With a widening tax gap and growing federal deficit, Congress and the IRS may opt for more aggressive
tax enforcement, which could come a t the expense of taxpayers' procedural due process rights.
MARILYN E. PHELAN, CPA and A r t o r n e y
concern with the tremendous
and ever-increasing federal
budget deficit (estimated to be
in the trillions given the enormous projected costs of the
recently enacted financial rescue and economic
stimulus plans) may lend continuing support
for the Treasury Department's current more
aggressive tax enforcement policy.' This could
swing the pendulum back to having the IRS
revert to the giant enforcement authority,
with little sensitivity to taxpayers' rights, as it
once was perceived to be. Several members of
Congress became concerned in the 1990s that
the harsh and highly intrusive collection measures of the IRS (in their view at least), had
caused violations of taxpayers' procedural
due process rights.
Taxpayer Bill of Rights
Although a 1988 Taxpayer Bill of Rights
(TBR1) established new procedures that
required the Service to interview taxpayers to
ensure they were knowledgeable of the audit
and collection process, the 1988 Bill of Rights
failed to curb the extensive collection powers
of the Service. This congressional concern led
to the enactment of a limited taxpayers'bill of
rights for taxpayers in 19963 (TBR2), followed two years later by the enactment of the
much more comprehensive Internal Revenue
Service Restructuring and Reform Act of 1998
(IRSRRA)4(popularly known a's the Taxpayers' Bill of Rights,' and referred to in this article as Taxpayers' Bill of Rights 3 or TBR3) to
curb the then perceived high-handed tactics
of an overly powerful IRS.
The 1998Act followed the issuance of a report,
"AVision for a New IRS, Report of the National
Commission on Restructuring the Internal
Revenue Ser~ice,"~
in which the Commission
noted that it had been over 40 years since Congress and the President had csnsidered significant IRS reforms. The Commission stated
that its goal was "to recommend changes to the
IRS that will help restore the public's faith in the
American tax system."As aC'guidingprinciple,"
the Commission stated its belief "that taxpayer satisfaction must become paramount at
the new IRS and that the IRS should initiate con-
MARILYN E. PHELAN, CPA, Ph.D., J.D., is the Paul W h i t field Horn Professor o f l a w - a t Texas Tech University i n Lubbock, Texas. Ms. Phelan is also of counsel a t Field, Manning,
Stone, Hawthorne eb Aycock, i n Lubbock
MARCH 2009 PRACTICALTAX STRATEGIES
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: tact with a taxpayer only if the agency is pre: pared to devote the resources necessary for a
proper and timely resolution of the matter."TBR3
: provided for a more balanced means to collect
taxes (between the Service's need to adminis-
: ter the tax laws and the rights of taxpayers).
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TBR3 overlaid a previous highly aggressive
federal collection system that some contended
"involved very little judicial oversight.' The perceived lack of judicial oversight was evidenced by the fact that, prior to TBR3, neither
administrative nor judicial review was available to challenge a tax deficiency after assessment until the taxpayer paid the alleged
liability. Section 7422 states that a suit cannot
be brought in any court for recovery of any tax
allegedly erroneously assessed or collected until
the taxpayer pays the tax and files a claim for
refund. Section 6343(b) was available to grant
taxpayers the right to file a claim, after the Service had levied on taxpayers' property, for return
of wrongfully levied property. Further, under
Section 7426, a third party was permitted to
file a claim in a federal district court to challenge a levy the Service made on the third party's
property or to recover property the Service had
sold pursuant to a levy.
One of the most important features of
TBR3 was that it provided a means to challenge
IRS action after an assessment but prior to the
Service levying on a taxpayer's property.' Further, TBR3 was designed to provide taxpayers
with a means to replace the old IRS with a kinder,
"more user friendlyngorganization that would
identify good customer service and address taxpayer rights in a much more fundamental and
pervasive manner than in the past.
Although the TBRl did not curtail the then
extensive IRS collection powers, it did add Section 7520 (currently Section 7521) to the Code
to require the Service to inform a taxpayer of
his or her rights and the Service's obligations
during the audit, appeals, refund, and collection process. Section 7521 requires that a representative of the taxpayer who has a properly
executed power of attorney be permitted to represent the taxpayer during all stages of the
administrativeprocess. (A taxpayer grants a representative a power of attorney by filing Form
2848 with the Service.)
Further, if the taxpayer clearly states during an interview with the Service that he or she
wishes to consult with the representative, the
interview must be suspended to afford the taxpayer a reasonable opportunity to do so.'' In
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addition, absent an administrative summons,
a taxpayer cannot be required to accompany
the representative to an interview." The Service must explain the audit process and the taxpayers' rights under the process prior to the
initial in-person audit interview.''
I R S Publications. Pursuant to the requirements of TBRl and TBR3, the IRS. now provides taxpayers with clear, nontechnical
information regarding their rights in several
IRS publications:
IRS Publication 1, "Your Rights as a Taxpayer,'' explains the general rights of taxpayers.
IRS Publication 5, "Your Appeal Rights and
How to Prepare a Protest If You Don't
Agree," informs taxpayers how to appeal a
tax case.
IRS Publication 594, "The IRS Collection
Process," describes the collection process.
IRS Publication 556, "Examination of
Returns, Appeal Rights, and Claims for
Refund," includes a detailed, nontechnical
discussion of taxpayers' rights.
IRS Publication 1660, "Collection Appeal
Rights," provides information on how to
file an appeal.
IRS Publication 1546,"The Taxpayer
Advocate Service," sets out means to
obtain help with unresolved tax problems.
Abuse of discretion standard. Courts have used
an abuse of discretion standard to review the
Service's adverse determinations. The abuse of
discretion standard is more fully discussed
below. In Porter,13a recent Tax Court case, the
court ruled that review for abuse of discretion
does not preclude the court from conducting
a de novo trial in a Section 6015(f) case. Further, in Perkins,14 the court stated that its
review is de novo when the underlying tax liability is at issue, but that it reviews an IRS determination for abpse of discretion when the
underlying tax liability is not at issue. Section
6015(f) and these two cases will be discussed
in more detail below.
Recent case
The Service's apparent reversion to a stricter
interpretation of the Code and the courts'continuing use of the abuse of discretion standard
to review IRS determinations, however, leaves
doubt as to the current effectiveness of taxpayer
relief measures, some of which were created,
and others enhanced, by TBR3. For example,
TAXPAYERS' PRODEDURAL RIGHTS
the Tax Court in Perkins affirmed the Service's
determination that the taxpayers could not offset their tax deficiencies with a tax overpayment for a year when the limitations period had
run on a refund claim for the,overpayment.This
exemplifies a diminished concern for taxpayers' interests.
The taxpayer spouses in Perkins agreed
that they owed tax for the tax years 1995 and
2000, but they requested the IRS Appeals officer to apply an overpayment for 1999 to their
1995 and 2000 liability.The taxpayers filed their
1999 return in 2004. It was not in dispute that
they overpaid their 1999 tax liability by an
amount sufficient to cover the unpaid tax liability for 1995 and 2000. However, the Appeals
Officer refused to give them credit for the overpayment because they filed the return more than
three years after its due date or extended due
date. (The taxpayers had not filed for an
extension of time to file the 1999 return.)
Section 6 5 1 1 requires that a claim for
refund be filed within three years from the time
the return was filed or two years from the time
the tax was paid, whichever expires later. The
taxpayers' 1999 return, filed in 2004, constituted their claim for refund. Because the taxpayers' refund claim was filed more than three
years after the return was due, the limitations
period had expired (tax was paid in 1999
through wage withholdings). Section 65 11(h)
suspends the limitations period while a taxpayer
is unable to manage financial affairs due to disability. The taxpayer contended he had mental health difficulties that reflected a diagnosis
of bipolar disorder and depression. However,
he did not submit evidence of mental illness.
The Tax Court remanded the determination
for the 1995 and 2000 tax years to the Office
ofAppeals for reconsideration of the taxpayer's
claim that he was financially disabled so that
his 1999 overpayment should be applied to his
tax liability for those years. On remand, his claim
was denied again because he did not submit
required evidence of financial disability. The
Appeals Officer had furnished him with the
applicable guidelines, set out in Rev. Proc. 9921,15to be used in determining whether a taxpayer is financially disabled.
A taxpayer must include a physician's written statement with a claim of refund that sets
out the physician's opinion that the taxpayer
cannot manage his or her financial affairs, as
well as the time and length of the impairment.
The taxpayer did not provide a statement
TAXPAYERS' PROCEDURAL RIGHTS
from a physician. The Tax Court affirmed, in
Perkins,16 the Appeals Officer's ruling that the
taxpayer failed to show he was financially disabled during the period in which his 1999
refund claim could have been timely filed. It
agreed with Appeals that the taxpayers' tax overpayment in 1999 could not offset their 1995 and
2000 tax year liability.
Tax gap
One of Treasury's continuing concerns has been
the federal tax compliance rate. The IRS has
developed a concept called the "tax gap,"which
is the difference between the amount of taxes
owed and what actually is collected, or what taxpayers pay on a timely basis, as a method to
gauge taxpayers' compliance with their federal
tax obligations. The Treasuryre1eased"Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance" in August 2007. The.
report outlined tax gap activities and efforts.
It noted that in fiscal year 2006, federal receipts
totaled over $2.4 trillion and that the IRS collected 95% of the net receipts.
Thus, it reported that the overall compliance rate in the federal revenue system was quite
high. Still, as noted in the report, "an unacceptably large amount of the tax that should
be paid every year" is causing compliant taxpayers to "bear a disproportionate share of the
revenue burden."
