On November 16, 2021, the Tax Court issued its opinion in Ruhaak v. Commissioner, 157 T.C. No. 9. The primary issue presented in Ruhaak was whether the petitioner’s request for a hearing made before the expiration of the 30-day period following the mailing date of the levy notice necessarily triggered a CDP hearing and not an equivalent hearing.

Held: Timing is everything.

Background to Ruhaak v. Commissioner

The IRS sent the petitioner a Notice of Intent to Levy, and the petitioner dutifully requested a hearing regarding the proposed levy by submitting a Form 12153, Request for a Collection Due Process or Equivalent Hearing, within 30 days of the notice, during which the petitioner had a statutory right to request a collection due process (CDP) hearing.^[1] Thinking he was being clever, however, the petitioner checked the box on the Form 12153 to request an equivalent hearing in the event that his request for a CDP hearing was untimely.^[2]

Appeals determined that the petitioner timely requested a CDP hearing and thus was not entitled to an equivalent hearing. Following the CDP hearing, Appeals issued a notice of determination sustaining the proposed levy. The petitioner argued, however, that Appeals should have granted him an equivalent hearing because his Form 12153 constituted a written request for an equivalent hearing made within the one-year period provided for requesting an equivalent hearing.

The only reason the petitioner gave for requesting a hearing was that he sought “[r]eview of [a] personal statement of conscience with [the] hearing officer and incorporation of this complete text into the written record regarding this tax year.” Thus, when the settlement officer reached out to the petitioner to schedule his CDP hearing, he was confused and replied that he “did not request a Collection Due Process Hearing” and “did not request a hearing concerning tax year 2014.”

The petitioner explained that his “submission of IRS Form 12153…was a request for an Equivalent Hearing concerning tax year 2013. Item 7 is clearly marked.” He further explained that he believed his request “complie[d] with the regulatory requirement” for requesting an equivalent hearing because it “was made within the one-year period commencing the day after the date of the CDP levy notice.” The petitioner therefore asked the SO to revise her previous letter to reflect that he had requested an equivalent hearing.

Apparently, politeness, without reason, was objectively offensive to the SO, who found that the petitioner’s letter had not “provided a valid reason (in her view) to reschedule the telephone conference and had not been available when she called him for the conference as scheduled.”^[3] The petitioner, once more, politely responded that he wanted only an equivalent hearing. Once the SO scheduled the equivalent hearing, he would send her everything she wanted. But not before.

Appeals didn’t bite, and the SO sent the petitioner a notice of determination, which explained that because the Form 12153 was postmarked within 30 days of the notice of intent to levy, the petitioner had timely requested a CDP hearing. Appeals further concluded that the proposed levy for 2013 should be sustained on the grounds that the petitioner had not, technically, provided any information for the SO to consider, offered a collection alternative, disputed the underlying liability, or raised any other issues.

Shocked and appalled, but still polite, the petitioner filed a timely petition for review of the notice of determination in which he alleged that, despite his conscientious efforts to request an equivalent hearing for 2013, he received a notice of determination relating to a CDP hearing.

The nerve!

Not to be outdone, even though the IRS did not make any affirmative allegations in its answer, the petitioner filed a response to the answer in which he clarified that his position is that the notice of determination is invalid because the IRS didn’t have its listening ears on, and it conducted a CDP hearing, even though the petitioner had properly (and ever so cordially) requested an equivalent hearing.

At trial petitioner explained that he had requested an equivalent hearing so that he could present to Appeals his views on the morality of paying Federal income tax but without the possibility of subsequent Tax Court litigation or a fine. He conceded that he was aware that it is well settled that taxpayers may not object to the payment of Federal income tax on moral grounds…though he did enter his “written statement of conscience,” which “was admitted without objection to supplement the administrative record.”

And this part deserves a full quote:

The statement explains that petitioner believes he “must resist the payment of federal income taxes to the government of the United States of America” because it “coerces and compels all taxpayers to support the killing of human beings.” In particular, the statement notes that petitioner objects to paying for governmental involvement in abortion, capital punishment, warfare, and the production of weapons.

