Kelvin R. Crews v. Commissioner of Internal Revenue, 20-10916

Background

In 2010 the IRS assessed Trust Fund Recovery Penalties (TFRPs) against Kelvin Crews for unpaid trust-fund taxes of two related companies: Erosion Stopper, Inc. and K.C. Earthmovers, Inc.
Crews sought abatement; an IRS appeals officer (Victoria Johnson) reviewed the appeal and sent a May 2013 letter abating liabilities for K.C. Earthmovers but her correspondence did not mention Erosion Stopper.
Internal IRS notes by Johnson and the examining agent (Bradwell) contained ambiguous language suggesting a full concession, but the formal determination letter only referenced K.C. Earthmovers.
The IRS later sought to collect the remaining Erosion Stopper TFRPs; Crews requested a Collection Due Process (CDP) hearing and argued the Appeals Office had already abated both sets of penalties.
Settlement officer Cathleen Curry reviewed available records (some files had been destroyed or were unavailable), concluded Johnson had abated only K.C. Earthmovers, and upheld collection of the Erosion Stopper liabilities; the Tax Court affirmed.
The Eleventh Circuit reviewed whether Curry abused her discretion in upholding collection and whether Curry sufficiently gathered records; it affirmed the Tax Court, holding no abuse of discretion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the CDP settlement officer abused her discretion by finding Appeals Officer Johnson abated only one set of TFRPs	Crews: record (appeal letters, internal notes) shows Johnson directed abatement of both companies’ TFRPs	IRS: Johnson’s formal determination letter abated only K.C. Earthmovers; ambiguous notes do not override the letter	Court: No abuse of discretion — strongest evidence (Johnson’s letter) shows only K.C. Earthmovers was abated
Whether the settlement officer failed to obtain or review relevant records before deciding the CDP hearing	Crews: Curry did not retrieve the appeals claim file and misrepresented the scope of her review	IRS: Curry attempted to obtain files, reviewed available administrative record and Appeals materials, some files were destroyed/unavailable	Court: Curry made reasonable efforts, reviewed available records, and did not abuse discretion
Whether missing/destroyed records warrant adverse inference (spoliation) for Crews	Crews: absence of files implies they would have shown abatement of Erosion Stopper liabilities	IRS: no evidence files were destroyed in bad faith; missing files do not support an inference	Court: Spoliation inference unwarranted absent evidence of bad faith; no adverse inference applied
Standard of review for Tax Court review of CDP determinations	Crews: argued de novo review appropriate because he challenged validity of liabilities	IRS: CDP determinations reviewed for abuse of discretion	Court: Affirmance was proper under either de novo or abuse-of-discretion; applied abuse-of-discretion standard and found no abuse

Key Cases Cited

Slodov v. United States, 436 U.S. 238 (establishes concept of employer-collected "trust fund" taxes)
Romano-Murphy v. Comm’r, 816 F.3d 707 (11th Cir.) (procedural discussion of §6672 assessment/appeal process)
Thosteson v. United States, 331 F.3d 1294 (11th Cir. 2003) (definition and treatment of a "responsible person" under §6672)
Roberts v. Comm’r, 329 F.3d 1224 (11th Cir. 2003) (CDP hearing determinations reviewed for abuse of discretion)
Vinatieri v. Comm’r, 133 T.C. 392 (Tax Ct. 2009) (standard describing abuse of discretion as arbitrary or without sound basis)
Bashir v. Amtrak, 119 F.3d 929 (11th Cir. 1997) (spoliation inference requires bad faith in destruction of evidence)
Griswold v. United States, 59 F.3d 1571 (11th Cir. 1995) (internal IRS manuals have no force of law)