Christopher Iames v. Commissioner of I.R.S.
2017 U.S. App. LEXIS 4017
| 4th Cir. | 2017Background
- Christopher Iames was assessed a civil penalty (~$61,000) for a reporting violation; before assessment he filed a protest and obtained a preassessment administrative appeal with the IRS Office of Appeals.
- During the preassessment appeals process, Appeals reviewed the file, held a telephone conference with Iames’s counsel, agreed to seek documents and schedule a follow-up, then sustained the penalty after counsel failed to respond.
- The IRS assessed the penalty, issued a notice of intent to levy, and Iames requested a Collection Due Process (CDP) hearing under 26 U.S.C. § 6330 to contest underlying tax liability.
- At the CDP hearing the Office of Appeals declined to revisit liability, concluding Iames already had an opportunity to dispute liability in the earlier preassessment appeal; the Office sustained the collection action.
- Iames petitioned the Tax Court; the Tax Court granted summary judgment for the Commissioner, holding § 6330(c)(2)(B) and the relevant regulation bar liability challenges in a CDP hearing when the taxpayer previously had an opportunity to dispute liability before Appeals.
- The Fourth Circuit affirmed, holding both § 6330(c)(2)(B) and § 6330(c)(4) preclude relitigation of the underlying liability in the CDP proceeding where the taxpayer previously raised that issue and participated meaningfully.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 6330(c)(2)(B) permits a taxpayer to challenge underlying tax liability in a CDP hearing when the taxpayer previously had an administrative (Appeals) opportunity to dispute liability | Iames: § 6330(c)(2)(B) bars liability challenges in CDP only if the taxpayer had a prior judicial opportunity (i.e., notice of deficiency and Tax Court); administrative Appeals opportunities do not qualify | Commissioner: "opportunity to dispute" includes administrative preassessment Appeals conferences; IRS regulation so states and Lewis supports it | Held for Commissioner: administrative preassessment Appeals constitute an "opportunity to dispute," so § 6330(c)(2)(B) bars raising liability again in CDP |
| Whether § 6330(c)(4) bars raising an issue at CDP that was "raised and considered" in a prior administrative proceeding in which the taxpayer "participated meaningfully" | Iames: § 6330(c)(4) should be limited to collection issues, not underlying liability (which is governed by § 6330(c)(2)(B)) | Commissioner: § 6330(c)(4) is unqualified and precludes any issue previously raised and considered when the taxpayer participated meaningfully | Held for Commissioner: § 6330(c)(4) applies broadly; Iames raised liability in the prior Appeals proceeding, participated via counsel, and the issue was considered, so § 6330(c)(4) precludes relitigation in CDP |
Key Cases Cited
- Goza v. Comm’r, 114 T.C. 176 (2000) (describes CDP hearing framework under § 6330)
- Lewis v. Comm’r, 128 T.C. 48 (2007) (upheld IRS regulation that preassessment Appeals opportunity bars CDP liability review)
- Yates v. United States, 135 S. Ct. 1074 (2015) (statutory interpretation principle: read words in context)
- FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) (statutory text must be read with view to overall statutory scheme)