Jason Jeffers v. CIR, 992 F.3d 649

Background

Jeffers underreported income on his 2008 return (IRS paid a refund, later audited, additional tax/penalties assessed); he later filed an amended 2008 return seeking $1,620.
Jeffers filed a late 2009 return reporting over $12,000 owed; an installment agreement was entered then terminated for nonpayment; he later filed an amended 2009 return seeking $500.
On September 20, 2012 the IRS mailed a Notice of Federal Tax Lien under I.R.C. § 6320 for 2008–2009; Jeffers did not request a CDP hearing at that time.
On February 23, 2017 the IRS issued a Notice of Intent to Levy and Jeffers timely requested a CDP hearing, but he focused on contesting underlying liability and asserted pending amended returns/refund claims.
Appeals sustained the proposed levy, concluding Jeffers was precluded from challenging underlying liability because he had a prior opportunity (the 2012 § 6320 notice); the Tax Court granted summary judgment for the Commissioner and Jeffers appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a prior §6320 notice bars later challenge to underlying tax liability in a §6330 CDP hearing	Jeffers: prior CDP notice did not deprive him of an opportunity because he did not participate in a hearing and later-filed amended returns raise new issues	Commissioner: receipt of the §6320 notice gave Jeffers a prior opportunity to dispute liability; regulation 26 C.F.R. §301.6330‑1(e)(3) bars relitigation	Held: Prior §6320 notice precluded challenging underlying liability; the regulation is a permissible Chevron construction and properly applied
Validity of Appeals officer declining to consider amended returns / refund claims in CDP	Jeffers: Appeals should have considered amended returns and refund requests	Commissioner: No right to have amended returns considered in CDP (per Badaracco); CDP is limited and focused on collection	Held: Appeals not required to accept amended returns in CDP; refund claims challenge underlying liability and were precluded
Whether Appeals abused discretion in sustaining the levy by failing to consider collection alternatives	Jeffers: refund claims serve as a collection alternative or otherwise justify relief	Commissioner: Refund claims relate to liability, not valid collection alternatives; taxpayer offered no proper alternatives	Held: No abuse of discretion; Jeffers offered no valid collection alternatives and improperly pressed liability issues
Whether the regulation construing “opportunity” conflicts with §6330(c)(4)(A) or other statutory provisions	Jeffers: regulation conflicts with §6330(c)(4)(A) and §6402; it unfairly precludes challenges absent prior hearing participation	Commissioner: §6330(c)(2)(B) and (c)(4)(A) are complementary; regulation reasonably implements statutory purpose	Held: No conflict; the regulation reasonably interprets "opportunity" and harmonizes with related provisions

Key Cases Cited

Badaracco v. Commissioner, 464 U.S. 386 (1984) (no right to have amended return considered in collection proceedings)
Our Country Home Enterprises, Inc. v. Commissioner, 855 F.3d 773 (7th Cir. 2017) (§6330(c)(2)(B) refers to opportunities to dispute liability, not only opportunities actually exercised)
Kindred v. Commissioner, 454 F.3d 688 (7th Cir. 2006) (standard for reviewing Appeals determinations is abuse of discretion)
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (framework for deference to reasonable agency interpretations)
Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208 (2009) (agency interpretation need not be the only reasonable one)
Iames v. Commissioner, 850 F.3d 160 (4th Cir. 2017) (explaining harmony between §6330(c)(2)(B) and §6330(c)(4))
Musa v. Commissioner, 854 F.3d 934 (7th Cir. 2017) (standard of review for Tax Court summary judgment appeals)
Montgomery v. Commissioner, 122 T.C. 1 (2004) (discussing collection procedures and appeals)