Attorney case note
The issue
Whether petitioners’ execution of Form 870-LT barred a CDP challenge to their 2016–17 underlying liabilities, and whether Appeals abused its discretion by sustaining the proposed levy and NFTL filing.
What the Tax Court held
The Court held that the executed Form 870-LT was a valid waiver/closing agreement that precluded petitioners from challenging their 2016–17 underlying liabilities in the CDP proceeding. It further held that Appeals did not abuse its discretion in sustaining the levy and NFTL for those years. The Commissioner conceded 2018.
Key facts
- Ballengee Interests, LLC, a TEFRA partnership, claimed NOL carryforwards for 2016 and 2017 based on debt characterized as recourse.
- Petitioners executed Form 870-LT on June 2, 2020; its continuation page incorporated Form 886-A addressing the partnership-level adjustments.
- Petitioners later asserted that Form 886-A had not been attached when they signed and that they believed no adjustments had been proposed.
- After the IRS issued computational adjustments and collection notices, Appeals sustained the levy and NFTL; petitioners timely sought Tax Court review.
Why this matters
The decision applies section 7121 finality to an executed Form 870-LT in the TEFRA setting and confirms that a taxpayer who waived deficiency protections and agreed to partnership/affected-item determinations may be precluded from relitigating the underlying liability in a later CDP case.
Practical takeaway
Review incorporated schedules and adjustment explanations before executing Form 870-LT. In a subsequent CDP case, arguments that an incorporated attachment was not received may not invalidate the agreement absent an established statutory ground for setting aside a closing agreement, such as fraud, malfeasance, or material misrepresentation.
Source
Read the decision or court record ↗
This AI-assisted case summary is informational and is not legal advice. Consult the linked decision for the court’s complete opinion.