Renald Eichler v. Commissioner, 143 T.C. 30

Background

Petitioner (Dr. Eichler) faced section 6672 trust‑fund recovery penalties assessed December 20, 2010, for Q4 2008 ($89,760), Q1 2009 ($82,725), and Q2 2009 ($16,889).
Petitioner mailed an installment agreement request (Form 433‑A and financials) on April 11, 2011; IRS Collection failed to input the request code until June 6, 2011.
While the installment request was being processed, the IRS issued three CP‑90 Final Notices (Notices of Intent to Levy) on May 9, 2011; the Service Center sent a May 13 letter saying processing was incomplete and further contact would follow.
Petitioner timely requested a Collection Due Process hearing (Form 12153); Appeals scheduled an in‑person hearing on October 4, 2011. At hearing Appeals proposed an installment plan requiring an $8,520 downpayment, $25/month for one year, then $734/month thereafter.
Appeals issued a Notice of Determination on December 8, 2011, sustaining the proposed levy, refusing to rescind the notices of intent to levy, and requiring the $8,520 downpayment as a condition of the installment agreement.
The Tax Court reviewed (de novo for legal questions but abuse‑of‑discretion for Appeals’ determinations), held Appeals did not abuse discretion in refusing to rescind the notices, but remanded because the record lacked clarity on whether Appeals considered petitioner’s hardship and claims about ownership of joint funds when imposing the $8,520 downpayment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether IRS must rescind Notices of Intent to Levy when an installment agreement request is pending	Eichler: sec. 6331(k)(2) bars issuance of levy‑related actions while an installment request is pending; notices were issued prematurely and must be rescinded	IRS: sec. 6331(k)(2) prohibits levy but does not bar issuance of preliminary notices; IRM guidance applicable to Appeals permits leaving notices in place	Held: No abuse of discretion — statute bars levy but not issuance of notices; Appeals’ application of IRM for Appeals was permissible
Whether IRM required rescission of notices because request was pending	Eichler: IRM pt. 5.11.1.2.2.8 (Collection Division) supports rescission when notices issued while levy is prohibited	IRS: IRM contains different guidance for Collection vs Appeals; IRM does not have force of law and Appeals reasonably followed its own applicable procedures	Held: IRM does not confer rights; Appeals properly followed IRM provisions applicable to Appeals; no abuse of discretion
Whether requiring $8,520 downpayment as condition of installment agreement was an abuse of discretion	Eichler: downpayment causes economic hardship; some joint funds may not belong to petitioner	IRS: under sec. 6159 and IRM, Secretary may require liquidation/downpayment to facilitate collection; Appeals proposed a plan reflecting review of financials	Held: Remand required — genuine dispute of material fact because record does not show Appeals considered petitioner’s hardship and ownership assertions; Appeals must clarify basis and reconsider alternatives

Key Cases Cited

Living Care Alts. of Utica, Inc. v. United States, 411 F.3d 621 (6th Cir. 2005) (statutory restraints on levy do not necessarily bar issuance of preliminary levy notices)
Fargo v. Commissioner, 447 F.3d 706 (9th Cir. 2006) (internal IRS manuals do not create taxpayer rights enforceable as law)
Murphy v. Commissioner, 125 T.C. 301 (Tax Ct. 2005) (standard of review for Appeals’ determinations is abuse of discretion)
Sego v. Commissioner, 114 T.C. 604 (Tax Ct. 2000) (scope of issues allowed at CDP hearing and review standard)
Hoyle v. Commissioner, 131 T.C. 197 (Tax Ct. 2008) (remand appropriate where record lacks sufficient explanation of Appeals’ reasoning)
SEC v. Chenery Corp., 332 U.S. 194 (U.S. 1947) (agency action must be judged on the grounds the agency invoked)
SEC v. Chenery Corp., 318 U.S. 80 (U.S. 1943) (Courts may not uphold agency decisions on new grounds not considered by the agency)