The tax gap, then, is a compliance gap; it measures the extent to which taxpayers do not pay
their correct tax liability. The Service has
estimated the tax gap as approaching slightly
more than a quarter billion dollars annually,
$197 billion from individuals underreporting
on their tax returns and $88 billion from cor-
Personal Financial
Statement Software
www.networthexpress.eom
MARCH 2009
PRACTICAL TAX STRATEGIES
: porations and self-employeds underreporting
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The Service conducted the National Research
Program (NRP) in 2001 to determine the tax
gap. This was the first comprehensive effort to
measure the tax gap since 1988.As part of the
NRP, the IRS reviewed approximately 46,000
randomly sampled individual tax returns for
200 1. The findings showed that the gross tax
gap was $345 billion in 2001. a percentage
of tax liability for 2001, this represented a compliance rate of about 83.7%. Enforcement
activity and late payments reduced the gross
Assessment and collection
tax gap by $55 million, resulting in a net tax
gap of $290 billion and a net noncomp~~anceThe assessment of a tax liability is the starting
point in the IRS collection process. Assessment
rate of 13.7% percent for 2001."
when Congress set as a priority a need to is made after the following three steps occur:
narrow this tax gap and called for increased 1. A return has been audited (or after audit
when no return was filed).
IRS enforcement activity, the Treasury began
2.
The taxpayer has been given a 90-day
renewed emphasis on aggressive tax enforcenotice
of a tax deficiency resulting from
ment.lgWhile the Treasury's strategy to close
the audit or the failure to file a return.
the close gap is positive in that it represents
an emphasis on the integrity of the tax system, 3. The taxpayer's right to appeal through
the Tax Court has elapsed."
a new aggressive tax enforcement system may
After
assessing a tax, the Service has a lien
lead to a perceived reduced emphasis on taxon all the taxpayer? property and right to proppayers' due process rights. An aggressive tax
erty2' The lien arises at the time the assessment
enforcement program can affect taxpayers in is made and continues until the tax liability is
other contexts.
satisfied or becomes unenforceable by reason
For example, in Arguelles-Olivares v.
of lapse of time.23
Mukasey,'O the Fifth Circuit recently denied a
propcrtv. Except for exempt proppetition of review of a removal order of the ertylisted in Section 6334, all property on which
Board of Immigration Appeals for a person who the Service has a tax lien is subject to ley by
filed a false tax return. The Department of the Service.Section 6334 sets out the followHomeland Security instituted removal pro- ing exempt property:
ceedings charging that the individual, who was
wearing apparel and school books.
born in Mexico but who had been a permanent 2. Fuel, provisions, furniture, and personal
resident in the U.S. for more than 30 years, was
effects in the household, livestock, and
removable pursuant to 8 U.S.C section
p o u ~ t r yofthe taxpayer that does not
1227(a)(2)(A)(iii).The Board of Immigration
exceed $6,250 in value (indexed for
Appeals affirmed the removal order. The perinflation to $8,230 for 2009).
son was ordered returned to Mexico and was 3. ~~~k~ and toois necessary for the trade,
permanently barred from re-entry into the U.S.
business, or prof:;sion
of the taxpayer
his person, a self-employed masonry conthat does not exceed $3,125 in value
tractor, was married and had a daughter who
(indexed for inflation to $4,120 for 2009).
was a student at a university in Texas. A dis- 4. Unemployment benefits.
senting justice in Arguelles-Olivares termed the 5. Undelivered mail.
majority opinion "unfortunate," contending that 6. Certain annuity and pension payments.
"alien-hostile statutory construction" exposes 7. Worker's compensation.
aliens to the potential of unfair practices and 8. Judgments for support of minor children.
inequality of justice. According to Justice 9. Minimum exemption for salary, wages,
and other income.
Dennis, deportation in a case like ArguellesOlivares is "based on constructive paper trials 10.Certain service-connected disability
without juries rather than on records of judipayments.
cia1 convictions."
11.Certain public assistance payments.
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PRACTICAL TAX STRATEGIES
.
The remainder of this article summarizes
the present collection authority of the IRS and
outlines the procedural avenues currently
available to taxpayers to challenge IRS enforcement measures. The article also discusses
recent Code amendments and current IRS
court interpretations of Code and regulations provisions, which have been superimposed
onthetaxpa~ers'a~~eal~rocedures
described
in this article, to illustrate apotential tightening
of taxpayer relief.
MARCH 2009
TAXPAYERS' PRODEDURAL RIGHTS
l2.Assistance under Job Training Partnership Act.
13.Residences in small deficiency cases
(where the levy does not exceed $5,000),
and the taxpayer's principal residence in
the absence of certain judicial approval
or jeopardy.
The exempt amount of wages, salary, or other
income is an amount equal to the sum of the
standard deduction and the aggregate amount
of the deductions for personal exemptions.
IRS review process. Although not codified,
section 3421 of the IRSRRA requires the Service to develop and implement procedures
under which an IRS supervisor must review an
employee's determination to file a notice of levy
on any property or right to property belonging to a taxpayer before the Service takes action.
The review process may include a certification
that the Service employee has reviewed the taxpayer? information, has verified that a balance
is due, and has affirmed that the proposed action
is appropriate given the taxpayer's circumstances
and considering the amount due and the value
of the property or right to property.
Liens and levies. Pursuant to Section 7425,
when property is subject to a tax lien and
the lien has been filed of record for at least 30
days, the U.S. must be made a party to any civil
action or suit by a third-party creditor. In the
case of a nonjudicial sale, the IRS must be given
proper notice of the sale. Failure to give
proper notice to the Service of a nonjudicial
sale, or failure to join the U.S. in a civil suit,
causes any sale or judgment to be ineffective
as to the tax lien. The lien will be unaffected
by any foreclosure proceeding and will follow
the property into the hands of the purchaser.
Except for a taxpayer's salary or wages, a levy
does not apply to after-acquired property; it
extends only to property possessed and obligations existing at the time of the levy.24HOWever, a levy on salary or wages "shall be continuous from the date such levy is first made
until such levy is released under section
6343."25After the Service has levied on a taxpayer's property, it can foreclose on the property, sell the property, and apply the proceeds
against the tax liability.'Vhe IRSRRA amended
Section 6335 by preventing the IRS from
determining just a minimum price for the property. Section 6335(e)(l)(A) now requires the
Service to determine a minimum price below
which the property may not be sold.
TAXPAYERS' PROCEDURAL RIGHTS
The IRS also can pursue a personal action !
against a taxpayer to reduce a tax lien to judgment, in which case the limitations period of :
collection of the tax is extended until the judgment is satisfied or becomes unenforceable.''
The limitation on collection of a tax is ten years :
from the date of the assessment or, if there is :
an installment agreement between the taxpayer !
and the IRS, 90 days after the expiration of any :
period for collection agreed on in writing by :
the taxpayer and the Service at the time the f
installment agreement was executed."
Prior to TBR3, a taxpayer could challenge a :
notice of tax deficiency only by requesting an :
administrative review within 30 days after !
receiving a letter from the Service setting out
the deficiency." A taxpayer had no other ad- :
ministrative appeal rights. A taxpayer could :
obtain judicial review of a deficiency prior to
payment onlyby filing a petition for review with
the Tax Court within 90 days after receiving a :
notice of deficiency from the IRS3' The notice !
of deficiency followed an unresolved adminis- :
trative appeal or a taxpayer's failure to respond :
to the 30-day letter either inadvertently or as a :
waiver of an administrative appeal. Taxpayers f
could not bring suit in court to challenge a tax :
assessment prior to the taxpayer paying the :
alleged deficiency and filing a claim for r e f ~ n d . ~!'
As a result of the TBR3, taxpayers now have :
numerous appeal routes, discussed below, that :
grant taxpayers certain basic due process :
rights both in instances in which the taxpayer
agrees with a tax deficiency but does not have
sufficient funds to pay the deficiency, and :
instances in which the taxpayer disagrees with :
the deficiency. TBR3 also amended Section 1
62 13(a) to provide that an assessment may be
enjoined by a "proceeding in a 'proper court,' :
including the Tax Court."~-Theamendment !
permits the "proper court" to order a refundC'of :
any amount collected within the period dur- :
ing which the Secretary is prohibited from col- !
lecting by levy or through a proceeding in court."
Help clients incolporate orform an LLC.
Accomrnnafiom m o r r the eolrnny turn to
The Company Corporation
ro incorporateorform limit~dliabiliiycompania$r rheir clima.
COMFANY
CORPORATIOW
MARCH 2009
PRACTICALTAX STRATEGIES
:
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f Procedural relief avenues-taxpayer
: agrees with tax deficiency
: If a taxpayer agrees with a tax deficiencybut does
: not have funds available to pay the deficiency,
: the following options are available to avoid the
f IRS levying on the taxpayer's property.
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Extension or installments. The taxpayer may
obtain relief from the seizure of his or her property by obtaining an extension for payment of
the tax or by working out an agreement with
the Service to pay the tax over a period of time
through an installment agreement.32The taxpayer files Form 9465,"Installment Agreement
Request:' or Form 2159, "Payroll Deduction
Agreement." However, the Service requires a
taxpayer to pay $52 for direct debit installment
agreements (where payments are deducted from
the taxpayer's financial institution) and $105
for other agreements to obtain the right to pay
his or her taxes in installments. Taxpayers with
income at or below established levels may apply
and be qualified to pay a reduced user fee of
$43 for establishing new agreement^.^^
Although not codified, section 3506 of the
IRSRRA requires the IRS to report to a taxpayer,
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who has an installment agreement in effect, his
or her initial balance at the beginning of the
year, the payments made during the year, and
the remaining balance as of the end of the year.
