John Hartmann v. Commissioner of Internal Reven
667 F. App'x 374
| 3rd Cir. | 2016Background
- Hartmann appealed the Tax Court’s decision upholding an IRS notice of determination to levy for unpaid income taxes for tax years 2003, 2004, 2005, 2007, and 2008.
- The IRS sent a notice of intent to levy; Hartmann requested a Collection Due Process (CDP) hearing and cited an offer-in-compromise and inability to pay.
- The IRS Appeals Office requested pre-hearing documentation: an installment agreement or offer-in-compromise, a completed Form 433-A, and explanation for his failure to timely file his 2012 return.
- Hartmann provided a proposed installment plan and Form 433-A but did not provide the 2012 tax return or other requested documents before the hearing.
- The Appeals Office held the CDP hearing, then issued a notice of determination sustaining the levy because Hartmann failed to provide requisite documentation; Tax Court affirmed and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IRS abused its discretion in sustaining a collection levy after Hartmann failed to provide requested documentation for a collection alternative | Hartmann argued Appeals abused discretion by rejecting his proposed installment plan and proceeding with levy | IRS argued Appeals reasonably required documentation (including 2012 return) and could sustain levy when taxpayer failed to timely provide required financial info | Court held no abuse of discretion; sustaining levy was reasonable given Hartmann’s failure to provide requested documents |
| Whether Appeals was required to accept Hartmann’s proposed installment plan without complete documentation | Hartmann contended his submitted plan and Form 433-A sufficed | IRS maintained that full documentation is required to evaluate collection alternatives | Held that Appeals acted within discretion to require complete documentation before approving an alternative |
| Standard of review for Appeals’ CDP determination | Hartmann sought de novo review of Appeals’ discretionary conduct | Government argued for abuse-of-discretion review where underlying tax liability not at issue | Court applied abuse-of-discretion review and affirmed Appeals’ determination |
| Whether late filing of other tax returns precluded acceptance of compromise/plan | Hartmann argued lateness shouldn’t bar consideration of his plan | IRS argued failure to timely file 2012 return supported rejecting the alternative | Court agreed failure to timely provide return was a reasonable basis to reject the alternative |
Key Cases Cited
- Hartmann v. Commissioner, 638 F.3d 248 (3d Cir. 2011) (previous appeal affirming IRS in collection context)
- Hartmann v. Commissioner, [citation="351 F. App'x 624"] (3d Cir. 2009) (prior affirmance of levy collection)
- Kindred v. Comm’r, 454 F.3d 688 (7th Cir. 2006) (abuse-of-discretion review for CDP determinations when liability not in dispute)
- Living Care Alternatives of Utica v. United States, 411 F.3d 621 (6th Cir. 2005) (same)
- Dalton v. Comm’r, 682 F.3d 149 (1st Cir. 2012) (set aside agency CDP determinations only if unreasonable in light of administrative record)
- Christopher Cross, Inc. v. United States, 461 F.3d 610 (5th Cir. 2006) (failure to timely pay is reasonable basis to reject compromise)
- Olsen v. United States, 414 F.3d 144 (1st Cir. 2005) (no abuse of discretion in rejecting offer where taxpayer failed to provide financial information during administrative process)