So, if you’re keeping score at home, the petitioner is basically a conscientious objector.

But instead of the Vietnam War, taxes.

When All You Want is an Equivalent Hearing

A key difference between a CDP hearing and an equivalent hearing is that the Tax Court has jurisdiction, pursuant to IRC § 6330(d)(1), to review a notice of determination issued by Appeals following a CDP hearing if a timely petition for review is filed, but the Court generally lacks jurisdiction to review a decision letter issued by Appeals following an equivalent hearing.^[4] In addition, a timely request for a CDP hearing suspends the running of certain limitations periods (e.g., the IRC § 6502 limitations period on collection of assessed taxes) while the hearing and any subsequent appeals are pending,^[5] whereas those limitations periods continue to run during an equivalent hearing.^[6]

Petitioner argued that because the one-year period established by regulation for requesting an equivalent hearing necessarily includes the 30-day period for requesting a CDP hearing, a taxpayer who makes a hearing request within that 30-day period may request an equivalent hearing instead of a CDP hearing.

The Tax Court, ever so politely, disagreed.

Time Periods for Requesting a CDP Hearing or an Equivalent Hearing

The rules governing CDP hearings, including the 30-day period for requesting such a hearing, are established by statute.^[7] Regulations provide further guidance on the application of the statutory framework.^[8] The regulations confirm that “[t]he taxpayer must request the CDP hearing within the 30-day period commencing on the day after the date of the CDP Notice.”^[9] When the IRS sends a levy notice by certified mail on the same date printed on the notice, the 30-day period for requesting a CDP hearing begins on the day after the date the notice is mailed.^[10]

If the 30-day period for requesting a CDP hearing ends on a Saturday, Sunday, or legal holiday, the end of the period for requesting a CDP hearing is extended until the next succeeding day that is not a Saturday, Sunday, or legal holiday.^[11] In addition, if the CDP hearing request is delivered to the proper recipient via U.S. mail after the end of the 30-day period, but was postmarked before the end of the period, it is treated as having been delivered on the date of the postmark.^[12]

Unlike the rules governing CDP hearings, the rules applicable to equivalent hearings are not established by statute.^[13] Equivalent hearings are instead governed by regulations implementing Congressional intent as gleaned from the legislative history of IRC § 6330.^[14] Those regulations explain that, to obtain an equivalent hearing, a taxpayer must submit a written request for an equivalent hearing within the one-year period commencing the day after the date of the CDP Notice issued under IRC § 6330.^[15]

Timeliness of the Petitioner’s Hearing Request

The petitioner requested a hearing concerning the proposed levy at issue in this case before the expiration of the 30-day period for requesting a CDP hearing. The Form 12153 was thus a timely request for a CDP hearing in that it was both postmarked and delivered before the expiration of the statutory period for requesting a CDP hearing.

The petitioner contends, however, that because he checked the box on his Form 12153 to request an equivalent hearing, it also served as a timely written request for an equivalent hearing that was submitted “within the one-year period commencing the day after the date of the CDP Notice” as provided in Treas. Reg. § 301.6330-1(i)(2), Q&A-I7. He argues, therefore, that the SO should have granted his request for an equivalent hearing instead of concluding that he had timely requested a CDP hearing.