Offer in compromise. A taxpayer who is unable
to pay a tax liability in a lump sum or through
an installment agreement can file an offer in
compromise (OIC) to settle his or her tax liability for less than the full amount.34Enforcement action by the Service is suspended
during the period the Service evaluates an offer.
It generally takes the Service 12-18 months to
evaluate an offer to compromise a taxpayer's
tax liabilities.
A taxpayer must submit an OIC on Form
656, Offer in Compromise, and must include
Form 433-A (433-B for businesses) if the
offer is based on doubt as to collectability or
promotion of effective tax admini~tration.~'
The OIC applies to all taxes, including
interest and pena1ties.A taxpayer must file all
delinquent tax returns and pay any required
estimated tax payment to be eligible for an OIC.
Further, in order to avoid defaulting an OIC
once the Service accepts the offer, the Service
requires the taxpayer to remain in compliance
in the filing and payment of all required taxes
for five years or until the offered amount is paid
in full, whichever is longer. Failure to comply
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PRACTICAL TAX STRATEGIES
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with this condition results in the default of the
OIC and the Service reinstating the tax liability.
(This requirement is set out in Form 656; however, neither the Code nor regulations contain
the requirement.)
Taxpayers should use a checklist in Form 656
to determine if they are eligible for an OIC. The
objective of the OIC program is to accept a compromise when it is in the best interests of both
the taxpayer and the government, and promotes
voluntary compliance with all future payment and filing requirement^.^^ The worksheet
for Form 656 will inform a taxpayer of the offer
amount that the Service probably will accept.
The Form 656 OIC package contains a
worksheet titled "IRS OIC Monthly Low
Income Guidelines Worksheet" designed to
assist taxpayers in determining whether
they qualify for the income exception to their
otherwise required payment of the application fee. A taxpayer should use the worksheet in Form 656-A, "Income Certification
for Offer in Compromise Application Fee,''
to determine whether the taxpayer qualifies
as a low-income taxpayer and, thus, will not
be required to pay the application fee.
The Service will delay collection activities
while it is evaluating an OIC, for 30 days immediately after the offer is rejected, and while the
Service's Office ofAppeals is reviewing the taxpayer's timely-filed appeal of a rejected OIC.37
The taxpayer has 30 days to request the IRS
Appeals Office to reconsider the offer.38IRS Publication 1660,"Collection Appeal Rights7'provides information on how to file the appeal.
The IRS will not levy on the taxpayer's property during these periods. Further, if the Service rejects the taxpayer's offer and the taxpayer
submits a revised offer within 30 days of the
rejection, the Service will not levy on the taxpayer's property while it considers the revised
offer.39
Section 7122 wasamended byTBR3 to add
n ~ ~requires the Service to
a new s u b s e ~ t i o that
prescribe guidelines for IRS officers and
employees to determine whether an offer-incompromise is adequate and should be accepted
to resolve a dispute. Section 7122(d) requires
the Service to develop and publish schedules
of national and local allowances designed to
assure that taxpayers entering into a compromise have adequate means to provide for
basic living expenses. The guidelines require
IRS employees to determine, on the basis of the
facts and circumstances for each taxpayer,
TAXPAYERS' PRODEDURAL RIGHTS
whether the use of the published schedules is
appr~priate.~'
The IRS employees may not use
the schedules to the extent their use would result
in the taxpayer not having adequate means to
provide for basic living expenses.
The guidelines prevent an IRS employee from
rejecting an OIC from a low-income taxpayer
solely on the basis of the amount of the offer.
Section 7122(d) also prevents an IRS employee
from rejecting an OIC that relates only to issues
of liability of the taxpayer because the Service
is unable to locate the taxpayer's return or return
information for verification of the liability. Further, a taxpayer is not required to provide a
financial statement.
The IRSRRA added present Section 7122(e)
to require the Service to establish procedures
for an independent administrative review of any
rejection of a taxpayer's proposed OIC or installment agreement before rejection is communicated to the taxpayer. The procedures must
permit a taxpayer to appeal any rejection of an
OIC or installment agreement to the IRS
Office of appeal^.^'
Although not codified, sections 3462(d) (1)
through (3) of IRSRRA require the Service to
prepare a statement that sets forth in simple,
nontechnical terms the rights of a taxpayer and
the obligations of the Service relating to OICs.
The statement must advise taxpayers who have
entered into a compromise of the advantages
of notifying the IRS promptly of any change of
address or marital status; provide notice to taxpayers that in the case of a compromise terminated due to the actions of one spouse or
former spouse, the Service will, on application,
reinstate the compromise with the spouse or former spouse who remains in compliance with
the compromise; and provide notice to the taxpayer that the taxpayer may appeal the rejection of an OIC to the IRS Office of Appeals.
The Seventh Circuit recently ruled that
the "decision to entertain, accept or reject an
offer in compromise is squarely within the discretion" of the IRS.43Still, alternative dispute
resolution is available to taxpayers.
Section 7123 requires the Service to prescribe
procedures by which a taxpayer or the Office
of Appeals may request nonbinding mediation
on any issue unresolved at the conclusion of
the Appeals procedures or unsuccessful attempts
to enter into a closing agreement under Section 7121 or a compromise under Section 7122.
The Service recently announced that it has
established a two-year test of the mediation and
TAXPAYERS' PROCEDURAL RIGHTS
arbitration procedures for offer-in-compromise !
and trust fund recovery penalty cases that are :
under the jurisdiction of the Office 0fAppea1s.~~
Neither mediation nor arbitration is avail- :
able in cases where:
1. The taxpayer has the ability to pay in full :
based on unadjusted financial information submitted by the taxpayer (except
for economic hardship).
2. The taxpayer declines to amend or
increase the offer without stating any
:
specific disagreement with the valuations, figures, or methodology Appeals
.
used in determining reasonable collection potential.
3. The disputed issue is explicitly addressed 1
in established guidance (such as the
:
instructions for Form 656).
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4. An OIC is submitted as an alternative to
:
collection in a Collection Due Process
:
(CDP hearing,
- which is discussed below) :
:
or equivalent hearing case.
5. Appeals previously determined the issue :
:
of liability.
:
6. Appeals determines'that acceptance of an :
offer is not in the best interest of the gov- :
ernment.
Mediation is not available if the taxpayer
attempted to resolve the matter earlier through
fast-track mediation. Arbitration is not available in corporate OIC cases if the issue is
whether an individual is responsible for a trust
fund recovery penalty or if it is a doubt-as-toliability case. Appropriate issues for mediation
or arbitration in OIC cases include:
1. Value of assets, including those held by a
third party.
2. Value of dissipated assets and what
amount should be included in the determination of reasonable collection potential.
3. Taxpayer's proportionate interest in
jointly held assets.
4. Projections of future inc2me based on
calculations other than current income.
5. Calculation of a taxpayer's future ability
to pay when living expenses are shared
with a non-liable person.
6. Other factual determinations.
A perceived concern about the ease with
which taxpayers could compromise their tax
liability after TBR3 apparently prompted Congress to add the current Section 7122(c) to the
Code in 2005.45New Section 7122(c) became
effective 5/17/06, for o'ffers submitted on or after
7/16/06. This section now requires a taxpayer
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PRACTICAL TAX STRATEGIES
IF A TAXPAYER
CANNOT RESOLVE
A DISPUTE WITH
THE SERVICE. THE
TAXPAYER CAN
REQUEST HELP
FROMTHE
NATIONAL
ADVOCATE AND
MAY QUALIRI FOR
A TAXPAYER
ASSISTANCE
ORDERTO REQUIRE
THE SERVICE TO
CEASE ITS ACTION
AGAINST THE
TAXPAYER.
155
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to pay20% of any lump-sum OIC with the tax: payer's submission of the offer. A lump-sum offer
means any offer of payments made in five or
: fewer installment^.^^ The Service considers the
20% payment for a lump-sum offer and the
: installment payment on a periodic payment
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DESPITE THE
CLEAR
LANGUAGE OF
SECTION 7491.
THE lRS
CONTINUES TO
CONTEND I N
MANY CASES
THAT THE
BURDEN OF
PROOF REMAINS
WITH THE
TAXPAYER.
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offer as "payments of tax" and will not refund
these amounts if the Service determines the offer
is not processable or the Service later returns,
withdraws, rejects, or terminates the offer.
The Service also requires a person submitting
an OIC to pay a $150 filing fee unless it is submitted solely on doubt as to liability, or the taxpayer's total monthly income falls at or below
250% of the Department of Health and Human
Services poverty income levels.47
The payment must accompany the OIC.48A
low-income taxpayer can qualify for an income
exemption from the filing fees. Further, the submission of a periodic payment OIC must be
accompanied by the payment of the first proposed installment." A failure to make an
installment payment during the period the Service is evaluating the offer can be treated as a
withdrawal of the offer.50
Noncollectible status. A taxpayer who does
not have sufficient funds or assets to pay a tax
deficiency can request to be placed on noncollectible status to prevent the IRS from
levying on the taxpayer's salary, Social Security payments, and other benefits." The collections' limitations period continues to run
so that the tax deficiency can later become noncollectible because of time limitations. The limitation on collection of a tax is ten years from
the date of the assessment or, if there is an
installment agreement between the taxpayer
and the Service, 90 days after the expiration
of any period for collection agreed on in writing by the taxpayer and the Service at the time
the installment agreement was executed.''
