Thompson v. Commissioner, 140 T.C. 173

Thompson petitions under IRC 6330 after IRS collection action seeks a partial payment installment agreement.
IRS settlement officer limited Thompson’s monthly expenses to necessary expenses under IRM guidelines, labeling tithing and college payments as conditional.
Thompson argues tithing is a necessary expense and/or violates Free Exercise RFRA.
Thompson previously had non-CDP and CDP tax liabilities and penalties, and had an existing installment agreement that defaulted; as of trial, substantial balances remained.
The court reviews whether the settlement officer abused her discretion and whether collection action balances taxpayer ability to pay with government interests.
The court ultimately sustains the NFTL and the proposed collection action.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether tithing is a necessary expense under IRM guidelines.	Thompson argues tithing is a necessary expense (condition of employment) or essential for health/welfare.	IRS contends tithing is not a necessary expense under health/welfare or production of income.	No; tithing classified as conditional expense; not necessary.
Whether the classification violates the Free Exercise Clause.	Classification burdens Thompson’s religious practice by risking ministerial resignation.	Government cannot target religious decisions; but classification does not interfere with church autonomy.	No violation; government may apply general tax collection rules to religious practice.
Whether RFRA requires different treatment of tithing.	RFRA requires least restrictive means; Thompson’s proposal was less burdensome.	RFRA allows least restrictive means balancing compelling government interest.	No RFRA violation; the offered alternative did not meet government’s compelling interest.
Whether college expenses can be a necessary expense.	College costs should be allowed as necessary if needed for health, welfare, or income.	IRMs limit college expenses and require additional tests; Thompson would not pay within five years.	No; college expenses not a necessary expense under IRM guidelines.
Whether the underlying liabilities were properly before the Court.			Underlying liabilities not properly at issue; court limits review to collection action.

Goza v. Commissioner, 114 T.C. 176 (2000) (de novo review of underlying liabilities; burden on taxpayer to prove liabilities)
Pixley v. Commissioner, 123 T.C. 269 (2004) (necessary vs conditional expenses framework)
Hernandez v. Commissioner, 490 U.S. 680 (1989) (entanglement concerns; government cannot decide religious matters)
United States v. Lee, 455 U.S. 252 (1982) (free exercise limits on government burdens; generally applicable tax law)
Adams v. Commissioner, 110 T.C. 137 (1998) (compelling government interest in tax collection; RFRA context)
Phillips v. Commissioner, 283 U.S. 589 (1931) (historical basis for timely tax collection)