briefs. The Georgia State tax clinic has been around for a while, has developed a terrific web site that serves many taxpayers and clinicians and covers a broad geographic area in Georgia.  Keith

Unlike some of the other folks who have posted wonderful reflections about Nina, I do not have as long of a personal history with her. I am still a relative newcomer in the low-income taxpayer clinic community.  While I am new, my clinic, however, is not.  I am fortunate to direct a clinic with a long and proud history behind it.  Accordingly, not long after I started at Georgia State, I found myself wanting to celebrate our clinic’s twenty-fifth anniversary.  I had gotten to know Keith, and I asked him if he could perhaps pave the way by introducing me to Nina so that I could see if I could convince her to take the time out of her schedule to fly down to Atlanta to be the speaker at our twenty-fifth anniversary event.  Keith said I should just e-mail her directly.  Now, I assume that Nina must get significantly more e-mails in a day than most of us do.  Like Rob Nassau, I had never met Nina before, and so I thought there was a very good chance that my e-mail might get lost in the shuffle (as it very likely would have had I been on the receiving end).  I couldn’t have been more wrong.  Nina replied immediately and readily agreed to come down and speak at our event.  I still assumed that, given how busy she was, she would likely have to give her speech and then leave relatively quickly.  Nina made me 0 for 2 in my assumptions.  She insisted on getting to know our clinic students (and we have a lot of them), and she took the time to speak with all of them, to share her thoughts with them about their careers, and to really listen to their experiences in the clinic and what they perceived to be the most pressing issues facing low-income taxpayers.  While speakers can often time revert to chatting with faculty and distinguished guests in the audience, Nina was laser focused on wanting to communicate with our students so that she could make sure that she could influence them to always be thinking of how the tax system could be inadvertently hurting the most vulnerable among us.  And, unsurprisingly, she also gave an incredibly dynamic and impassioned speech indicating that she was intimately familiar with the history of our clinic and how it fit in the larger work of the low-income taxpayer community, the Taxpayer Advocate Service, and her work as the National Taxpayer Advocate.  She was able to command the attention of an audience that consisted of students, academics, IRS attorneys, and private practitioners, which is not easy to do.

I mention this story because, while Nina’s energy, creativity, and tireless advocacy have been rightly praised by so many, what I think is a bit underappreciated about Nina, especially outside the academic community, is how critical she has been towards creating an environment in which academic tax clinics could thrive.  While the grant funding that she helped secure is of course incredibly important to academic institutions that always have one (sometimes all) eyes on the budget when considering whether to start a clinic, what is even more important is how Nina approached her job as one that would engage both the academic and practitioner communities simultaneously and would look for ways to apply academic theory and research to practical problems impacting the most vulnerable in our society.  She moves seamlessly between the IRS, academic, and practitioner communities, and I think we might all take that a bit for granted given how rare that is.  Her ability to do this has been critical, however, for demonstrating that tax issues are social justice issues and that applied tax research is critical towards improving the lives of vulnerable populations.

Although Nina came out of the practitioner rather than the academic community, she from her earliest years as National Taxpayer Advocate recognized the importance of developing academic partnerships with people like Keith, Les, and other early critical tax theorists who focused on the intersection of poverty and tax law and who were among the early academics who built out the theoretical support for practical policy solutions for which Nina could advocate.  Indeed, she infused her annual reports with rigorous empirical research and qualitative theoretical and applied analysis to make sure that her policy proposals could never be effectively attacked for being based solely on anecdotal evidence or on partisan political consideration.  For those who criticize the academy for sometimes being too far removed from issues that touch people’s lives directly or that directly impact the practitioner community, the practical research and policy advocacy that came out of this work and that improved the lives of countless taxpayers serves as a stark rebuke.

Nina’s efforts created an environment in which academic tax clinics can present themselves as being exemplars of what an academic clinic should be.  As a result, academic tax clinics now occupy a space in which they can serve as an effective bridge between academic research and issues that directly impact individual taxpayers.  As a result, the future of academic clinics is bright.  Looking around at many of the country’s academic clinics, what you will find is that a new generation of tax academics is arriving to take them over, eager to build on this pioneering work by training future attorneys with a strong sense of why tax is a social justice issue, by helping to identify issues that could be ripe for legislative change, and by conducting academic research to further flesh out the theoretical basis for enhancing tax justice and taxpayer rights.  Academic clinics predate Nina’s work as National Taxpayer Advocate, but her efforts have ensured their future for decades to come.  As someone who is one of the recent arrivals in the academic LITC community, I am incredibly grateful, and I also feel a tremendous sense of responsibility.  Nina showed what could be done by a gifted researcher and advocate who wanted to make the tax system more just and fair whenever she could.  It’s an impossible standard to live up to, but I’m looking forward to all of our efforts to do so in the years ahead.