Proced~.lralrelief avenues-taxpayer
does not agree with tax deficiency
If a taxpayer does not agree with an alleged tax
deficiency, the taxpayer has the following
avenues of appeal or review.
Administrative review. A taxpayer may request
a meeting with the supervisor of the person who
issued the findings.The taxpayer also may appeal
an alleged tax deficiency to the Appeals Office
by requesting administrative review.53 The
appeal must be filed within 30 days from the
date of the deficiency determination letter, called
PRACTICAL TAX STRATEGIES
MARCH 2009
the 30-day letter.54The Appeals Office is separate from, and independent of, the IRS office
that determined the disagreed action against the
taxpayer.55The Appeals Office is the only level
of administrative appeal within the Service.
Conferences with Appeals Office personnel are
held in an informal manner by correspondence,
by telephone, or at a personal conference. For
further information regarding the process, see
the Appeals websitte at www.irs.gov/appeals.
The taxpayer may be required to file a
written protest with the Appeals Office. If the
total amount for any tax period is not more than
$25,000, the taxpayer may make a small case
request instead of filing a formal written
protest.56A taxpayer maybe able to recover reasonable administrative costs, and later litigation fees, if the taxpayer is the prevailing
party and meets other requirements set out in
Section 7430. To qualify for recovery of attorneys' fees, the taxpayer must exhaust administrative remedies within the Service; thus, the
taxpayer must request the administrative
appeal if the taxpayer later wants to recover these
fees from the IRS."
Petition for Tax Court review. If the taxpayer
does not request an appeals conference or disagrees with some or all of the issues after the
appeals conference, the taxpayer will receive
a formal notice of deficiency that permits the
taxpayer to file a petition for review with the
Tax Court within 90 days from the date the
notice is mailed to the taxpayer (150 days if the
notice is addressed to a taxpayer outside the
U.S.).58The taxpayer generally will have an
opportunity to attempt settlement with Appeals
before the trial date with the Tax Court.59
If the amount in the case is $50,000 or less
for any one tax year or period, the taxpayer can
request that his or her case be handled under
the small case pro~edure.~"
However, the decision of the Tax Court in a small case procedure
is final; a taxpayer m$not appeal the decision6'
The Clerk of the Tax Court will provide information about this simplified procedure and
about other matters relating to an appeal to the
Tax Court.
The taxpayer generally will have an opportunity to attempt settlement with Appeals
before the trial date with the Tax Court.
Audit reconsideration. A taxpayer can request
an audit reconsiderationif the taxpayer disagrees
with a tax assessment made after an audit of
the taxpayer's return or where the Service created a return for a taxpayer who did not file (as
TAXPAYERS' PRODEDURAL RIGHTS
authorized by Section 6020(b)).62The taxpayer
should file Form 4549 with the Service at the
address noted in Publication 3598. The Service
will accept an audit reconsideration request if
the taxpayer has information that the Service
had not considered previously that could
change the tax owed or provide the taxpayer
with a tax credit, if the taxpayer files a return
after the Service has prepared a return for the
taxpayer, if the taxpayer believes the Service
made a computation or processing error in
assessing the tax, or if the liability is unpaid
or credits were denied.63
Fast track mediation. A taxpayer may request
"fast track mediation" to help the taxpayer
resolve disputes promptly through mediation." If a taxpayer does not agree with any or
all of the Service's determinations, the taxpayer
may request a conference with the manager of
the IRS employee who issued the determinations. The process is designed to help the taxpayer and the Service resolve their dispute.
The process involves an Appeals Officer who
has been trained in mediation and whose
role is to facilitate communication. The taxpayer can represent him or herself or have a
representative at the mediation session. (A taxpayer files Form 2848 with the Service to designate the person who will represent the
taxpayer at the session.) For further information regarding the process, review the Appeals
website at www.irs.gov/appeals.
Collection due process hearing. ASnoted previously, the purpose of TBR3 was to provide
taxpayers with pre-deprivation opportunities to oppose IRS collection actions.65 In
that vein, pursuant to TBR3, a collection due
process hearing (CDP hearing) is available if
the taxpayer receives a notice of the filing of
a federal tax lien and/or notice of intent to levys6
A taxpayer requests a CDP hearing by filing
Form 12153." The IRS must give the taxpayer
written notice of his or her right to a CDP hearing within five business days after the first filing of a notice of federal tax lien. After the CDP
hearing, Appeals will issue a determination. The
taxpayer has 30 days after the date of the determination to seek review in the Tax C o ~ r t . ~ '
The Tax Court reviews the IRS determination under an abuse of discretion standard.'j9
In Magana, the Tax Court noted that, absent
special circumstances, a taxpayer cannot raise
an issue in the Tax Court that he or she had not
raised in a CDP hearing under Section 6330(b).
TAXPAYERS' PROCEDURAL RIGHTS
Prior to 1998, the service of a notice and
demand for payment on the taxpayer within 60
days of the assessment of a federal tax on the
taxpayer," along with a failure or refusal by the
taxpayer to pay the assessed amounts, was all
that was required procedurally prior to the Service's filing a lien on a taxpayer's property7' and
then levying on the delinquent taxpayer's
property7' Taxpayerswere entitled to post-deprivation proceedings to challenge a levy, but there
was no procedure in place for a taxpayer to challenge the Service's initial decision to levy on the
taxpayer's property Section 6343(b) granted taxpayers the right to file a claim for the return of
wrongfully levied property after the IRS had
taken the property. In addition, Section 7426
permitted a third party to file a claim in federa1 court to recover property on which the Service had wrongfully levied.
Sections 6320 and 6330 were added to the
Code in 1998 to grant taxpayers the right to
request a pre-deprivation hearing to permit a
taxpayer to present arguments as to why the
filing of a lien or the levying on a taxpayer's
property would not constitute an appropriate
collection device. Section 6330(c)(2)(A) authorizes the Secretary of the Treasury to consider
"any relevant issue relating to the unpaid tax
or the proposed levy" during a CDP hearing.
This includes offers of collection alternatives,
which may include the posting of a bond, the
substitution of other assets, an installment
agreement, or an offer in compromise.
Section 6320 grants a taxpayer the right to
a hearing prior to the Service filing a federal
lien against the taxpayer. Section 6320(a)(1)
requires the Service to notify a taxpayer in writing of the filing of a federal lien. Section
6320(a) (2) requires that the notice be given in
person, be left at the taxpayer's dwelling or usual
place of business, or be mailed by certified mail,
to the person's last known address not more
than five business days after the date the lien
was filed. Section 6520(a) (3) requires that the.
notice state inc'simpleand nontechnical terms"
the amount of the unpaid tax, the right of the
taxpayer to request a hearing within 30 days
from the date of the notice, the administrative
appeals available to the taxpayer, and the procedures relating to the appeals as well as the
procedures relating to the release of federal liens.
The hearing granted the taxpayer is conducted pursuant to the provisions of Sections
6330(c), (d), and (e).73
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Section 6330 grants a taxpayer the right to
a hearing prior to the Service levying on the
taxpayer's property. Section 6330 requires the
Service to notify a taxpayer in writing (the CDP
Notice), at least 30 days prior to aproposed levy,
so that the taxpayer may request a CDP hearing before the Office of Appeals to challenge
the levy action.
Prior to 2006, a taxpayer was entitled to a
hearing simply by requesting it. Currently, a taxpayer must request a CDP hearingC'inwriting"
and must state the grounds for the requested
hearing.74If the taxpayer requests a CDP hearing and "states the grounds for the requested
hearing:' the IRS may not levy on the taxpayer's
property while the hearing is pending7'
The taxpayer may raise any relevant issue
at the CDP hearingrelated to the alleged tax
deficiency or the proposed levy and may challenge the appropriateness of the action as well
as request collection alternatives, such as
installment payments and offers in comprom i ~ eThe
. ~ hearings
~
are informal and may be
conducted via correspondence, over the telephone, or face to face.77A transcript, recording, or other direct documentation of the
The
' taxpayer is
proceeding is not r e q ~ i r e d . ~
entitled to have an impartial hearing officer who
has had no prior involvement with respect to
the unpaid tax.79
There are problems for a court in reviewing a CDP hearing conducted pursuant to Sections 6320 and 6330. The method or standard
for judicial review of such a hearing is not settled." Because there generally is not a transcript
or official record of the hearing, normal judicial review is lacking. The Seventh Circuit
decided the "standard of review is highly deferential as Congress intended."" Further, the
First Circuit recently decided that Congress'
purpose in providing taxpayers with predeprivation procedures was "to prevent mere
bureaucratic harassment" and was not "intended
to strip the IRS of effective and reasonable tax
collection proced~res."'~The court added
that taxpayers must provide at the hearing all
relevant information requested by the Appeals.
The Service's interpretation of Section
633O(c)(2) (B) has limited taxpayers' ability to
challenge a tax levy. Section 6330(c)(2)(B) states
that a person "may" raise at the hearingC'challenges to the existence or amount of the
underlying tax liability for any tax period if the
person did not receive any statutory notice of
deficiency for such tax liability or did not othPRACTICAL TAX STRATEGIES
MARCH 2009
erwise have an opportunity to dispute such tax
liability." The Service takes the position that
this provision of the Code prevents a taxpayer
from challenging the existence or amount of
the tax liability unless the taxpayer did not
receive a timely statutory notice of deficiency
or otherwise have the opportunity to dispute
the tax liability.
