Moosally v. Commissioner
142 T.C. No. 10
Tax Ct.2014Background
- Petitioner signed Form 2751 and was assessed trust fund recovery penalties (TFRPs) for two 2000 quarters and a $2,150 income tax assessment for 2008; she later submitted an Offer in Compromise (OIC) and Form 433-A in June 2010.
- The IRS Centralized OIC Unit rejected the OIC in May 2011 (calculating RCP of $34,497.88) and recommended filing a Notice of Federal Tax Lien (NFTL).
- Petitioner timely appealed the OIC rejection to Appeals; Settlement Officer Barbara Smeck was assigned to that appeal and began reviewing the OIC and supporting financials.
- The IRS filed an NFTL and sent Letter 3172; petitioner timely requested a Collection Due Process (CDP) hearing and Settlement Officer Donna Kane was initially assigned.
- The CDP case was transferred from Kane to Smeck while Smeck was already reviewing the OIC rejection for the same tax periods; Smeck then conducted the CDP hearing and sustained the NFTL and the OIC rejection.
- Petitioner petitioned the Tax Court under I.R.C. §6320, arguing the assigned Appeals officer (Smeck) was not impartial because of prior involvement in the OIC appeal; the Court remanded for a new CDP hearing before an impartial officer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Appeals officer who reviewed the OIC and then conducted the CDP hearing had "prior involvement" and thus was not impartial under I.R.C. §6320(b)(3) and Treas. Reg. §301.6320‑1(d)(2) | Moosally: Smeck reviewed the rejected OIC for the same tax liabilities and periods before being assigned the CDP hearing, so she had prior involvement and was not impartial. | Commissioner: No prior involvement because Smeck had not issued any determination on the OIC; §6320 allows simultaneous/combined review of collection matters and this benefits taxpayers. | Held: Smeck had prior involvement under the regulation and thus was not an impartial officer; petitioner entitled to a new CDP hearing before an impartial Appeals officer. |
| Whether the Court should decide collection on the merits (i.e., allow collection to proceed) | Moosally: (did not reach merits because of impartiality claim) | Commissioner: (argued merits in administrative record) | Held: Court did not address merits; remanded for a new impartial CDP hearing, so collection issue deferred. |
Key Cases Cited
- Cox v. Commissioner, 514 F.3d 1119 (10th Cir. 2008) (discusses breadth of "prior involvement" restriction and reverses Tax Court on facts involving multiple periods)
- Burlington N. R.R. Co. v. Oklahoma Tax Comm’n, 481 U.S. 454 (1987) (statutory text governs when unambiguous)
- Badaracco v. Commissioner, 464 U.S. 386 (1984) (courts may not rewrite statutes to achieve perceived better policy)
- Golsen v. Commissioner, 445 F.2d 985 (10th Cir. 1971) (establishes rule to follow controlling Court of Appeals authority when appeal lies there)