Best v. Commissioner
702 F. App'x 615
| 9th Cir. | 2017Background
- Taxpayers (Leonard & Evelyn Best; Howard May; Estate of Judith May and personal representative Marcia May) appealed Tax Court decisions upholding IRS levies to collect unpaid federal income tax and penalties under 26 U.S.C. § 6673(a)(1).
- Taxpayers requested Collection Due Process (CDP) hearings after receiving notice of proposed levies; IRS Appeals conducted hearings and performed verifications under § 6330(c)(1).
- Taxpayers had previously had opportunities to contest underlying tax liabilities and in these cases had agreed to the underlying liabilities.
- During CDP, IRS provided account transcripts; later, Forms 4340 were produced before Tax Court trial.
- Taxpayers argued they were entitled to additional specific documents (e.g., signed delegation orders or particular verification documents) and that levies were improper.
- Tax Court sustained the levies and imposed sanctions for frivolous positions; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of levies / CDP procedure | Levies improper; procedural defects in verification | IRS complied with § 6330; verification performed and procedures met | Levies sustained; CDP verification adequate |
| Right to contest underlying liability at CDP | Best/May argued they could challenge liability anew | Once previously had chance to contest, they could not relitigate at CDP (§ 6330(c)(2)(B)) | Taxpayers not entitled to relitigate liability; they had already agreed to liability |
| Adequacy of documents provided at CDP (account transcripts vs. Forms 4340) | Taxpayers said IRS must provide more (e.g., full assessment records, delegation order) | Account transcripts satisfy 26 C.F.R. § 301.6203-1; Forms 4340 later confirmed assessments; no rule requires delegation order copy | Provision of account transcripts and subsequent Forms 4340 was sufficient; no signed delegation order required |
| Imposition of penalties under § 6673(a)(1)(B) | Taxpayers claimed good-faith or counsel reliance for document demands | Positions were frivolous or groundless; § 6673(a)(1)(B) applies irrespective of taxpayer state of mind | Tax Court did not abuse discretion imposing penalties; positions were frivolous |
Key Cases Cited
- Koff v. United States, 3 F.3d 1297 (9th Cir. 1993) (deference to Treasury regulation on what constitutes the pertinent parts of an assessment; Form 4340 suffices to show proper assessment)