The Tenth Circuit in Coxa3agreed with the
Service's interpretation. The court interpreted
the subsection to read that a"taxpayer may not
challenge the existence or amount of the tax
liability unless the taxpayer did not receive a
timely statutory notice of deficiency or otherwise have the opportunity to dispute the tax
liability." In Kindred,84the Seventh Circuit stated
that Section 6330(c)(2) (B) limits challenges to
the existence or amount of underlying tax liability to situations in which a taxpayer has "not
receive [d.] any statutory notice of deficiency
for such tax liability or did not otherwise have
an opportunity to dispute such tax liability."
Both the Seventh and Tenth Circuits assumed
that the Service is correct in its interpretation
of Section 6330(c)(2)(B).The Seventh Circuit
in Kindred ruled that a taxpayer's claim that the
IRS is barred from assessing a tax liabilitybased
on the expiration of the three-year limitations
period in Section 6501 constituted a challenge
to the underlying tax liability and was barred
by Section 6330(c)(2) (B). The Seventh Circuit
stated that the proper way to challenge the
amount of the tax liability would have been to
file a petition to the Tax Court within 90 days
after the receipt of the statutory notice of deficiency pursuant to Section 6213(a).
Because the taxpayers in Kindred failed to
file the petition within 90 days, the Seventh Circuit disallowed their challenge. It stated that
they were "precluded from doing so through
a CDP hearing." The Seventh Circuit also
ruled that any claims taxpayers did not raise
at the CDP hearing d6uld not be raised in a petition to the Tax Court or in an appellate court.
A taxpayer may appeal to the Tax Court an
adverse determination in a CDP hearing,
which is issued in aXNoticeof Determinati~n."'~
(The levy continues to be suspended if the taxpayer files a petition for review to the Tax Court
within 30 days of the Notice of Determination.)
Courts, however, apply an abuse of discretion
standard of review.86
In perk in^,'^ the Tax Court explained that
"abuse of discretion" is defined as any action
that is unreasonable, arbitrary or capricious,
TAXPAYERS PRODEDURAL RIGHTS
clearly unlawful, or lacking sound basis in law,
taking into account all the facts and circumstances. The Tax Court stated that its review
is de novo when the underlying tax liability is
at issue (including additions to tax), but that
it reviews an IRS determination for abuse of
discretion when the underlying tax liability is
not at issue. Because it is difficult for a taxpayer
to demonstrate "abuse of discretion," taxpayers' right of appeal of an adverse determination after a CDP hearing is limited.
A CDP hearing must be conducted by an
impartial appeals officer (i.e., one who has had
no prior involvement with respect to the
unpaid tax specified in the CDP notice).88While
the Code does not define "no prior involvement," the IRS interpreted this term to mean
only that an appeals officer not have conducted
a hearing previously for the taxpayer regarding collection of the same tax. The IRS interpretation was based on Reg. 301.6330-1 (d)(2).
The Tenth Circuit recently disagreed with the
Service's po~ition.'~
The Tenth Court ruled that
an appeals officer cannot have any substantive
or material involvement with a taxpayer's liability regardless of whether the liability is the
liability currently under official review by
the appeals officer.
Collection Appeals Program. A taxpayer may
appeal the proposed filing of a Notice of Federal Tax Lien or a proposed levy under the Collection Appeals Program (CAP).9oThe CAP
program also permits a taxpayer to appeal the
actual filing of the notice of federal tax lien or
an actual levy if CDP rights are not available.
A taxpayer requests a CAP procedure by filing Form 9423.A taxpayer cannot appeal a CAP
decision to a c ~ u r t . ~ '
The CAP program generally is quicker and
is available for a broader range of collection
actions. For example, a taxpayer may appeal
the Service's rejection of an installment agreement or a proposal by the Service to terminate
a taxpayer's installment agreement. A taxpayer also may appeal a rejected OICg2The CAP
procedure is beneficial in that it permits a taxpayer to challenge the filing of a tax lien
before the Service files the lien and to challenge
IRS action before the Service levies or seizes
the taxpayer's p r ~ p e r t y . ' ~
Innocent spouse relief. A taxpayer who filed
an incorrect joint return may request innocent
spouse relief from joint and several liability on
the joint return. TBR3 provided additional tax
relief for a so-called "innocent spouse." A
TAXPAYERS' PROCEDURAL RIGHTS
new Section 6015, added to the Code in 1998,
replaced Section 6013(e), which was repealed
by the 1998 Act. Section 6015 was designed to
be more accessible than former Section 6013(e),
which had made relief difficult to obtain.
However, the IRS generally refers to case law
applying the restrictive provisions of former
Section 6013(e) in construing the provisions
of Section 60 15.The Tax Court has agreed with
the Service's p ~ s i t i o n . ' ~
The innocent spouse provisions of Section
6015 require the IRS to inform individuals subject to joint tax liability of their right to relief
if they qualify as innocent spouses. This
requirement is set out in section 3501 of the
IRSRRA. Although section 350 1 was not codified, the Tax Court has ruled that it is part of
the public law and, thus, has the force of law.'=
In order to request innocent spouse relief,
the taxpayer submits Form 8857 and should
include Form 12510.96Rev. Proc. 2003-19"provides the appeal procedures for a spouse or former spouse of a taxpayer seeking relief from
joint and several liability on a joint return. Publication 504 details taxrights and procedures
for divorced or separated individuals.
Section 6015 provides three avenues of
relief from joint and several liability:
1. Section 6015(b)(1) permits a spouse to
escape joint and several liability from an
understatement of tax attributable to the
other spouse's taxable income if the innocent spouse had no reason to know of the
income. This provision is similar to former
Section 60 13(e) although its intent was to
liberalize that section in the new Section
6015. For example, Section 6015(b)(l)(C)
requires an innocent spouse's knowledge
to be actual, whereas former Section
6013(e) required only that an innocent
spouse knew or had reason to know.
2. Section 6015(c), which is an additional
form of innocent spouse-relief enacted by
TBR3, relieves a separated spouse from
an understatement of tax attributable to
the other spouse if the spouses are joint
filers but are living apart, are no longer
married, or are legally separated. Section
6015(c) (3) (C) places the burden of proof
on the Service, whereas former Section
6013(e) placed the burden on the taxpayer.
3. Section 6015(f), also an additional form
of innocent spouse relief created by
TBR3, confers on the IRS discretion to
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grant equitable relief in situations in
which relief is unavailable under Section
6015(b)or(c).
In Che~hire,'~
the Tax Court denied a taxpayer relief under Section 6015(b), ruling
that the "no knowledge of the understatement
required of section 6015(b)(l)(C)is similar to
that found in former section 6013(e)(l)(C)."
The taxpayer spouse in Cheshire had knowledge of underlying transactions that gave rise
to her husband's understatement of tax, but she
had no knowledge that her spouse had reported
the transactions incorrectly on their income
tax return. Still, the court denied her relief under
Sections 6015(b) and (c).
One dissenting justice in Cheshirenoted that
Section 6015 is a remedial statute andC'should
be construed and applied liberally in favor of
those whom the statute was designed to benefit. A dissenting justice commented that "it is
apparent that Congress intended section 6015
to provide broader relief than that provided by
section 60 13(e)." Two dissenting justices contended that the majority construction of Section 6015 (c) (3) (C) "squarely conflicts with the
legislative history of section 60 15(c)." The dissenting justices opined that the legislative
history of the 1998 Act requires that a putative innocent spouse must know that his or her
return was incorrect.
The Tax Court denied the taxpayer separate
relief under Section 6015(c) because she had
actual knowledge of a disputed item of income
that gave rise to the deficiency on a joint return
she filed with her husband. The court ruled that
the fact that she did not know the amount was
misstated on the return was "of no import."
The Tax Court also set out guidelines for taxpayers seeking equitable relief from income tax
liability under Section 6015(f). It stated the following seven conditions for relief:
1. The requesting spouse must have filed a
joint return for the tax year in which the
taxpayer seeks relief.
2. Relief is not available to the requesting
spouse under Section 6015(b) or (c).
3. The requesting spouse applied for relief
no later than two years after the date of
the Service's first collection activity with
respect to the requesting spouse.
4. No assets were transferred between the
spouses as part of a fraudulent scheme by
the spouses.
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MARCH 2009
5. The nonrequesting spouse did not transfer disqualified assets to the requesting
spouse.
6. The requesting spouse did not file or fail
to file the return with fraudulent intent.
7. The income tax liability from which the
requesting spouse seeks relief is attributable to an item of the nonrequesting
spouse unless one of the following
exceptions apply:
Attribution is due solely to the community property laws
The item is only presumptively attributable to the requesting spouse
The requesting spouse did not know,
and had no reason to know, that the
nonrequesting spouse misappropriated
funds for the nonrequesting spouse's
benefit (but only to extent nonrequesting spouse took funds intended for
payment of tax)
The requesting spouse was a victim of
abuse prior to the time the return was
signed and, as a result of prior abuse,
did not challenge the treatment of any
items on the return for fear of the nonrequesting spouse's retaliation.
The Fifth Circuit affirmed the decision of
Court in Cheshire. The appeals court
the
referred to court decisions interpreting former
Section 60 13(e) (1) to determine the meaning
of"know1edge"in the new Section 6015. It commented that the legislative history of Section
60 15(c) (3) (C) was "ambiguous." However, it
agreed with the Tax Court that the knowledge
standard under this section in an omitted
income case is "actual and clear awareness" of
an"item" of income. The Fifth Circuit decided
that because "the wording of 5 6015(f) (1) is
virtually identical to that of former 5
6013(e) (1)(D), case law construing former 5
6013(e)(l) ( D ) is helpful in determining
whether the ~ o m m i & i o n e rabused his discretion" in denying the taxpayer equitable relief.
Finally, the Fifth Circuit reviewed the Service's
decision to deny the spouse equitable relief pursuant to Section 6015(f) under an abuse of discretion standard and found no abuse of
discretion.