The Tax Court notes that it “might be persuaded by petitioner’s argument” if it were to read Treas. Reg. § 301.6330-1(i)(2), Q&A-I7, in isolation. When construing a regulation, however, the Tax Court does not just look at the words or phrases in isolation, but rather it reads those words and phrases in their context.^[16] That context includes the governing statute and the entire scheme of regulations issued thereunder.^[17] In addition, the Tax Court’s interpretation of a regulation must “give effect to its plain and ordinary meaning unless doing so would produce absurd or unreasonable results.”^[18]

In so reading the regulation, the Tax Court concludes that only those taxpayers who fail to timely request a CDP hearing are eligible to request an equivalent hearing. Logically, a taxpayer cannot yet have failed to make a timely request for a CDP hearing before the 30-day period for requesting a CDP hearing has expired.^[19]

Since the petitioner mailed and the Appeals Office received his Form 12153 within the 30-day period (as extended by IRC § 7503) for requesting a CDP hearing under section 6330, he was not eligible under the plain text of Treas. Reg. § 301.6330-1(i)(1) to request an equivalent hearing. The Tax Court, therefore, held that the petitioner’s request for a hearing made before the expiration of the 30-day period following the mailing date of the levy notice necessarily triggered a CDP hearing and not an equivalent hearing. The SO properly granted petitioner a CDP hearing and, at the conclusion of the CDP hearing, Appeals properly issued him a notice of determination.

Footnotes:

1. See IRC § 6330(a)(2), (3); Weiss v. Commissioner, 147 T.C. 179, 187-191 (2016). ↑
2. Under the applicable regulations, a taxpayer who fails to make a timely request for a CDP hearing may request an equivalent hearing instead, provided that the request for an equivalent hearing is made in writing within the one-year period commencing on the day after the date of the levy notice. Treas. Reg. § 301.6330-1(i)(1), (2), Q&A-I7. ↑

3. 

   In fairness, the SO also noted that the petitioner had not provided any of the information she had requested in her previous letter. ↑

4. See Ramey v. Commissioner, 156 T.C. 1, 9-11 (2021); Weiss v. Commissioner, 147 T.C. at 188; Craig v. Commissioner, 119 T.C. at 257-259. ↑
5. See IRC § 6330(e)(1); Treas. Reg. § 301.6330-1(g)(1) and (2), Q&A-G1 ↑
6. See Weiss v. Commissioner, 147 T.C. at 188; Treas. Reg. § 301.6330-1(g)(2), Q&A-G2, (i)(2), Q&A-I3. ↑
7. See IRC § 6330(a)-(c); Ramey, 156 T.C. at 2-3, 8-9; Weiss, 147 T.C. at 187-88; Craig, 119 T.C. at 257-58. ↑
8. See Ramey, 156 T.C. at 9; Treas. Reg. § 301.6330-1. ↑
9. Treas. Reg. § 301.6330-1(b)(1), (c)(1)-(2), Q&A-C3. ↑
10. Weiss, 147 T.C. at 189-191; see also Ramey, 156 T.C. at 9; Treas. Reg. § 301.6330-1(a)(3), Q&A-A9 (stating “[n]otification properly sent to the taxpayer’s last known address…is sufficient to start the 30-day period within which the taxpayer may request a CDP hearing”). ↑
11. See IRC § 7503; Treas. Reg. § 301.6330-1(c)(2), Q&A-C4; see also Ramey, 156 T.C. at 9-10, 10 n.9; Weiss, 147 T.C. at 189; Treas. Reg. § 301.6330-1(c)(3), Ex. (1). ↑
12. See IRC § 7502(a); Weiss, 147 T.C. at 189; Treas. Reg. § 301.6330-1(c)(2), Q&A-C4. ↑
13. See Craig, 119 T.C. at 258. ↑
14. Id. ↑
15. Treas. Reg. § 301.6330-1(i)(2), Q&A-I7 and Q&A-I9 (stating “[a]ll taxpayers who want an equivalent hearing must request the hearing within the one-year period commencing the day after the date of the CDP Notice issued under IRC § 6330”). ↑
16. See Shea Homes, Inc. v. Commissioner, 142 T.C. 60, 100 (2014) (citing FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)), aff’d, 834 F.3d 1061 (9th Cir. 2016). ↑
17. See id. at 100-01. ↑
18. See Union Carbide Corp. v. Commissioner, 110 T.C. 375, 384 (1998). ↑
19. See Treas. Reg. § 301.6330-1(i)(1). ↑

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