On November 23, 2021, the Tax Court issued a Memorandum Opinion in the case of Roberts v. Commissioner (T.C. Memo. 2021-131). The primary issue presented in Roberts was whether the settlement officer abused his discretion in determining that petitioner was ineligible for a collection alternative.
Background to Roberts v. Commissioner
The petitioner has unpaid tax liabilities for 2004-2007. In an effort to collect these liabilities the IRS filed an NFTL, and in May 2019, the IRS mailed the petitioner a Notice of Federal Tax Lien. The petitioner timely requested a CDP hearing, indicating that she was interested in an installment agreement. She stated that the NFTL would have “severe negative impacts” upon her family. She raised no other issues in her hearing request.
The IRS sent the petitioner a letter explaining that the IRS could not consider her request for an installment agreement unless she became current in her Federal tax filing obligations and supplied a completed Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals), along with supporting financial information. The letter requested these documents by late August 2019. The petitioner did not submit any information.
Numerous calls were made, conferences scheduled, all the while, the IRS reiterated that the petitioner had to come into compliance with her filings and submit financial documents including a Form 433-A.
She did not…until 10 days after the deadline that the SO had given her in his final ultimatum.
The Tax Court Petition in Roberts v. Commissioner
In the petitioner’s Tax Court petition, she asserted that she had “proposed an alternative method of paying” her tax liabilities and that “a levy [sic] would constitute a financial hardship.” She stated that she was no longer working because she had to supervise her son, who was not going to school because of the pandemic. She maintained that she had incurred additional expenses in caring for her elderly mother. She did not dispute her underlying tax liabilities for 2004-2007.
The IRS filed a motion for summary judgment. The Tax Court directed petitioner to respond within 30 days, warning that failure to respond could result in a decision against her.
To the surprise of no one, especially the IRS, the petitioner filed no response.
Lauber the Magnanimous
Because the petitioner did not respond to the motion for summary judgment, the Tax Court could enter a decision against her for that reason alone. Judge Lauber, in his infinite grace, nevertheless considered the motion for summary judgement on its merits…and then went ahead and granted it anyway.
Abuse of Discretion? Hardly.
Although the petitioner “said” she was interested in an installment agreement, she did not in fact “propose” an installment agreement, and it is not an abuse of discretion to decline to consider something that was never proposed.
The petitioner failed to submit any financial information, and the SO was therefore unable to consider whether she qualified for a collection alternative. The Tax Court has consistently held that an SO does not abuse his discretion when he declines to consider a collection alternative for a taxpayer, like the petitioner, who is not in compliance with her current tax obligations, including making required estimated tax payments for the current year.
Summary Judgment and a Reminder in Roberts v. Commissioner
Finding no abuse of discretion in any respect, the Tax Court granted summary judgment for the IRS and sustained the collection action.
The Tax Court did note, however, that the petitioner was, technically, free to submit to the IRS at any time, for its consideration and possible acceptance, a collection alternative in the form of an installment agreement or an offer-in-compromise, supported by the necessary financial information.
The Tax Court did not go so far as to say that the petitioner’s Tax Court case was a total freaking waste of time, because the petitioner could simply have resubmitted her installment agreement application…but, you know, it was…
- See Rule 121(d). ↑
- Id. ↑
- See Gentile v. Commissioner, T.C. Memo. 2013-175, aff’d, 592 F. App’x 824 (11th Cir. 2014). ↑
- See McLaine v. Commissioner, 138 T.C. 228, 243 (2012). ↑
- See Giamelli v. Commissioner, 129 T.C. 107, 111-112 (2007); Boulware v. Commissioner, T.C. Memo. 2014-80, aff’d, 816 F.3d 133 (D.C. Cir. 2016). ↑