The IRS has initiated a strict construction
of the innocent spouse relief provisions of Section 6015(f).For example, the Service takes the
position that the equitable relief provisions of
Section 6015(f) are available only to spouses
who file joint returnsg9despite the fact that Sec-
ax
TAXPAYERS' PRODEDURAL RIGHTS
.
tion 6015(f) does not require the filing of a joint
tax return as a procedural requirement for relief.
This interpretation by the Service is consistent
with regulations as amended in 2002. Reg.
1.60 15-4 states that a "requesting spouse who
files a joint return ... and who does not qualify for full relief under 5 1.6015-2 or 1.60153 may request equitable relief under this
section."
Sections 6015(b) and (c) do have that
requirement, but the requirement is not present in Section 6015(f). Section 6015(b)(1)(A)
provides relief if "a joint return has been
made for a taxable yearl'section 6015(c)(l)permits an election for separate liability for an individual "who has made a joint return for any
taxable year."
In Christen~en,'~~
the Ninth Circuit agreed
with the Service that Section 6015(f) should
be available only to spouses who file a joint
return. The Ninth Court decided that the
"plain language, context, and legislative history"
of Section 6015(f) suggested that Section
6015(f) relief should be available only to taxpayers who file joint federal income tax
returns. The taxpayer in Christensen argued
that if Section 6015(f) is interpreted to require
the filing of a joint return, the requirements of
Sections 6015(b) and (f) would be essentially the same. However, the court pointed out
that a taxpayer need not show lack of knowledge to qualify for relief under Section 6015(f);
thus, it concluded that "even with a joint filing requirement, relief under 5 60 15(f) is distinct from relief under 5 60 15(b)."
The requirement that a putative spouse must
have filed a joint return to request relief under
Section 6015 substantially limits relief for
taxpayers in community property states who
have filed separate returns but who are liable,
nonetheless, for taxes on one half the income
of the other spouse because of communityproperty laws.
The IRS has imposed a two-year limitations
period for actions for equitable relief under Section 6015(f).1°' Section 6015(b)(1)(E) prescribes
the limitations period to bring a request for
innocent spouse relief under Section 6015(b)
as two years after the Service has begun collection activity with respect to the taxpayer
requesting t h e relief. Further, Section
6015(c) (3) (B) imposes the same two-year
limitations period for the separate liability election under Section 6015(c). Section 6015(f)
TAXPAYERS' PROCEDURAL RIGHTS
does not prescribe a limitations period for equitable relief.
The Tax Court recently implied, although it
did not rule on the issue, that the Service's imposition of the two-year limitations period to equitable relief requests under Section 6015(f)
would frustrate the legislative intent of Section
6015 and the related public law. In McGee,'02 the
Service denied a taxpayer's request for equitable
relief from joint liability under Section 6015(f)
because the taxpayer made her request more
than two years after the Service's first collection activity. The Tax Court did not address the
issue of whether the Service had abused its discretion by imposing a two-year limitations
period on Section 6015(f) because it ruled for
the taxpayer on another basis.
The court ruled that withholding the taxpayer's refund, which she claimed on her individual federal income tax return, to offset
partially unpaid joint tax liabilities from a prior
year, was a collection action that required the
Service to send the taxpayer notice of her Section 6015 rights. Because the Service failed to
provide the collection-related notice required.
by section 3501 of the IRSRRA, the court
granted the taxpayer's petition for review of the
Service's denial of equitable relief from joint
liability.
The court did not consider the argument that
Congress did not intend to impose a strict limitations period on Section 6015(f) relief
because Section 6015(f) is designed to address
inequitable situations.
A taxpayer's petition for review of the Ser.rice's denial of innocent spouse relief must be
filed within 90 days after the Service mails a
final determination notice.'03 According to the
IRS, courts must review its denial of equitable
innocent spouse relief under an abuse of discretion standard.lo4In Brown,1osthe IRS refused
innocent spouse relief under Section 6015(f)
for self-employment tax liabilify because it contended half of the income reported on Schedule C was attributed to the requesting spouse.
Thus, the Service alleged that one of the seven
threshold conditions as set out in Rev. Proc.
2003-61 was not satisfied.
The Tax Court, on the other hand, decided
it would be inequitable to deny the requesting
spouse relief. The court noted that the nonrequesting spouse was unstable and abusive and
that the requesting spouse was constantly in
fear of him. It determined that economic
hardship existed because the requesting spouse
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162
would be unable to pay reasonable living
expenses if she were required to pay the selfemployment taxes. The court cited the fact that
the requesting spouses' medical condition
prevented her from finding employment and
that she lived day to day on assistance from her
father and friend.
The IRS also contends that, pursuant to the
Administrative Procedure Act (APA), courts
may consider only the administrative record
in making its determination.lo6The Tax Court
in Ewinglo7rejected the Service's position, ruling that the Service's determination of whether
a taxpayer is entitled to relief under Section
6015(f) "is made in a trial de novo and is not
limited to matter contained" in the IRS record.
However, the Ninth Circuit vacated the Tax
Court's decision on jurisdictional grounds.lo8
In Friday,logthe Tax Court ruled that a petition in a Section 6015 proceeding, which it
stated is sometimes referred to as aC'standalone"
case to determine the appropriate relief available to a taxpayer, "is generally not a "review'
of the Commissioner's determination in a
hearing but is instead an action begun in this
Court." In Porter,"' the Tax Court ruled that
review for abuse of discretion does not preclude
the court from conducting a de novo trial in
a Section 6015(f) case. The Tax Court decided
that use of the word "determine" in Section
6015(e)(1)(A) suggested that Congress intended
the court to conduct trials de novo when
making its determinations under Section
6015(f). The court held that, while it has
reviewed the Service's denial of relief in cases
arising under Section 6015(f) for abuse of discretion, review for abuse of discretion"does not
trigger application of the APA record or preclude us from conduct a de novo trial."
The court read Sections 6015(e) and (f) "to
give effect to both." It stated that its de novo
review of the Service's determinationsunder Section 6015(f) "gives effect to the congressional
mandate that we determine whether a taxpayer
is entitled to relief under section 60 15."The Tax
Court decided that its "approach (de novo
review, applying an abuse of discretion standard)
properly implements the statutory provisions
at issue" and its "long history in numerous other
areas of Tax Court jurisprudence."
Injured s p o u s e relief. A taxpayer may file an
"injured spouse" claim (which differs from
"innocent spouse" relief) if the so-called
"injured spousenisentitled to an overpayment
on a joint return that was, or is expected to be,
PRACTICAL TAX STRATEGIES
MARCH ZOO9
applied against the other spouse's past-due federal debts, state taxes, child or spousal support
payments, or federal nontax debt, such as
student 1oans.l" The "injured spouse" relief permits the "injured" spouse to retain his or her
share of a refund as against the federal government applying it to pay the above-noted
other spouse's debts. A taxpayer files aninjured
spouse claim on Form 8379.
Wrongful levy. If the Service has levied on
a taxpayer's property to collect a tax for which
the taxpayer is not liable,'the taxpayer may file
a claim for return of the wrongfully levied property.''' A third party whose property was
levied on wrongfully to pay another's tax liability also may file a civil action against the U.S.
in a federal district court.l13The Service may
release a levy on a part or all of a taxpayer's
propertyTT4
and may issue a certificate of discharge for property subject to a lien.l15
The Service must release the levy on all, or
part of, a taxpayer's property and must
promptly notify the person on whom the levy
was made that the levy was released if any of
the following occur:
1. The liability for which the levy was made
is satisfied or becomes unenforceable by
reason of lapse of time.
2. Release of the levy will facilitate the collection of the liability.
3. The taxpayer has entered into an installment agreement under Section 6159
(unless the agreement provides otherwise).
4. The Service has determined that the levy
is creating an economic hardship due to
the financial condition of the taxpayer.
5. The fair market value of the property
exceeds the liability, and release of the
levy on a part of the taxpayer's property
can be made without hindering collection of the tax liability.
The Service is not required to release the levy
if a release would jeopardize its secured status.l16
The IRSRRA, added a new subsection (e)
to Section 6343 that requires the Service to
release a levy on a taxpayer's salary or wages
"as soon as practicable" on agreement with the
taxpayer that the tax liability is not collectible.
The IRS must return property that it has
levied on if it determines that either:
1. The levy was premature or not in accordance with administrative procedures.
TAXPAYERS' PRODEDURAL RIGHTS
payer Assistance Order (TAO) to require the :
2. The taxpayer has entered into an installment agreement (unless the agreement
Service to cease its action against the taxpayer. :
provides otherwise).
3. Return of the property would facilitate
Taxpayer Advocate Service
collection of the tax liability.
