John Ryskamp v. Commissioner of IRS, 797 F.3d 1142

Background

John Ryskamp underpaid federal income taxes for multiple years; the IRS moved to levy his property and he sought a Collection Due Process (CDP) hearing under 26 U.S.C. §§ 6330, 6331(d).
I.R.C. § 6330(g) permits the IRS to treat as ‘‘never submitted’’ any portion of a hearing request that is frivolous or reflects a desire to delay, and declares such portions not subject to further administrative or judicial review.
The IRS rejected Ryskamp’s initial CDP request with a boilerplate letter listing possible frivolous grounds but did not identify which specific positions it deemed frivolous; Ryskamp amended but the IRS again dismissed his request.
Ryskamp petitioned the Tax Court; the Tax Court held it had jurisdiction to review whether the IRS properly treated the entire request as frivolous and concluded the IRS’s form letter was inadequate, remanding for a proper identification/hearing.
On remand, Ryskamp filed a new CDP request, the Appeals Office held a correspondence hearing, identified some positions as frivolous, considered non-frivolous claims, found Ryskamp failed to provide necessary financial documentation, and permitted collection to proceed.
The D.C. Circuit affirmed: (1) the Tax Court has jurisdiction to conduct a limited, facial review of § 6330(g) frivolousness determinations; (2) the IRS abused its discretion by issuing a boilerplate denial without identifying specific frivolous positions; and (3) after the remand hearing the Appeals Office did not abuse its discretion in permitting collection.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 6330(g) strips tax court jurisdiction to review IRS determinations that a CDP request is entirely frivolous	Ryskamp (and amicus) argued the tax court may review whether the IRS correctly characterized the request as frivolous to ensure non-frivolous issues were not overlooked	IRS argued § 6330(g) precludes any administrative or judicial review of portions it treats as frivolous, so the Tax Court lacked jurisdiction	Court held tax court has jurisdiction to perform a limited, facial review of the frivolousness determination (whether IRS meaningfully identified why the request is frivolous and whether it overlooked any non-frivolous argument)
Whether the IRS abused its discretion by rejecting Ryskamp’s original CDP request via boilerplate letter	Ryskamp argued the letter failed to identify which positions were frivolous, preventing him from correcting or withdrawing them	IRS relied on § 6330(g) and its form denial as sufficient to treat the request as if never submitted	Court held the boilerplate denial was inadequate and an abuse of discretion because it did not specify which arguments were frivolous or explain why
Scope of judicial review under § 6330(g) — can court reach merits of allegedly frivolous positions?	Ryskamp sought relief and substantive review of some positions	IRS argued courts cannot reach merits of positions deemed frivolous	Court held review is limited to threshold/facial plausibility; courts may not adjudicate merits of positions classified as frivolous
Whether Appeals Office abused its discretion on remand in denying collection alternatives and permitting levy	Ryskamp contended Appeals failed to address or substantively respond to his “CFS facts” theory and wrongly denied alternatives	IRS pointed to Ryskamp’s failure to provide required financial documentation and noncompliance with filing obligations	Court held Appeals Office did not abuse its discretion: Ryskamp failed to supply requested financial info and his “CFS facts” theory was not legally cognizable

Key Cases Cited

Thornberry v. Commissioner, 136 T.C. 356 (T.C. 2011) (Tax Court held it may review whether Appeals properly treated entire CDP request as frivolous)
Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (U.S. 2015) (reviewing court may conduct limited inquiry into whether an agency satisfied a statutory threshold without doing a merits "deep dive")
Byers v. Commissioner, 740 F.3d 668 (D.C. Cir. 2014) (standards of review: de novo for underlying tax liability questions; abuse of discretion for CDP determinations)
Schlabach v. United States, 101 Fed. Cl. 678 (Fed. Cl. 2011) (supporting limited facial review of frivolousness determinations)
Orum v. Commissioner, 412 F.3d 819 (7th Cir. 2005) (no abuse of discretion where taxpayer failed to supply requested documentation for collection alternatives)
Hartmann v. Commissioner, 638 F.3d 248 (3d Cir. 2011) (similar principle on taxpayer noncompliance and denial of collection alternatives)
Flora v. United States, 357 U.S. 63 (U.S. 1958) (rule that refund suits require full payment, illustrating why post-payment relief is often inadequate)
Amgen Inc. v. Smith, 357 F.3d 103 (3d Cir. 2004) (discussing limits on judicial review when statute precludes it)