Reflections on the Impact of Nina Olson by Michelle Drumbl

Continuing our series described in a post on July 8, we are offering reflections on Nina’s impact during the month of July before she retires. Today’s post comes from Michelle Drumbl. Michelle is a Clinical Professor of Law at Washington & Lee and the Director of the Tax Clinic. She writes often on issues involving innocent spouse, EITC and other topics that impact low income taxpayers. She keys in on an important feature that Nina has brought to the NTA position. Keith

Tireless energy: when I think of Nina Olson, these are always the first two words that come to mind. In my twelve years as a Low-Income Taxpayer Clinic director and clinical tax professor, Nina Olson has served as a great inspiration for my client advocacy as well as my academic scholarship. 

Each December when the LITC directors gather for the annual grant program conference, Nina gives a keynote address. The conference falls at a time of year when I am busy and distracted. It coincides with the end of the academic semester, when I am thinking of grading and preparing for the new semester. Nevertheless, when it is time for Nina’s keynote, I am energized. Listening to her is like drinking a double shot of espresso: I find myself madly jotting down ideas for cases and educational outreach, or making notes of research studies she references. I have been continually inspired each year as she has identified new issues and challenged the clinics in new ways. I know that I am not alone – Nina has been at the forefront of expanding the LITC movement. Under her watch, the grant program has grown into a robust national network of clinics, resulting in a meaningful embodiment of a taxpayer’s right to retain representation. 

I am heartened to learn that, even as she retires from her position as National Taxpayer Advocate, Nina has a vision for continuing her pursuit of taxpayer rights in a different capacity. Taxpayers across the United States are better off for it. Best wishes, Nina, as you continue your journey on behalf of taxpayers. Thank you for your service as Taxpayer Advocate, and I look forward to continuing to cross paths with you in this work.

Reflections on the impact of Nina Olson by Rob Nassau

As we continue our July reflections, Rob Nassau who directs the low income taxpayer clinic at Syracuse Law School provides the one today.  Rob is a long time pillar of the LITC community who not only directs the clinic but also serves as a doctrinal professor at the law school.  Keith

In many respects, Nina Olson is the person who’s had the most impact on my professional life . . . and I’ve never even met her face-to-face (although I came close once; more on that later).  Sure, I’ve heard her speak countless times at LITC Conferences (and elsewhere), but I’ve never actually met her and shook her hand and thanked her personally for all she’s done – not just for me, but, literally, for all Americans.  So let me do that now.

For me, without you I would not have the best tax job in America – directing the Syracuse University College of Law LITC – if Ms. Olson had not played such a critical role in the enactment of Section 7526.  Like many other law school LITCs, the matching funds authorized by Section 7526 prompted Syracuse to start an LITC back in 2002, and I have been there ever since, guiding hundreds of law students as they helped thousands of taxpayers unravel their tax problems . . . and loving every minute of it.  Thank you!

For my students, without you they would not have had the opportunity to put doctrinal tax law into practice, and to learn how to represent lower-income taxpayers. Many of them have gone on to careers in tax – some even at LITCs.  On their behalf, thank you!

For our clients, without you they would likely not have gotten (free, high-quality) representation to help them navigate our complex tax system.  On their behalf, thank you!

For all Americans, we would not have had 18+ years of brilliant and tireless advocacy on behalf of all of us.  We would not have the better, fairer tax system that we have.  If I can speak (one time) for our entire country; thank you!

And what about my one near-miss opportunity to meet Ms. Olson in person.  It happened in July 2017, when I was invited to tape a Continuing Education segment that was to be shared with TAS Case Advocates.  I traveled to a studio in suburban DC only to learn that Ms. Olson had uncharacteristically taken ill, so two other TAS attorneys and I made the tape without her.  I think we did a good job, but I know it would have been better with Ms. Olson.