4. With the consent of the taxpayer or the
The Office of the Taxpayer Ombudsman was :
created in 1979 to serve taxpayers as their priNational Taxpayer Advocate, return of the
mary advocate within the Service.12'The posi- :
propertywould be in the best interests of
the taxpayer (as determined by the National tion was codified by TBRl as Section 7802. In :
Taxpayer Advocate) and the U.S.ll'
1996, TBR2 amended Section 7802 (the pre- :
The Service must issue a certificate of decessor of Section 7803) to replace the Office :
release of a tax lien not later than 30 days after of the Taxpayer Ombudsman with the Office
the tax liability has been fully satisfied or has of the Taxpayer Advocate. TBR3 renamed the :
become legally unenforceable, or after the Taxpayer Advocate the National Taxpayer :
taxpayer gives the Service a bond conditioned Advocate and mandated that the National :
on payment of the amount assessed, together Taxpayer Advocate cannot be an officer or an
with all interest on the liability. The IRS may employee of the IRS for two years preceding :
issue a certificate of release for any part of a or five years following his or her tenure as the
taxpayer's property if it finds that the remain- National Taxpayer Advocate.
ing property subject to the lien is at least douThe Office of the Taxpayer Advocate is !
ble the amount of the unsatisfied liability under the supervision and direction the :
secured by the lien and the amount of other National Taxpayer A d ~ o c a t e .TBR3
' ~ ~ provided :
liens on the property that have priority over for Local Taxpayer Advocates (LTAs) to be
the federal tax lien.''*
located in each state and mandated a report- :
A taxpayer who wants to sell property sub- ing structure for LTAs to report directly to the
ject to a tax lien, such as the taxpayer's home, National Taxpayer Advocate. Taxpayers may :
may pay the tax liability equal to the value of seek help with unresolved tax issues and :
the property secured by the tax lien and then may obtain information from the Service by :
apply for a certificate of discharge. The appli- contacting the Taxpayer Advocate office in the !
cation should request release of the lien against taxpayer's area.
one piece of property.lIgA taxpayer selling a
The Taxpayer Advocate independently rep- i
primary residence may apply for a taxpayer relo- resents a taxpayer's interest by protecting the
cation expense allowance if he or she is unable taxpayer's rights and resolving problems that
to pay relocating expenses. The taxpayer must cannot be worked out through normal chansubmit Form 12451 to the Service.
nel~.'~~Although
this office cannot make a tech- :
The Service is required to issue a certificate nical tax decision, it is available to provide :
of discharge at the request of the property's assurance that the taxpayer will receive a :
owner if the owner is a third person (one whose complete and impartial review of his claim. :
unsatisfied liability did not give rise to the lien)
After an application is filed by a taxpayer :
and the owner deposits with the Service an with the Taxpayer Advocate Office, the National I
amount of money equal to the value of the inter- Taxpayer Advocate can issue a Taxpayer Assis- :
est of the U.S. in the property or furnishes a tance Order (TAO) if the Taxpayer Advocate f
bond acceptable to the IRS in a like amount. determines the taxpayer 2 suffering or is :
The Service must refund the deposit and about to suffer a significant hardship as a result
release the bond to the extent the Service deter- of the manner in which the IRS has been han- :
mines that the unsatisfied liability giving rise dling the taxpayer's alleged tax liability.lZ4 :
to the lien can be satisfied from a source other TBR3 expanded the definition of "significant
than such property or the value of the inter- hardship' to provide that a TAO is available in :
est of the U.S. if the property is less than the the following four circumstances:
prior Service's determination of the value of 1. An immediate threat of adverse action
:
against a taxpayer.
the property.I2"
2. The Service's delay of more than 30 days in :
Taxpayer Assistance Order. If a taxpayer canresolving a taxpayer's account problems.
not resolve a dispute with the Service, the taxpayer can request help from the 'National 3. A taxpayer incurring significant costs if
Taxpayer Advocate and may qualify for a Taxrelief is not granted.
TAXPAYERS' PROCEDURAL RIGHTS
MARCH 2009
PRACTICAL TAX STRATEGIES
:
163
TAXPAYER'S PROCEDURAL DUE PROCESS RIGHTS
1. Taxpayer agrees with deficiency-insufficient
funds.
Extension (Section 6161) or installments (Section 6159).
Offer in compromise (Section 7122).
Noncollectible status. (IRM 5.16, 5.4.10.7, and 8.23.3.121.
2. Taxpayer does not agree with deficiency.
Administrative review (Section 7522(b)(3)).
Petition for Tax Court review (Section 6213).
Audit reconsideration (IRM 4.13).
Fast track mediation (IRM 4.51.4).
Collection due process hearing (Regs. 301.6320-1 and 301.6330-1).
Collection appeals program (IRM 5.1.9.4.1, 8.1.1.4, and 8.24.1).
Innocent spouse relief (Section 6015).
Injured spouse claim (IRM 25.18.5).
Wrongful levy claim (Section 6343).
Taxpayer assistance order (Sections 7803(c) and 7811).
4. Irreparable injury to the taxpayer if relief
is not granted.'"
The TAO requires the Service to release propertyit has levied on or to cease to take action
against the taxpayer.lZ6
The Taxpayer Advocate Service administers
the federal program that created Low Income
Tax Clinics,''' which are independent organizations that provide low-income taxpayers
with representation in federal tax controversies for free or a nominal charge. See IRS Publication 4134 for a list of the Low Income
Taxpayer Clinics.
Shifting of burden of proof
Section 7491 was added to the Code as part of
TBR3 to provide another important taxpayer
relief measure. This section shifts the burden
of proof to the Service in certain cases in which
the taxpayer introduces credible evidence
with respect to any factual issue relevant to
ascertaining the liability of the taxpayer for any
tax. The taxpayer, however, must comply with
substantiation requirements and must maintain all required records.'" In addition, the taxpayer must have cooperated with all reasonable
IRS requests for witnesses, information, docThe benuments, meetings, and inter~iews.''~
efits of Section 7491 are not available for
partnerships, corporations, and trusts unless
the taxpayer meets the net worth requirements
set out in Section 7430(c) (4) (A) (ii).I3' Before
the enactment of Section 7491, the burden of
proof was exclusively on the t a ~ p a y e r . ' ~ '
F'RACTICAL TAX STRATEGIES
M A R 3 2009
The conference committee crafting Section
749 1 noted that "credible evidence is the quality of evidence which, after critical analysis, the
court would find sufficient enough to base a
decision on the issue if no contrary evidence
were s~brnitted."'~'Presumably credible evidence is evidence that is worthy of belief. A taxpayer cannot make "implausible factual
assertions, frivolous claims, or tax protestortype argument^."'^^
The legislative history of Section 7491 suggests that Congress merely intended to place
a burden of production on a taxpayer. As noted
in Thompson,'34"Congressexplicitly undertook
to provide taxpayeri with a~statutoryescape
hatch from the long-standing common law burden of proof rule." For example, while the Service's determination regarding a tax deficiency
is presumed correct, the burden of proof
regarding entitlement to a claimed deduction
may shift to the IRS to disprove entitlement if
the taxpayer introduces "credible evidence" complete with the necessarFsubstantiation and documentation sufficient to fulfill the requirements
of Section 7491.I3' Courts have specified that
it is a legal question whether a taxpayer has produced sufficient evidence to shift the burden
of proof to the Service undersection 749 1.'36
Despite the clear language of Section 7491,
the IRS continues to contend in many cases that
the burden of proof remains with the taxpayer.
For example, in Thompson, the Service contended that Section 183(d) exclusively supplied
the burden of proof rules and that taxpayers
in that case could shift the burden of proof to
TAXPAYERS' FRODEDURAL RIGHTS
the U.S. only if they met the requirements of numerous taxpayer procedural rights outlined
Section 183(d), which provides for a pre- in this article to substantial delay tactics that
sumption of profitability in a hobby loss alle- afford little concrete relief. w
gation case if certain conditions are met. The
district court ruled that, while Section 183(d) NOTES
Discussion of the Treasury's current enforcement poldoes act to shift the burden of proof to the U.S.
icy in " A Comprehensive Strategy for Reducing the Tax
if the.taxpayer can satisfy its requirements (i.e.,
Gap," U.S. Department of the Treasury, Office of Tax
in a case in which a taxpayer can show a profit
Policy, 9/26/06, page 5.
Taxpayers' Bill of Rights 1 (TBRI). Technical and Misfor at least two out of seven consecutive tax years
cellaneous Revenue Act of 1988, P.L. 100-647.
in a horse operation), a taxpayer can succeed
Taxpayers' Bill of Rights 2 (TBR2). P.L. 104-168, 110 Stat.
in shifting the burden of proof pursuant to Sec1454 (7/30/96).
P.L. 105-206, 112 Stat. 685 17/22/98).
tion 7491 despite failing to meet the requireSee Preslar, 167 F.3d 1323, 83 AFTR2d 99-851 ICA-10,
ments of Section 183(d).
1999).
The IRS has also contended that Section 749 1 ' 6/25/97.
did not shift the burden with respect to a taxSee Living Care Alternatives of Utica, lnc.,411 F.3d 621,
95 AFTR2d 2005-2668 (CA-6. 2005).
payer's alleged liability for a penalty relating
Sections 6320 and 6330.
to a federal tax. Some courts have questioned
" A Vision for a N e w IRS," Note 6, supra.
In Allison, the Federal l o Section 7521 (bi(21.
the Service's p0siti0n.l~~
Claims Court disagreed with the Service and 11 Section 7521 Ic).
ruled that, in circumstances in which the tax- 12 Section 7521 IbiI1 i .
payer provides basic cooperation, the Service l3 130 TC NO. 10 (2008).
has both the initial burden of production l 4 TCM 2008-1 03.
l5 1999-1 CB 970.
and the ultimate burden of proof on factual " TCM 2008-261
issues relating to the taxpayer's liability for the l 7 " A Comprehensive Strategy for Reducing the Tax
G ~ D . "note 1, suDra.
penalty tax. Thus, according to the Claims
Court, the Service "may be the party framing l198 IRS. Tax Gap Whitepaper, 5/24/07, page 1.
Id.
and proving the question of negligence." In 20 526 F.3d 171 ICA-5, 2008).
Hansen, the Ninth Circuit recognized that 21 Section 621.3Ia).
IRSRRA now places on the Service the burden 22 Section 6321.
of production of evidence of taxpayer negli- 23 Section 6322.
gence with respect to penalties. The court 24 Section 6331 (b).
