David J. Chadwick v. Commissioner, 154 T.C. 84

Petitioner was sole member of two LLCs (Integrated Communications Network and Netcast) that failed to pay employment taxes for multiple quarters; separate revenue officers investigated and concluded petitioner was a “responsible person” under I.R.C. §6672.
Each revenue officer prepared a Form 4183 recommending Trust Fund Recovery Penalties (TFRPs) and obtained an electronic supervisory approval; on the same days the IRS mailed Letter 1153 to petitioner proposing TFRPs and advising of appeal rights.
Petitioner did not appeal either Letter 1153; the IRS assessed the TFRPs and later mailed a Notice of Intent to Levy; petitioner timely requested a CDP hearing and checked “I Cannot Pay Balance.”
The Appeals settlement officer (SO) requested Forms 433-A/433-B, delinquent Forms 1040 (2015–2017), and supporting financial documentation to consider collection alternatives; petitioner failed to provide the requested returns or financial information by the extended deadline.
The SO verified assessments and notices, declined to place the account in currently not collectible (CNC) status for lack of information, issued a notice of determination sustaining the levy, and petitioner timely petitioned the Tax Court; petitioner did not respond to the IRS’s summary-judgment motion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether TFRPs are “penalties” within the meaning of I.R.C. §6751(b)(1)	No timely or substantive response from petitioner	TFRPs are not "taxes" for §6751(b)(1) purposes; they’re penalties subject to supervisory-approval rules	TFRPs are penalties under §6751(b)(1) and thus subject to its supervisory-approval requirement
Whether supervisory approval for the initial penalty determination was timely and adequate	No timely or substantive response from petitioner	Forms 4183, with supervisors’ electronic signatures completed the same day Letters 1153 were mailed, satisfied §6751(b)(1)	Approval was timely and adequate; the Forms 4183 met §6751(b)(1) written-approval requirement
Whether the SO abused discretion by refusing CNC status / other collection alternatives	Petitioner claimed inability to pay and requested CNC/alternatives	SO argued petitioner failed to provide required delinquent returns and financial data needed to evaluate CNC or other alternatives	No abuse of discretion — SO properly denied CNC given petitioner’s failure to supply requested information and file returns

Goza v. Commissioner, 114 T.C. 176 (Tax Ct. 2000) (standard of review in CDP cases: de novo if underlying liability properly raised; otherwise abuse of discretion)
Mason v. Commissioner, 132 T.C. 301 (Tax Ct. 2009) (Letter 1153 provides taxpayer an opportunity to dispute TFRP liability)
Graev v. Commissioner, 149 T.C. 485 (Tax Ct. 2017) (§6751(b) applies broadly to penalties under the Code)
Blackburn v. Commissioner, 150 T.C. 218 (Tax Ct. 2018) (written supervisory approval can be evidenced electronically)
Belair Woods, LLC v. Commissioner, 154 T.C. 1 (Tax Ct. 2020) (initial penalty determination is embodied in the formal notice notifying the taxpayer of the penalty decision)
United States v. Rozbruch, 28 F. Supp. 3d 256 (S.D.N.Y. 2014) (district court view that §6751(b) might not apply to TFRPs; discussed and distinguished)
Jimenez v. Quarterman, 555 U.S. 113 (U.S. 2009) (inquiry begins with plain meaning of statutory text)