502 F. App'x 1
D.C. Cir.2013Background
- This case arises on appeal from a Tax Court decision sustaining the IRS’s collection of taxes for 1999 and 2000.
- Johnson owes over $2 million; he does not dispute the debt but challenges IRS compromise handling.
- He argues the IRS declined his offers-in-compromise and that the IRS backed out of a settlement it had accepted.
- He also contends the CDP process violated 26 U.S.C. § 6330(c)(3)’s requirement to balance collection efficiency with the taxpayer’s intrusiveness concerns.
- The court reviews Tax Court determinations de novo for law and with abuse-of-discretion review of the Tax Court’s factual determinations; the IRS’s handling of offers, the settlement authority, and § 6330(c)(3) compliance are examined.
- The opinion emphasizes that the IRS reasonably determined Johnson’s dissipated assets exceeded his offers and that certain living-expense claims were not substantiated; it also clarifies the distinction between CDP proceedings and proposed collection actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IRS properly rejected Johnson’s offers-in-compromise | Johnson | IRS | Yes, IRS acted within discretion |
| Whether IRS unlawfully backed out of an accepted settlement | Johnson | IRS | No, no binding agreement existed and IRS authority governs settlements |
| Whether § 6330(c)(3) requires consideration of intrusiveness in proposed collection actions | Johnson | IRS | No violation; only proposed collection actions must be no more intrusive than necessary |
| Whether settlement officers can bind the IRS to settlements | Johnson | IRS | No; only authorized officials can bind the IRS; officers cannot bind absent superior approval |
Key Cases Cited
- Andantech L.L.C. v. Comm’r, 331 F.3d 972 (D.C. Cir. 2003) (de novo review of law; abuse-of-discretion standard applies to decisions of the Tax Court)
- Tucker v. Comm’r, 676 F.3d 1129 (D.C. Cir. 2012) (abuse-of-discretion review of compromise decisions; interpretation of discretionary acts)
- Living Care Alternatives of Utica, Inc. v. United States, 411 F.3d 627 (6th Cir. 2005) (intrusiveness of collection actions under § 6330(c)(3))
- Bornstein v. United States, 345 F.2d 558 (Ct. Cl. 1965) (agency authority limitations; unauthorized acts not binding on the United States)