Section 6331 (e).
decided, however, that because penalties in 25
'' Section 6335.
Hansen preceded the effective date of Section 27 Sections 6502(a)(2) and 7403.
7491(c), the burden of production of lack of
Section 6502(a)(l).
29 See IRM 4.10.8.11.
negligence remained with the taxpayer.
Section 6213ia).
Section 74221a).
32 Sections 61 61 and 61 59.
33 IRS Publication 594, "The Collection Process," page 6.
34 Section 71 22.
35 Note 33, supra at page 7 .
36 IRS Policy Statement P-5-100.
37 Reg. 301.7122-1(f)(5).
38 I R M 4.10.
'-.
39 I R M 4.10.8.1 1.
40 Then Section 7122(c), which n o w is redesignated as Section 7122Id) (effective in 2005 as a result of the Tax
lncrease Prevention and Reconciliation Act of 2005, P.L.
109-222, section 509Iai).
41 Reg. 301.7122-1 (cII21.
42 See Reg. 301.7122-I(fl(5).
43 Kindred, 454 F.3d 688, 98 AFTR2d 2006-5472 (CA-7,
20061.
44 Ann. 2008-11 1, 2008-48 IRB 1224.
45 Tax lncrease Prevention and Reconciliation Act of
2005, P.L. 109-222.
46 Section 7122(c)(l)(A)Iii).
47
Note 33, supra at page 6 .
48
Section 71 2 2 ( c ) ( l)(A)(l).
49
Section 71 2 2 ( c ) ( l)(B)(i).
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.
30
31
Conclusion
Many of the procedural appeal routes summarized in this article were expanded by TBR3
in response to a perceived need for enhanced
taxpayers' rights and more taxpayer ability to
challenge the then harsh IRS enforcement system. Congress has wavered in the past 20
years as it attempts to balance the need for
aggressive tax enforcementmeasures against the
need to protect taxpayers' rights. With a widening tax gap and a significant and ever-growing
federal deficit, Congress, as well as the Treasury,
now perceives a need for renewed aggressive
enforcement policies. Unfortunately, the current emphasis on collection of the tax, and the
limited judicial review available when courts
continue to use an abuse of discretion standard
to review IRS determinations, could relegate the
TAXPAYERS' PROCEDURAL RIGHTS
MARCH 2009
PRACTICAL TAX STRATEGIES
.
:
:
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165
:
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.
77
Section 71 2 2 ( c ) ( l)(B)(ii).
See Venen, 38 F.3d 100, 74 AFTR2d 94-6680 ICA-3. 1994).
See also I R M 5.16, 5.4.10.7, and 8.23.3.12.
Section 6502(a1(21.
Section 7522(b)(3)
See IRM 4.10.8.11.
See IRM 1.1.7.1.
See discussion in IRS Publication 5, "Your Appeal Rights and
How t o Prepare a Protest If You Don't Agree," page 1.
Section 7430ib).
Section 6213.
See I R M 8.1.1.3.
Section 7463.
Section 7463(b).
See IRM 4.13. See also IRS Publication 3598, "What
You Should Know About the Audit Reconsideration
Process."
IRS Publication 3598, page 2. For discussion of the audit
reconsideration process, see Baltic, 129TC 178 (2007).
and Jones, TCM 2007-142.
See Rev. Proc. 2003-4, 2003-1 CB 123; Rev. Proc. 200340, 2003-1 CB 1044; discussion of Fast Track Mediation at IRM 4.51.4; and IRS Publication 3605.
P.L. 105-206, cited in note 4, section 1001. Section 1001
of the IRSRRA states that its purpose was t o "ensure
an independent appeals function within the Internal Revenue Service."
Sections 6320 and 6330. See Regs. 301.6320-1 and
301.6330-1 for a detailed description of taxpayers' rights
and procedures regarding the CDP hearing. These sections present the provisions of Sections 6320 and 6330
in question and answer format w i t h examples t o illustrate the process.
Reg. 301.6320-1 (c)(21.
Reg. 301.6320-1 (f).
See Magana, 118 TC 488 (2002) and Giamelli, 129 TC
107 12007).
Section 6303.
Section 6321.
See Shapiro, 424 U.S. 614, 3 7 AFTR2d 76-959 (19761.
See Section 6320ib).
Section 6330(b)(l).
Section 6 3 3 0 ( e ) ( l ) .
Section 6330(c).
Reg. 301.6330-1.
78
Id.
50
51
52
53
54
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56
57
58
59
60
62
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63
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1
67
6g
70
71
72
73
74
75
76
Sections 6320(b)(3) and 6330(b)(3).
See Living Care Alternatives of Utica, Inc., supra note
7.
Kindred, supra note 43.
Olsen, 414 F.3d 144, 96 AFTR2d 2005-5081 (CA-I, 2005).
83
514 F.3d 11 19, 101 AFTR2d 2008-685(CA-10, 2008).
84
Note 43, supra.
85 Section 6330(d). See also Reg. 301.6330-1 (1).
'"ee
Jones, 338 F.3d 463, 92 AFTR2d 2003-5508 (CA5, 2003); Olsen, supra note 82; Orum, 412 F.3d 819, 95
AFTR2d 2005-2931, 820 (CA-7, 2005); Living Care Alternatives of Utica., Inc., supra note 7 ; and Kindred, supra
note 43.
87 Note 14, supra.
Section 6330(b)(3).
89
Cox, supra note 83. rev'g Cox, 126 TC 237 (20061.
90
See IRM 5.1.9.4.1, 8.1.1.4 and 8.24.1.
91
See Regs. 1.301.6320-1 and 1.301.6330-1.
92
See IRS Publication 1660, "Collection Appeal Rights."
pages 1-4.
93
Sections 6320(b) and 6330ib).
79
80
PRACTICAL TAX STRATEGIES
MARCH 2009
94
Cheshire, 115 TC 183 (2000). aff'd 282 F.3d 326, 89
AFTR2d 2002-900 (CA-5, 20021.
95 McGee, 123 TC 314 (2004).
96
See R S Publication 971, "Innocent Spouse Relief."
97 2003-1 CB 371.
Note 94. supra.
99 See Rev. Proc. 2003-61, section 2.03.
lo0523 F.3d 957, 101 AFTR2d 2008-1795 (CA-9, 2007).
101
See Rev. Proc. 2000-1 5, 2000-1 CB 447, section 5.
102 Note 95, supra.
103
Section 601 5 i e ) ( l ) ( B ) ( i ) .
See Cheshire, note 94, supra.
105
TC Summary Opinion 2008-121. See also Ybarra, TC Summary Opinion 2008-2.
106
See Porter, note 13, supra.
lo7
122 TC 3 2 (2004).
108
Ewing, 439 F.3d 1009, 97 AFTR2d 2006-1 224 (CA-9, 2006).
log
124 TC 220 (2005).
110 Note 13, supra.
104
111
See R M 25.18.5. See also discussion of "injured spouse
relief" in Wynne, 306 F. Supp.2d 660, 93 AFTR2d 2004692 (DC Tex., 2004).
112 Section 63431131.
" 3 ~ e c t i o n7426.
114
Section 6343.
1 ' 5 ~ e c t i o n6325.
li6
Section 63431a)iI ).
l17Section 63431d).
" 8 ~ e c t i o n6325113).
119
See IRS Publication 783, "Instructions on How t o Apply
for Certificate of Discharge of Property From Federal
Tax Lien."
120
Section 6325(b)(4).
121
Discussion of the history of the Taxpayer Advocate Service at 4 U.S.C.C.A.N., 105th Cong., 2nd Sess. 1998,
page 306.
122 Section 7803(c).
l Z 3 s e eIRS Publication 1546, "The Taxpayer Advocate Service-How to Get Help With Unresolved Tax Problems."
124 Section 781 1 (a).
1 Z 5 ~ e c t i o 781
n 1 ia)(2).
126
Section 781 1 ib).
127
Note 123. supra at page 7.
128
Section 7491 (a)(2)(A).
l Z 9 ~ e c t i o 7491
n
(a)(2)(B).
1 3 0 ~ e c t i o7491
n
(a)(2)(C).
l3'
In Helvering v. Taylor, 293 U.S. 507, 14 AFTR 1194 (1935).
the Supreme Court stated: "Unquestionably the burden
of proof is on the taxpayer t o show that the Commissioner's determination is invalid." in Mays. 763 F.2d 1295,
56 AFTR2d 85-5335 (CA-1 I,1985), the court stated that
the "burden of proof is on the taxpayer t o s h o w that
the Commissioner's ?&dings were erroneous."
1 3 ' ~ .Rep't No. 105-599, 105th Cong., 2d Sess. 228 (1997)
at 240-41.
1 3 3 ~ eThompson,
e
523 F. Supp. 2d 1291,100 AFTR2d 20076649 (DC Ala., 2007).
134
135
Id.
See Blodgett, 394 F.3d 1030, 95 AFTR2d 2005-448 (CA8, 20051, and Interex, Inc., 321 F.3d 55, 91 AFTR2d 200311 01 (CA-1, 2003).
136
See Blodgett, supra note 135, and Estate of Mitchell,
250 F.3d 696, 87 AFTR2d 2001 -2043 (CA-9, 2001 ).
1 3 7 ~ e e . ,e.g., Higbee, 116 TC 438 (2001); Allison, 101
AFTR2d 2008-756 (Fed. CI. Ct., 2008); and Hansen 471
F.3d 1021, 9 8 AFTR2d 2006-8234 (CA-9, 2006).