Chandler v. Commissioner
660 F. App'x 694
| 10th Cir. | 2016Background
- Chandler owed substantial federal tax liabilities (estimated $750,000–$1,000,000) and the IRS filed a notice of federal tax lien.
- Chandler requested a Collection Due-Process (CDP) hearing and submitted an offer in compromise to pay $122.40/month for 24 months (total $2,937.60).
- The IRS Office of Appeals preliminarily rejected the offer as an attempt to hinder collection, and then issued a final determination sustaining the lien and rejecting the offer.
- The Office of Appeals calculated Chandler’s reasonable collection potential (RCP) at $518,579 (five years of disposable income plus equity in assets) and proposed an installment plan totaling $103,920.
- Chandler appealed to the Tax Court and later claimed a changed circumstance: his monthly medical expenses increased from $144 to $310, reducing RCP marginally to about $508,619.
- The Tax Court refused to remand to the Office of Appeals, concluding the change was not material because RCP remained far greater than Chandler’s $2,937.60 offer; the Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tax Court abused its discretion by refusing to remand to IRS Office of Appeals for reconsideration after a claimed change in circumstances (increased medical expenses). | Chandler: increased medical expenses are a changed circumstance warranting remand to Office of Appeals to reassess his offer. | IRS/Tax Court: the expense increase only marginally reduces RCP which remains far above Chandler’s offer, so remand would be unhelpful. | Denied — Tax Court did not abuse discretion; change was not material and remand would be unproductive. |
Key Cases Cited
- Wheeler v. Comm’r, 521 F.3d 1289 (10th Cir. 2008) (standard of review for Tax Court decisions).
- Kurzet v. Comm’r, 222 F.3d 830 (10th Cir. 2000) (standard of review and Tax Court appellate practice).
- Lewis v. Comm’r, 523 F.3d 1272 (10th Cir. 2008) (de novo review of legal conclusions; clear-error review of facts).
- Murphy v. Comm’r, 469 F.3d 27 (1st Cir. 2006) (IRS will not accept a compromise less than the case’s reasonable collection value).