Attorney case note
The issue
Whether Appeals abused its discretion in sustaining a proposed levy and notice of federal tax lien in a collection-due-process proceeding, and whether a penalty should be imposed under I.R.C. § 6673.
What the Tax Court held
The Tax Court sustained Appeals’ collection determination, finding no abuse of discretion. The Court also granted the Commissioner’s motion and imposed a $10,000 penalty under I.R.C. § 6673 because the proceeding was instituted primarily for delay and/or advanced frivolous or groundless positions.
Key facts
- The case was submitted without trial under Tax Court Rule 122 on stipulated facts.
- Petitioner, an Ohio LLC wholly owned by Percy Squire, challenged collection of reported but unpaid Form 940 and Form 941 liabilities and a 2019 I.R.C. § 6721 civil penalty.
- Petitioner did not challenge the underlying liabilities in its CDP hearing requests; it sought an offer in compromise and, in the lien request, discharge of the lien.
- The August 2023 offer proposed $121,000 to resolve liabilities of petitioner, Percy Squire individually, and another entity. It lacked payment terms and was not accompanied by the required application fee or down payment.
- The IRS Centralized Offer in Compromise Unit returned the offer as not processable because IRS records reflected an open offer.
- Petitioner did not pursue lien relief at the CDP hearing or assign error to that determination in the petition; the Court treated that issue as abandoned or conceded.
Why this matters
The decision illustrates deferential abuse-of-discretion review of CDP collection determinations when underlying liability is not at issue. It also confirms that an unprocessable or incomplete OIC does not require Appeals to defer collection, and that repeat delay-oriented CDP litigation can warrant a substantial § 6673 penalty.
Practical takeaway
For a CDP collection alternative, ensure a timely, taxpayer-specific, processable submission with required fees, payments, financial disclosures, and current compliance. Preserve lien-relief issues expressly in both the CDP hearing and petition. This memorandum opinion also underscores the heightened § 6673 risk after prior judicial warnings or sanctions.
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.